The MBA Bump: MBA Grads Now Get An $85K Bump Over Pre-MBA Pay

If you want to know if an MBA is worth it, the single most compelling statistic you can look at is the difference between what a person earned before entering an MBA program and what that same individual gets once he or she has the degree. The MBA pay increase may well shock you because it certainly surprised us.

It’s $85,000. That is right. According to Bloomberg Businessweek, which surveys thousands of MBA grads for its annual rankings, that is the median gain in salary from students’ pre-MBA jobs to their first jobs out of business school. The hefty increase is for the Class of 2022 across a wide range of business schools.

Obviously, that number would vary greatly based on where you earned your MBA, where you ultimately went to work, and what industry you choose to work in. If you are outside the coasts, your starting compensation will likely be lower–but your cost of living would also be much lower than living in New York or the Bay Area. And if you land a job in consulting, where 30% of MBA grads went last year, your base salary would have been $175,000 to start, with a $30,000 sign-on bonus and an extra $30,000 median performance bonus in year one.

THE $85,000 MBA Pay BUMP FOR 2022 GRADS

Even so, the $85,000 bump is much bigger than expected because MBA salaries are now at record or near-record levels at most business schools. Previous studies show increases well below that level (see Where MBAs Make The Largest Salary Leaps). One recent study, for example, showed that MBAs overall saw a salary jump of $36,742 — a nearly 50% increase. On average, users of the site that gathered the data voluntarily from grads reported a pre-MBA salary of $79,505 and an average post-MBA salary of $116,248. That post-MBA salary is very low compared to what MBAs from Top 25 schools make these days.

It might be easy to assume that the biggest jumps in pay occur at Harvard, Stanford and Wharton. But students in those programs often come in with the highest pre-MBA pay, far in excess of what a student going to other Top 25 or Top 50 schools. So the actual increase as well as the percentage increase often will be lower for a Stanford or Harvard grad despite the comparatively higher starting compensation packages.

No less crucial, starting pay for an MBA is only the beginning. What an MBA holder gets over a lifetime of work is far more important (see The MBA Premium: Lifetime Earnings Of MBAs By School). MBA graduates from the top 50 business schools in the U.S., in fact, will pull down median cash compensation of $5.7 million after graduating and working for 35 years. That is a premium of $2.3 million over those with just an undergraduate degree. If you earn your MBA from one of five schools–Harvard, Stanford, Berkeley, Dartmouth or Virginia–your estimated median pay would surpass $8 million over a 35-year period.

MBA PAY IS GATHERED BY SEVERAL RANKING ORGANIZATIONS

Pre-MBA pay, moreover, is hard to come by. Business school employment reports provide no clues as to what a graduate made before attending school. So the only way to find out is by a ranking organization’s surveys to the latest graduating class. Forbes, which hasn’t published a ranking going on four years, typically gathers this data. So does the Financial Times, which does not publish the actual pre-MBA pay.

In the case of Businessweek, the $85,000 figure is based on responses from 6,422 from 117 business schools around the world. Unfortunately, Businessweek does now release its pre-MBA pay data by school or even by industry choice. But the reported MBA bump comes from a significantly sized sample.

And it’s an incredibly impressive number.

DON’T MISS: ANALYSIS: MBA PAY HAS VASTLY OUTPACED INFLATION or MBA SALARIES & BONUSES AT THE TOP 30 U.S. BUSINESS SCHOOLS