Wharton MBA, Jobless For A Year & $200K In Debt, Offers ‘Urgent Warning’ For Career Changers

An MBA from an elite business school is supposed to be a ticket to a better life. Too often for those who need it most — first-generation, low-income students — it doesn’t work out that way.

John Costa knows this firsthand. He graduated from the Wharton School at the University of Pennsylvania with the MBA Class of 2016, looking to break into management consulting in a pivot from his pre-MBA career in local government. But the last eight years have not gone exactly according to plan.

Since graduating, Costa has twice been jobless for 12 months or more, including currently, having been laid off from his dream job at McKinsey in August of last year. He’s also been homeless, having depleted his life savings during the long searches for work — all while saddled with more than $200K in debt.

‘I DIDN’T GO INTO IT ASKING THE RIGHT QUESTIONS’

Costa tells Poets&Quants he is “not looking for sympathy.” Instead, he says, “My story is an urgent warning about the state of the ‘American Dream’ in the 21st century.”

Costa says what is hurting his chances with employers is not his CV or the Wharton MBA he paid so many thousands of dollars to earn. It’s his pre-MBA background.

And that’s where his warning to others comes in.

“For people who are considering business school or who are in the process of applying to business school, hoping to make some big career transition, they truly need to understand what the risks are — because I know I didn’t go into it asking the right questions,” he says.

GOING FROM BLUE COLLAR TO WHITE COLLAR — ‘THAT’S RARELY DONE’

Costa’s background is in law enforcement and crime and intelligence analysis. He decided to get an MBA because he saw little opportunity for career advancement in the public sector, and because in his work as a crime intelligence analyst in Southern California, “a lot of our crime was driven by at-risk youth. Now, there’s a saying: ‘When the only tool you have available is a hammer, everything looks like a nail.’ So when you work in law enforcement, the only lever at your disposal is taking people to jail. And I’m thinking, ‘Well, wait a minute. Don’t we have after-school programs? Can we get the City Council involved? Community-based groups? Faith-based groups?’ I wanted to find a more holistic solution. And so I thought an MBA would give me a sort of credibility and put me in a position to influence a broader array of stakeholders.”

Joining Wharton in fall 2014, Costa soon realized that the concept of “career changing” is widely inadequately quantified.

“I’d done a lot of networking with current students and I had asked about people career-changing,” he says. “And what I learned, and you’ll find this on paper very easily, is about half of the student body is looking to make some kind of career change. What I wish I knew, and what your readers should know, is that most of these career changes are incremental career changes.”

In other words, he adds, “you’ll find somebody who, say, works in luxury consumer goods, and then they want to go into i-banking, specializing in luxury consumer goods. Or someone who is an MD, they’re used to working in healthcare, and now they want to do the healthcare business side of things. Those are incremental changes.”

On the other hand, somebody like Costa who wants to go from blue collar to white collar — an FGLI, or first-generation, low-income student looking to break into an elite field — “that,” he says, “is rarely done.”

PREDICTABLE OUTCOMES FOR 500 OF THE ‘BEST & BRIGHTEST MINDS’

Costa has data to back up his contentions — because he himself was a data point when he was still a Wharton student.

“We had a student club for first-generation, low-income students,” he recalls. “And there was a session where they interviewed all the students who failed to get internships. And that was me. I did not get an internship for the summer.

“I show up and there are some second-year students, and they kind of put their arm around you and say, ‘So tell me, what did you apply to?’ And I said, ‘Well, I applied to consulting.’ And they’re like, ‘Oh, no, no. As a career-changer, you can’t apply to consulting.’ And I said, ‘Well, it wasn’t just MBB (McKinsey, Bain, Boston Consulting Group). I mean, I spread a wide net. I was interested in Deloitte and Accenture, and Kearney, and several others.’ And they’re like, ‘No, no, no, you’ve got to understand. You’re competing against, out of a class of 850 people, literally 600 or 700 students who hail from FAANG (Facebook, Apple, Amazon, Netflix, Alphabet), and Goldman Sachs, and MBB. That’s who you’re competing against. You are not on equal footing against them.'”

It’s a conversation he wouldn’t forget. In his second year, wanting to test whether other students were experiencing the same thing, Costa worked on a research project that compared career outcomes for FGLI students versus their more traditional peers. The results:

• FGLI students submitted 57% more applications than their classmates to receive the same number of job interviews
• They were 8 times more likely to graduate unemployed
• Those who did receive job offers were compensated up to 70% less after controlling for industry and location

“The shocking part was that every variable associated with job placement outcomes came from the student’s pre-MBA profile,” Costa says.  “That means about 500 of our nation’s best and brightest business minds from the top 30 MBA programs graduate without jobs every May simply because they come from the ‘wrong background,’ and the outcome was predictable even before they received an acceptance letter.”

