For those who maintain that money cannot buy happiness, MBAs from the country’s top business schools will beg to differ. New data released exclusively to Poets&Quants reveals that MBAs graduating from full-time programs at the top 50 U.S. schools are 58% happier in their first jobs post-MBA than their jobs right before entering business school.
They’re richer, too–a lot richer. On average, salaries increased by 44% from their final pre-MBA job to their first post-MBA position. Specifically, students entering B-school report an average salary of $90,708 and a post-MBA average of $130,889 — or a $40,181 increase just for earning an MBA. Far more impressive, however, were the total compensation packages. According to the data, an MBA leads to an 82% increase in total compensation — from $101,500 pre-MBA to $200K post-MBA. Total compensation includes performance bonuses, signing bonuses, stock, relocation, and “other compensation.”
The data is self-reported on the TransparentMBA platform and includes hundreds of recently graduated MBAs. All told, more than 1,100 data points were analyzed, says Kevin Marvinac, TransparentMBA co-founder and COO. Marvinac says a 42% median salary increase is “astronomical” but also cautions to consider the cost of an elite MBA. Still, many MBAs reported salaries more than $200K for their first jobs out of B-school.
HIGHEST REPORTED BASE SALARY OUT OF SCHOOL: $280K
The highest reported pay went to one MBA who claims to have made a base salary of $280,000 right out of B-school, which was an astounding $200K increase from their last job before his MBA that paid him $80,000. On the other end, a few graduates also reported salary decreases. One MBA claims to have taken a $155K pay cut from $230K pre-MBA to $75,000 post-MBA.
Marvinac and TransparentMBA broke the dataset into field-specific points. For example, one person reported making $100K in total compensation in a corporate strategy position pre-MBA and jumping to a ridiculous $365K pay package in a post-MBA investment banking role. Another catapulted from a $90,000 corporate finance role to a $290K investment banking position. One engineer used an MBA to leap from a $65,000 a year job to a $317,500 investment banking gig. In fact, the vast majority of the most significant increases were achieved by MBAs going into investment banking. Similarly, most salary increases stemmed from industry changes.
ENTREPRENEURSHIP & EARLY-STAGE STARTUPS DRIVING UP TRADITIONAL PAY
Marvinac, who is working toward an MBA at Chicago’s Booth School of Business, says sign-on and performance bonuses in traditional MBA hiring industries such as investment banking and consulting are what largely lead to the massive compensation increases. “That’s definitely a tactic on their part to get the top talent to commit early,” Marvinac tells Poets&Quants, noting the data backs up what they have heard anecdotally from other MBAs.
While Marvinac says they don’t have the specific quantitative data to back it up, he suspects increasing MBA infatuation with tech, entrepreneurship, and early-stage startups have led traditional MBA employers to sweeten the pot in recent years. Performance bonuses, which can equal base salary, could be the major reason why outsized compensation packages are being reported in investment banking, Marvinac explains. Plus, he points out, “exploding offer” tactics are often used in investment banking to get top talent to commit to a full-time position offer earlier and could be skewing numbers higher.
“There are companies that will say, ‘OK, you’ve finished your internship and we’ll give you an offer and you have until the holidays to decide,'” Marvinac says. “The signing bonus will be $35,000 at first. But if they wait till November 1, it will go down to $20,000 and then $10,000 around the holidays.”
Of course, an impressively high salary for an MBA is not uncommon. For the Class of 2015, some 12 schools world-wide reported having MBAs make at least $200,000 for a base salary. In job reports to surface for the Class of 2016, graduates from Duke’s Fuqua School of Business reported an average total compensation package of $151K, which just includes base salary, sign-on bonus and other guaranteed compensation. At Chicago Booth, graduating MBAs going into consulting this year made a median base salary of $145K with a median signing bonus of $25,000, again suggesting TransparentMBA’s data is congruent with what schools are reporting.