Payback On An MBA: $55K To $47K Bump by: John A. Byrne on April 08, 2015 | 4,008 Views April 8, 2015 Copy Link Share on Facebook Share on Twitter Email Share on LinkedIn Share on WhatsApp Share on Reddit Source: Bloomberg Business How much is an MBA degree worth? The latest data from Bloomberg’s survey of 6,400 second-year MBAs who gained jobs by April 2014 shows it’s worth quite a bit–even more so for job switchers. MBA grads who used the degree to switch careers generally saw bigger pay increases over their pre-MBA compensation than those who built on their earlier work experience and stayed in the same industry. AN 85% INCREASE IN PAY OVER PRE-MBA LEVELS FOR CAREER SWITCHERS For the MBAs who ventured into new fields, the median pay increase was a whopping $55,000 toward a salary of $120,000. That translates into an 85% increase in pay at a time when wage growth for managerial and professional employees has been relatively stagnant. And that is $55K more a year, every year for the foreseeable future which means that annual percentage increases on that base are higher, too. MBAs who returned to their industries actually reported slightly higher starting pay–roughly $122,000–but the bump in salary was less, a median $47,000 increase because pre-MBA pay was higher at a median of $75,000 instead of $65,000 for those who did the switch. Nothing to sneeze at, for sure. But eight grand less than if you switched careers. Of course, all of this varies greatly depending on which career you enter and whether you leverage a summer internship into a full-time job offer. The most lucrative MBA career path today is private equity but it is almost impossible to land a PE job without prior experience. So in that case, having a work background in PE and staying in the field would likely result in the largest compensation increases of any graduating MBA today. MBAS WHO LEVERAGE SUMMER INTERNSHIPS TYPICALLY GET THE BIGGEST BUMP What’s driving the higher increase for career switchers is the rush into consulting by many MBAs. The standard pay package at McKinsey, Bain and BCG is a $135,000 base and a $25,000 signing bonus. And many MBAs who venture into consulting are career switchers. Other research by the Graduate Management Admission Council, which surveys a much broader array of business schools, finds similarly impressive increases in pay, especially for graduates who gain offers from their internship employers. The study found that the average percentage increase in post-degree salary was 36% for those staying with their same employer, 70% for those accepting a new offer, and 84% for graduates who joined their internship company. “Participating in an internship while in school typically produces an additional 28 percent increase above the baseline salary increase a student receives who does not participate in an internship,” according to the GMAC study. “After graduation, the benefits of an internship are even greater. Those who participated in an internship and received an offer of employment from that internship more than doubled the salary increase received by graduates who continued working for the same employer during and after business school.” DON’T MISS: THE MBA BUMP: HOW MUCH TO EXPECT? Comments or questions about this article? Email us.