WHAT B-SCHOOLS WANT VERSUS WHAT EMPLOYERS WANT

When Costa graduated in 2016, the employment rate for Wharton MBAs three months after graduation was 95.5%. Costa was one of the 98.3% who received a job offer after 90 days, and one of the 26.6% to go to work in consulting, having been hired as director of customer insights at Sears.

But the retailing giant went out of business two years later, sending Costa on a career rollercoaster that continues to this day.

A big part of the problem for MBAs like him, Costa says, is that there’s a disconnect between what business schools are looking for versus what employers want.

“Business schools, particularly Wharton, love the diverse backgrounds — which is one of the things that attracted me to them,” he says. “They want to see people who take the same degree but do something different, especially if it’s something for a social good. And that facilitates really interesting conversations in the classroom. However, employers, I think, have a very different set of incentives. And they only care about three things: background, background, and background.

“If they have their way, the entire class would be full of i-banking, bulge brackets, FAANG, and MBB. They would be happy if that was all that they recruited from.”

HOW B-SCHOOLS CAN IMPROVE CAREER COACHING

What might have changed Costa’s circumstances? What could Wharton do, or have done, to help Costa and those in similar straits get back on their feet?

He suggests that for a start, career coaching needs to be more “holistic,” based on six points:

1. “What do you want to do in your career? What tasks, projects, and activities do you find energizing and rewarding?”
2. “What are you good at? Will you be successful in your proposed career path against other candidates vying for the same role?”
3. “What are the odds of actually getting hired in your proposed field? When young people say they want to be POTUS or an astronaut, they are encouraged to have a backup plan; but when a blue-collar first-generation college grad wants to be a management consultant, no one warns him that it’s never been done before.”
4. “What is the future outlook of the proposed career path? Is the job currently in demand? What is the expected growth rate over the next 5-10 years? How likely is it that emerging technology such as AI will render those jobs obsolete?”
5. “What are the necessary credentials to have credibility in your field? My brother is an RN, and his license gives him credibility to work in any department in any hospital in the U.S. But with a Wharton MBA, I’ve had over 1,000 employers tell me I’m unqualified because I don’t come from the ‘right background.'”
6. “What is the expected compensation? I have no aspirations of being a billionaire, or even a millionaire. But I still have $200K in student loans to pay off.”

Most career coaching stops at points one or two, Costa says. “They just say, ‘Well, what do you want to do?’ I want to go into consulting. ‘Oh, sure. Lots of people go into consulting,’ and they act like you actually have a chance. And somebody needs to be there to tell you, ‘Well, hold on. Has that ever been done before?’ And that’s actually some advice that I would give to somebody who’s still in the kind of searching and application stage: If you’re thinking about using an MBA to transition to a new career, go on LinkedIn and find three other people who’ve done that before.

“If you are struggling to find three other people who have done exactly what you’re trying to achieve, I know it can sound powerful to be the pioneer. It makes for a great story, but your odds are very, very slim.”

EVEN WITH A CV THAT HAS WHARTON & McKINSEY ON IT, 80% OF EMPLOYERS WON’T GIVE HIM AN INTERVIEW

In mid-August, it will be 12 months since Costa was laid off from McKinsey. “And even now, I feel like, OK, I’ve made it, right? I’ve got a Wharton MBA, I have McKinsey. This is the power resume that everybody wants, right? But I’m still finding 80% of employers just don’t even want to invite me to a first-round interview.

Costa says he is now considering another career pivot, perhaps to tech or government, “where the emphasis is less on my background than it is about the skills that I bring to the table.” He says the job security of a government position appeals to him, while the growing field of AI is attractive for its newness and potential.

He offers an analogy as last words of advice to B-school candidates:

“As somebody explained to me, when people are thinking about what they want to do when they grow up, someone might say, ‘Well, I want to be a basketball player. They make tons of money.’ That’s true. They do make tons of money, but let me ask you this: Are you any good at it? Can you dribble? Can you shoot? And even if you are, the next question is: What are the odds of actually getting drafted into the NBA?

“If somebody said, ‘I want to be president,’ or ‘I want to be an astronaut,’ then somebody — a mentor who has any ethics at all — should say, ‘That’s great. I don’t want to shoot down your dreams, but it’s important that you have another plan that’s kind of front-and-center as you work toward that in the background.’ And when somebody comes in and says, ‘Oh, I come from local government and I want to be a consultant competing against people from FAANG and bulge-bracket investment banking firms,’ you should have the same conversation with them.”

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