5 ms·

I run an MBA admissions site on the side and did some analysis on this. tl;dr if you are confident an MBA can create a step increase in annual comp of even $10

by bmpafa 8y ago

I run an MBA admissions site on the side and did some analysis on this. tl;dr if you are confident an MBA can create a step increase in annual comp of even $10k, the cost is more than covered over the remainder of your career.

Retric 8y ago
"Between 2008 and 2014, the average salary of MBA graduates three years after they left business school increased by just 4 per cent to $127,000." https://www.ft.com/content/a2813230-d69b-11e7-a303-9060cb1e5f44 https://www.ft.com/content/a2813230-d69b-11e7-a303-9060cb1e5... 10k/year is far more than the value of the median MBA. Especially, when you adjust the numbers for inflation and expected raises.
- madeuptempacct 8y ago
  Is this from a fancy school? Most MBAs I know are working jobs that have nothing to do with their MBA, making less than $50,000. The only people who benefited from it are guys who did engineering + MBA.
  - ghaff 8y ago
    I'm not sure if it's to the same degree as law degrees, but there's definitely a strong element of credential value from top schools. The conventional wisdom for law degrees is that, if you can't get into a top school, most people shouldn't bother. That's probably at least somewhat true with MBAs as well.
    - storgendibal 8y ago
      There is a pretty strong power law in effect for the ROI on an MBA depending on the strength of the school. https://gmatclub.com/forum/value-of-a-top-10-mba-213365.html https://gmatclub.com/forum/value-of-a-top-10-mba-213365.html
    - gamblor956 8y ago
      Many people go to law school for reasons other than working in BigLaw wasting their lives away in an office. For example, a great number of lawyers (and budding law school students) work for (or want to work for) for smaller firms, or in-house at companies, or at non-profits, and go home in the evenings to their friends and families. But yes, if you plan to go to law school solely because you want to make money, it's not worth it unless you go to a top school or graduate at the literal top of your class.
  - Retric 8y ago
    People making crazy 20+ million a year salaries boosts the average quite a bit. But, yea the median change in salary is much worse than the average change in salary.
  - Synroc 8y ago
    What roles did those people end up having after the MBA?
  - freehunter 8y ago
    You can say that about most degrees, though. I know plenty of advertising degrees who are waiting tables. I know plenty of CS grads who are stocking shelves. I know mechanical engineers who deliver pizza. I know people with just high school diplomas who make six figures in the Midwest (a lot of money for a cheap area of the country). No degree guarantees you a job, there's always work and ambition and a lot of luck and timing that factor into anyone's career success.
  - sct202 8y ago
    That seems low especially since a run of the mill b-school undergrads from Big Ten schools have average salaries in the 50ks.
Synroc 8y ago
I think it’s more the opportunity cost potentially. Amount of lost income by not working for 2 years + can you get that $10k increase in salary by having 2 more years of experience
- scarface74 8y ago
  Why would you have to not work for two years? There are plenty of executive MBA and part time MBA programs from reputable schools (not just for profit and online schools) that would allow you to work and go to school. There are some that only meet on weekends.
  - abakker 8y ago
    My casual observation is that these programs are not taken as seriously (likely because the reduce time commitment is seen as less rigorous) and therefore the payback is more difficult to achieve.
    - scarface74 8y ago
      Even from the same top tier schools? The one person I know that got an EMBA from a decent respected school is a manager at a FAANG. Total comp is somewhat higher than mine, but he is also on the west coast where the cost of living negates much of the difference and if I went into consultancy, it would negate all of the difference.
    - brixon 8y ago
      Depends on the school. If it is a nationally ranked school then it is very likely that on-premise and online versions are the same. You would have to research this for each school.
    - spookthesunset 8y ago
      > My casual observation is that these programs are not taken as seriously In many schools there is no external difference between full time and part time (evening) MBA programs. You walk out the door of both programs with the exact same degree. Nobody outside the program will ever know which path you took to get the degree.
scarface74 8y ago
Is that really the case for people in tech though - that they could get a step increase of over 10K by pursuing an MBA instead of getting experience at $latest_tech_fad? After staying at one job for way too long 10 years ago, I’ve hopped jobs 4 times, pursuing that strategy (and learning about modern architecture) and have seen jumps of $7K, $10K, $25K, and $20K. Unless the market sours, I should be able to put together a resume and skillset to get another $25K bump as a consultant within the next 3 years. This isn’t in Silicon Valley, NY, or DC. I can’t see an MBA helping.
- ryandrake 8y ago
  Anecdote: was in software, went to top-10-ish MBA school, went back to software industry with higher salary and have not done very badly since. But was it higher than I would have been making in 2 years without going to school? Impossible to know. Is my subsequent trajectory steeper enough to make up for the costs? Impossible to know. I do feel it’s nice to have that base business, accounting, finance, general management knowledge as a foundation to use to understand things, but is it $150k + $opportunity cost of 2 years worth of education? Not sure...
  - scarface74 8y ago
    As I said in another post, I was an MBA dropout but I did learn a lot. I’m not sure how much that knowledge has helped me in my career, but it has helped me communicate with CxOs during the second part of my career without looking like a deer in headlights when they started talking about the business end of things.
  - jbeckham 8y ago
    If you are spending $150K on an MBA, you are spending way too much. In Louisiana, LSU's Executive MBA costs under $60K including all books and meals during the program. If you go Southeastern Louisiana University, their Executive MBA program costs around $20K with the same things included. I went to Southeastern for mine, and I found it very useful in moving into the management chain inside of IT. Then again, as someone above pointed out, I knew why I was getting an MBA. I can teach myself tech, but some of the business aspects are a pain to teach myself so I paid someone else to teach me those.
kodablah 8y ago
This should be tempered with the (surely unquantifiable) negatives that come with continued employment at places that value credentials in this way. Often I've seen, though not in every case, that "step increase for MBA" type employers rarely sustain the type of merit-based increases that occur at places where merit is the only reason for the increases.
dman 8y ago
This analysis overlooks what losing financial freedom for 5-10 years in the most productive part of your life does to you. Ie even if you make the money back later, if there are 5-10 years where your decisions are constrained then you never really make that back.

