Still More Evidence Of The MBA’s Value

Just a week after Bloomberg released data that showed MBA graduates who switched careers getting a $55,000 increase over their pre-MBA pay, The Financial Times weighed in with its own data set on salary. The compensation numbers–for alumni three years out of an MBA program–was even more impressive.

MBA alumni who were 24 or under when they started their degree reported that their salary increased by nearly $69,000, up 145% over their pre-MBA pay. Alums who entered their MBA programs when they were 27 and 28 reported salary increases of $67,000, roughly doubling their pre-MBA pay, according to the FT. Older students, who enrolled at the age of 31 or above, had a pay increase of $56,000, or a 70% rise over pre-degree salary.

“Broadly speaking, the same pattern occurs in all industry sectors and countries, regardless of whether graduates work overseas or move to a different industry,” the newspaper reported. The data comes from the British newspaper’s survey of the MBA Class of 2011 used in its 2015 global MBA rankings published earlier this year (see 2015 Financial Times Global MBA Ranking).

FOLLOWS HIGHLY FAVORABLE BLOOMBERG DATA RELEASED UST LAST WEEK

Only a week ago, Bloomberg took its student survey data from its ranking published late last year to track returns. For the MBAs who ventured into new fields, the median pay increase was a whopping $55,000 toward a salary of $120,000. That translated into an 85% increase in pay at a time when wage growth for managerial and professional employees has been relatively stagnant. 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 (See Payback On The MBA: A $55K to $47K Bump).

The Financial Times data further makes the case in favor of an MBA degree.

The FT broke the alumni pay numbers out by world regions which showed that some of the highest returns were reported in South America. For alumni who entered their MBA programs at an age of 29 and 30, the salary increase was 131%, or $96,000 over their pre-MBA pay.

In North America, the FT said that alumni who entered their MBA programs at an age of 24 or below, reported salary increases of $67,000, a whopping 137% increase over their pre-degree pay. For graduates who started their MBA at 25 and 26, the salary rise was exactly the same, $67,000, representing a 110% increase over pre-MBA pay. For those aged 27 to 28, generally the sweet spot for a two-year MBA program, the increase was $64,000, or 89%.

OLDER STUDENTS SAW SLIGHTLY SMALLER INCREASES

The older the student, the lower the return, presumably because older students entered their MBA programs with higher salaries to begin with. Students in North American business schools who entered at age 29 or 30, reported a $61,000 increase, or an 81% jump.

In Oceania and Asia, the youngest students surveyed, aged 24 or less, reported massive percentage increases three years after graduation of 178%, or $71,000. Students who were 25 to 26 saw pay increases of 146%, or $72,000. For incoming students aged 27 and 28, the increase was 132%, or $76,000.

The payoff in Europe was nearly just as good. For students who were 27 to 28 when they started their MBA program, the increase three years after graduation was 94%, or $61,000.

The newspaper said that three out of four respondents to its alumni survey were aged between 25 and 30 when they started their MBA programs, while 21% were 31 or above and the remaining 4% were 24 or younger. “The older the participants were, the more likely they were to enroll in one-year European MBA programs as opposed to two-year U.S.-type MBA programs,” the FT said. “On average, 75% of those aged 26 or under attended two-year programs in comparison to only 43% of those aged 31 or above.”

The FT did not report how many completed responses were compiled to support the data it published nor the response rate to its survey.