The Economist Asks 'Is The MBA Worth It?'

In the inevitable ups and downs of economic cycles, there are always good times and bad times. And as the Class of 2024 employment reports trickled out toward year-end, it began increasingly clear that last year was not a stellar one for graduating MBAs.

One school after another reported declining placement rates, both at graduation and three months later. Many also reported falls in starting compensation. We have been cataloging these disclosures, one by one, for months. Finally, The Economist noticed.

In a rather sobering article, entitled “Why elite MBA graduates are struggling to find jobs: Is a degree still worth it?,” the magazine rounded up the employment stats for the newest degree holders. The upshot: “At the top 15 business schools, the share of students in 2024 who sought and accepted a job offer within three months of graduating, a standard measure of career outcomes, fell by six percentage points, to 84%. Compared with the average over the past five years, that share declined by eight points.”

A PROF TELLS THE ECONOMIST OF HIS WORRIES THAT MORE MBAS ARE UNEMPLOYED

Source: The Economist chart accompanying its article

Of course, the numbers vary greatly from school to school. The worst results were at Harvard Business School and MIT Sloan, both of which reported that nearly a quarter of their MBA graduates last year had not accepted a job three months after getting their diploma. The Economist rightly points out that during the decade to 2022, on average 82% of MIT Sloan MBAs searching for a job had accepted one at graduation, and 93% had done so three months later.

“In 2024 those figures were 62% and 77%, respectively,” according to the magazine. “At some elite schools the reality may be even worse than it looks. One professor worries that some students who are counted as entrepreneurs are in fact unemployed. American business may be booming. But those who imagine themselves as its future leaders are suffering a recession.”

We’ve reported on the reasons for the decline: Less hiring by consulting firms which had over-hired in the pandemic years; a pullback by tech firms, and an increasing preference for less expensive undergrads in finance. But we also have made the point that at Harvard and MIT, where students quit six-figure jobs, MBA graduates are likely to be quite picky about what they accept. They are willing to wait for the right opportunity and are often targeting private equity, venture capital and hedge fund jobs that hire off-cycle and in very small numbers.

IS THE MBA WORTH IT? ASKS THE ECONOMIST

Nonetheless, The Economist uses the decline to jump to a conclusion that has been voiced many times before: Is the MBA worth it? What do those placement rates say about the value of the degree and the considerable investment people make to get it?

Ultimately, the magazine is skeptical. “Even if the consulting industry springs back to life, few think the MBA will be as critical to getting on in the future,” it contends. “Advanced degrees, particularly in science and in engineering, are seen as more credible by consultants’ clients today.”

What often happens, however, is that cycles that go down go up just as quickly. What you won’t find in The Economist is any hint that what the magazine’s editors are telling you is already out of date. Career development officials at business schools are seeing renewed interest in hiring MBAs as companies attempt to leverage artificial intelligence in their organizations. Business schools have gone all in on AI and their future graduates will bring to their employers important know-how to smartly deploy this disruptive technology in their organizations.

A CONTRARIAN ASSESSMENT OF THE MBA JOB MARKET THROUGH 2030

A new study that only came out a month ago predicted significant growth in the market for MBAs through 2030. MBA graduates, enrollments, and applications started trending up as of 2024, while the MBA job market is improving even as the labor market as a whole tightens, concluded Validated Insights, a marketing agency specializing in higher education.. That growth is projected to continue through 2030 at a 3.2% CAGR (compound annual growth rate).

In truth, the world has not become more simple. Business is as sophisticated and as complicated as ever. And the need for higher education to prepare young professionals for these roles has not diminished. It has only increased.

The Economist also missed an important data point motivating many young people who pursue an MBA. They increasingly view the return on investment of the MBA differently than an earlier generation of students. The greatest share of respondents to a survey of Gen Z applicants conducted by the Graduate Management Admission Council in 2023 found they cited the opportunity to enhance their life and develop their potential as a reason for applying to business school. Boosting their future income ranked second.

NOT EVERY MBA PROGRAM HAS SEEN A DECLINE IN PLACEMENT

And even among those glum placement figures, there are mixed results. Eight of the top ranked 25 European MBA programs last year reported increases in their job rates. Alliance Manchester Business School in the troubled United Kingdom managed to place 94% of its MBAs three months after commencement, up 23 percentage points. Bayes Business School in London got jobs for 91% of its MBAs, up 11 percentage points from the previous year. In the U.S., Miami Herbert Business School placed 97% of its MBA grads last year three months after graduation, up nine percentage points from a year earlier. At William & Mary’s business school, three-month placement rates for MBA grads soared 23 percentage points to 88% from 55% the previous year.

But all this is something that isn’t as sexy as yet another article proclaiming that the bloom is off the MBA rose.

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