by bmpafa 8y ago

Retric 8y ago

"Between 2008 and 2014, the average salary of MBA graduates three years after they left business school increased by just 4 per cent to $127,000." https://www.ft.com/content/a2813230-d69b-11e7-a303-9060cb1e5f44 https://www.ft.com/content/a2813230-d69b-11e7-a303-9060cb1e5... 10k/year is far more than the value of the median MBA. Especially, when you adjust the numbers for inflation and expected raises.

madeuptempacct 8y ago
Is this from a fancy school? Most MBAs I know are working jobs that have nothing to do with their MBA, making less than $50,000. The only people who benefited from it are guys who did engineering + MBA.
- ghaff 8y ago
  I'm not sure if it's to the same degree as law degrees, but there's definitely a strong element of credential value from top schools. The conventional wisdom for law degrees is that, if you can't get into a top school, most people shouldn't bother. That's probably at least somewhat true with MBAs as well.
  - storgendibal 8y ago
    There is a pretty strong power law in effect for the ROI on an MBA depending on the strength of the school. https://gmatclub.com/forum/value-of-a-top-10-mba-213365.html https://gmatclub.com/forum/value-of-a-top-10-mba-213365.html
  - gamblor956 8y ago
    Many people go to law school for reasons other than working in BigLaw wasting their lives away in an office. For example, a great number of lawyers (and budding law school students) work for (or want to work for) for smaller firms, or in-house at companies, or at non-profits, and go home in the evenings to their friends and families. But yes, if you plan to go to law school solely because you want to make money, it's not worth it unless you go to a top school or graduate at the literal top of your class.
- Retric 8y ago
  People making crazy 20+ million a year salaries boosts the average quite a bit. But, yea the median change in salary is much worse than the average change in salary.
- Synroc 8y ago
  What roles did those people end up having after the MBA?
- freehunter 8y ago
  You can say that about most degrees, though. I know plenty of advertising degrees who are waiting tables. I know plenty of CS grads who are stocking shelves. I know mechanical engineers who deliver pizza. I know people with just high school diplomas who make six figures in the Midwest (a lot of money for a cheap area of the country). No degree guarantees you a job, there's always work and ambition and a lot of luck and timing that factor into anyone's career success.
- sct202 8y ago
  That seems low especially since a run of the mill b-school undergrads from Big Ten schools have average salaries in the 50ks.

