MBAs Expect 140% Pay Rise From Degree
If that increase sounds Pollyannaish, candidates in many other countries have even greater expectations, according to a new survey of MBA candidates by QS TopMBA.com, an organization that holds admissions fairs for business schools. Prospective students in Switzerland said they anticipate post-MBA salaries of $200,000, which would reflect a 145% increase over pre-MBA pay of $82,000, the highest salaries of any MBA applicants in the world.
MBA applicants from India expect the largest percentage increase. They believe the MBA degree will boost their pre-MBA pay by 369% to $112,000, from just $24,000 a year. The current pay of Indian candidates is among the lowest reported by any MBA applicants in the world. Only applicants in Nigeria reported lower salaries: $21,000 on average.
MBA APPLICANTS APPEAR UNREALISTICALLY OPTIMISTIC ABOUT THE BENEFITS OF THE MBA
In China, a country like India from which much of the growth in business education is occurring, MBA applicants expect the degree to provide a 245% increase in salary to $121,000 a year from only $35,000 a year currently.
What makes the numbers especially optimistic is the fact that QS did not survey applicants to only the top schools but to a wider variety of business schools whose graduates tend to make considerably less than those at such schools as Harvard, Stanford, Wharton, London Business School, INSEAD and other top-ranked institutions.
Yet, even in the best of all possible worlds, the average salaries at the highest ranked schools would fall well below the expectation of U.S. applicants for average salary of $140,000. Graduates of Harvard Business School reported average base salaries of $124,000 in 2012, for example. Only when you include the average signing bonus of $26,200 at HBS do you exceed the overall expectation—and that is for the graduates of Harvard Business School.
AT EVEN HIGHLY REGARDED BUSINESS SCHOOLS APPLICANTS WOULD FALL SHORT OF THEIR EXPECTATIONS
At Georgetown University’s McDonough School, in contrast, the average starting salary last year was $99,799. Even adding the average signing bonus of some $24,100 would make an MBA graduate from McDonough fall some $16,000 short of the expected salary in the QS survey.
Still, compared to 2012, there has been a general drop in candidates’ current earnings as well as their target salaries, according to the report. In the U.S., for example, applicants reported making $58,000 a year, down from $61,000 in 2012. A year earlier, MBA applicants expected to make $153,000 a year when they graduated. That expectation has fallen this year by $13,000 to $140,000 a year. In short, applicants in previous years were even less realistic than those polled in the past year.
The report attributes the decline to the less-than-certain economy, which the authors believe have made MBAs more risk adverse–rather than an increasing realization that earlier expectations were far too optimistic. “The job market for MBAs now shows signs of healthy growth,” the report said. “Yet prospective applicants remain quite risk adverse in the wake of the recession, and if anything have become more so in 2013.”
Post-MBA Salary Expectations By Country
CORRECTION: An earlier version of this story incorrectly expressed the percentage increases which were provided by QS.
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