Is An MBA Bubble Popping? Seriously?

bubbleIt’s become common sport to bash the world’s most successful educational degree in the past half century. Naysayers fall all over themselves to to tell you that the MBA degree is no longer valuable to have, that there is a surplus of MBA grads, that the job market for people with this graduate business degree has virtually collapsed.

The latest critic came out of the cave yesterday when The Atlantic published an online story under the deadline: “Is An MBA Bubble Popping?” The opinion piece by Jordan Weissman contends that “surveys show declining pay and shrinking job opportunities for business grads, even as the rest of the job market keeps healing.” It couldn’t be further from the truth.

The reason why these silly stories are so plentiful on the web is because they drive traffic. Some people who don’t have an MBA like to read about the supposed misfortunes of those who do. Many others who are considering the degree worry about the costs and sacrifices to get an MBA so they are hungry for information that purports to tell them whether they should go for it.


But what about this latest piece of gloom by The Atlantic. It’s pretty much fiction, assembled from two fragments of evidence, one misinterpreted by the author and the other so ridiculously flawed it is laughable. Yet, The Atlantic boldly concludes: “It’s undeniable that salaries for new MBAs have decreased since the recession, which suggests the market is glutted with business-school grads.”

Really? The author cites a recent survey of MBA recruiters by the Graduate Management Admission Council which showed that 42% of responding employers would keep MBA salaries stable this coming year. This is one of those glass half-empty kind of observations because the same survey showed that more than half (56%) of employers plan to increasebase salaries for MBA graduates at (45%) or above (11%) the rate of inflation. Only 2%, by the way, said they planned to decrease salary offers to MBAs.

In other words, MBA pay is largely going up next year, according to the survey–not down.


The Atlantic also sources a report last month by Michigan State’s Collegiate Employment Research Center which it said projected that recruitment would tumble nearly 25% next year based on a survey of some 6,5000 employers. “The center expects a whopping 58% decline in finance, a traditional bastion of MBA hiring,” according to The Atlantic. Of course, those results completely contradict the findings in the GMAC study which does a much better job of surveying companies that actually hire MBAs.

GMAC found that more than three-quarters of employers–exactly 87%–who plan to hire business school graduates in 2014 expect to maintain or increase their hiring from this year. You couldn’t get a more positive prediction. That’s on top of a complete turnaround of the job market since the end of the Great Recession. In other words, this coming year’s positive outlook is icing on a very large and delicious MBA cake.

So who’s right? GMAC or Michigan State? It might help to go back and see what Michigan State was predicting a year ago for the MBA market and how their forecast held up. It turns out that the school’s Collegiate Employment Research Center said this year’s MBA job market would contract by 6% “wiping out last year’s gains.” That retrenchment never occurred. Nor will the center’s predictions for the MBA job market in 2014.


Rather than contract, this year’s MBA job market was the strongest it has ever been since the Great Recession. In fact, of the 71% of employers in the GMAC survey who hired MBAs in 2013 one in ten hired more than they had anticipated and three out of four employed as many as they thought they would. And the success wasn’t felt only by the top schools but pretty much across the board.

About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.