In your twenties, New York City is the place to be. The city comes with a certain vibe. When you’re here, you’re truly alive. Living among the elite, you feed off the energy, stimulated by the variety and inspired by the possibilities. Amid the action, anything can happen; you can be anyone, do anything, and have everything.
Opportunities abound in the Big Apple. From rooftop parties, the city is bright lights and pulsing energy – a place where you can finally belong. That’s the dream, at least. Over time, the novelty wears off. In the summer, the streets grow stuffy and shadowy. The hypersonic pace wears you down over time, as the endless hours and demands sow doubts. Stacked on top of your neighbors, you can find yourself dreaming of space and privacy. After watching Armadillo-sized rodents squeeze through grates, you’re bound to question your place in the New York food chain.
BIG CITY, BIG PAY
So why choose a big city like New York? Think pay. According to a 2019 study by Deutsche Bank, American metros generate the highest pay and spending power. San Francisco residents, for example, can expect average monthly pay of $6,526. Among American cities, you’ll find New York City ($4,612), Boston ($4,288), and Chicago ($4,062) also ranking among the Top Five. While city life entails a high cost of living, Deutsche Bank also found that professionals enjoy heavy purchasing power once the cost of rent is removed. In San Francisco, disposable income reaches $4,710, with Chicago ($3,298), Boston ($3,188), and New York City ($3,157) also listed among the leaders.
That translates to more pay and more options – the freedom and resources to truly experience the best in life. That’s particularly true for high ticket talent like MBAs. After giving up two years of pay and career momentum to pursue education, MBAs personify this urgent ‘Go big or go home’ ethos – the kind that spurs game-changing innovations and lives of significance.
There are many factors that shape MBA pay. Certainly, a school rank has an impact. What else could explain the difference between the average starting pay packages for 2019 Wharton grads ($172,016) and their Yale SOM counterparts ($152,860)? Well, there is always the percentage of students entering the most lucrative fields. Take 2019 consulting numbers. At Wharton, the median starting pay was $165,000, with 25.1% of graduates pursuing this path. Compare that to Yale SOM, where pay and placement were $145,000 and 34.9% respectively. Translation: a higher percentage of Yale SOM students went into an area where they received lower pay than their Wharton peers.
HOW MUCH ARE YOU WORTH?
Beyond reputation and industry, there is location. Where do MBAs traditionally snag the highest pay? Think the coasts. The East Coast still leans heavily on finance, while the West serves as the gateway to high tech. Of course, pay isn’t always commensurate with location. Harvard Business School is a case in point. In the Northeast, 2019 graduates snagged $149,294 in base pay on average. Head to the South and that number rises to $151,324. Better still, HBS MBAs earned $153,603 in the Southwest as well. Alas, this example reveals the power of concentration. In the Northeast, you’ll find 230 HBS graduates from 2019. In the South and Southwest, the combined total is 56 graduates. As a result, pay averages in both the South and Southwest are more vulnerable to higher (and lower) bases.
Yes, regional pay is a flawed metric. Aside from varying number of graduates, the data doesn’t include bonus – a one-time perk, but one that can comprise nearly a quarter of a new hire’s first-year pay. The data also skips over other guaranteed compensation such as stock options, tuition reimbursement, profit-sharing, and 401K match – big time differentiators over the long haul. Regions also tend to be cover extensive ground, meaning Midwest starting pay in Chicago could be quite different from, say, Omaha (as could the cost of living).
So why does regional pay matter? For starters, it sets the marker for future pay: the higher the base, the higher the pay raise (for high performers). At the same time, it sets MBAs’ worth, negotiation-wise, as they move into different companies or roles. Bottom line: regional pay tells MBAs what they are worth. It is another piece of the puzzle, an indicator of whether an offer is set too low…or may be too good to pass up. What’s more, regional pay establishes a business school’s reach – with a lack of data perhaps indicating how weak their network is in spots.
Who much base pay did 2019 MBA grads from your favorite business schools average in particular regions? What were the high and low bases they collected? How have these numbers changed over the past four years? Click on the links below so you can compare MBA programs side-by-side in various regions.