MORE WOULD-BE MBAS HAVE ALREADY DONE A BUSINESS MAJOR
And then, there is this: More would-be MBA students already have undergraduate degrees in business that may be good enough for their careers. “One thing that has changed is that an undergraduate business major has become the most popular major in America,” says Boulding. “That didn’t use to be true.”
In fact, undergraduate degrees in business surpassed education as the most popular undergrad degree in the U.S. nearly 40 years ago back in 1980-1981 when 200,523 graduates chose business over the 108,074 grads who majored in education, according to the National Center for Education Statistics (see chart below). By 2015-2016, the latest year for which numbers are available. more than three times as many graduates majored in business than education, 371,694 vs. 106,850. In other words, some 19.4% of the annual undergraduate output now major in business. Many of them–given the work experience they have already accumulated–may not see the need to return to graduate school for an MBA. And for years now, their employers are often often than not telling them to stay put.
“With a really robust economy, firms are trying to hold onto talent where they have it,” adds Boulding. “Instead of the old model of having you work as an analyst for two or three years and then encouraging you to get an advanced degree, those firms have changed their policies to allow their employees to stay as long as long as they think you are good enough to stay. So in a strong economy undergraduate majors may be a factor in people choosing not to get an MBA. Under this scenario, if the economy was not as strong, companies may be promoting them less and raising their salaries less. We are entering into a world of pure conjecture on what is going to happen.”
WHAT IF THE TECH SECTOR COLLAPSES IN A RECESSION?
Conjecture or not, few are betting that a recession–no matter how global or severe–will bring back the two-year, full-time, on-campus MBA. “It is unlikely that there will ever be anything like the surge of applications that happened after the financial bust,” believes Jeremy Shinewald, founder and president of mbaMission, one of the world’s largest MBA admissions consulting firms. “And I can’t help but wonder if the current decline in applications is really just a reasonable fall from the top of the cycle, rather than a crisis, at least for Top-15 programs. A recession would probably drive some back to MBA programs, but my sense is that it would have to hit the tech industry for there to be any real impact on MBA application volumes.
“If the FAANG companies had their first major waves of layoffs, it would trickle down to so many young professionals at those firms,” adds Shinewald. “Financial services as an industry is so much smaller than it was in 2009. I am not sure that banking layoffs would have much of an impact and PE firms are funded and lean. Tech is where they are all hiding and those who are betting on a recession should give consideration to getting ahead of the potential wave of applicants so that they can compete in a less competitive year.”
As bad as it is to wish for a recession, it would be worse to hope for the collapse of the tech sector.