Synroc 8y ago

I think it’s more the opportunity cost potentially. Amount of lost income by not working for 2 years + can you get that $10k increase in salary by having 2 more years of experience

scarface74 8y ago
Why would you have to not work for two years? There are plenty of executive MBA and part time MBA programs from reputable schools (not just for profit and online schools) that would allow you to work and go to school. There are some that only meet on weekends.
- abakker 8y ago
  My casual observation is that these programs are not taken as seriously (likely because the reduce time commitment is seen as less rigorous) and therefore the payback is more difficult to achieve.
  - scarface74 8y ago
    Even from the same top tier schools? The one person I know that got an EMBA from a decent respected school is a manager at a FAANG. Total comp is somewhat higher than mine, but he is also on the west coast where the cost of living negates much of the difference and if I went into consultancy, it would negate all of the difference.
  - brixon 8y ago
    Depends on the school. If it is a nationally ranked school then it is very likely that on-premise and online versions are the same. You would have to research this for each school.
  - spookthesunset 8y ago
    > My casual observation is that these programs are not taken as seriously In many schools there is no external difference between full time and part time (evening) MBA programs. You walk out the door of both programs with the exact same degree. Nobody outside the program will ever know which path you took to get the degree.

scarface74 8y ago

Is that really the case for people in tech though - that they could get a step increase of over 10K by pursuing an MBA instead of getting experience at $latest_tech_fad? After staying at one job for way too long 10 years ago, I’ve hopped jobs 4 times, pursuing that strategy (and learning about modern architecture) and have seen jumps of $7K, $10K, $25K, and $20K. Unless the market sours, I should be able to put together a resume and skillset to get another $25K bump as a consultant within the next 3 years. This isn’t in Silicon Valley, NY, or DC. I can’t see an MBA helping.

ryandrake 8y ago
Anecdote: was in software, went to top-10-ish MBA school, went back to software industry with higher salary and have not done very badly since. But was it higher than I would have been making in 2 years without going to school? Impossible to know. Is my subsequent trajectory steeper enough to make up for the costs? Impossible to know. I do feel it’s nice to have that base business, accounting, finance, general management knowledge as a foundation to use to understand things, but is it $150k + $opportunity cost of 2 years worth of education? Not sure...
- scarface74 8y ago
  As I said in another post, I was an MBA dropout but I did learn a lot. I’m not sure how much that knowledge has helped me in my career, but it has helped me communicate with CxOs during the second part of my career without looking like a deer in headlights when they started talking about the business end of things.
- jbeckham 8y ago
  If you are spending $150K on an MBA, you are spending way too much. In Louisiana, LSU's Executive MBA costs under $60K including all books and meals during the program. If you go Southeastern Louisiana University, their Executive MBA program costs around $20K with the same things included. I went to Southeastern for mine, and I found it very useful in moving into the management chain inside of IT. Then again, as someone above pointed out, I knew why I was getting an MBA. I can teach myself tech, but some of the business aspects are a pain to teach myself so I paid someone else to teach me those.

kodablah 8y ago

This should be tempered with the (surely unquantifiable) negatives that come with continued employment at places that value credentials in this way. Often I've seen, though not in every case, that "step increase for MBA" type employers rarely sustain the type of merit-based increases that occur at places where merit is the only reason for the increases.

dman 8y ago

This analysis overlooks what losing financial freedom for 5-10 years in the most productive part of your life does to you. Ie even if you make the money back later, if there are 5-10 years where your decisions are constrained then you never really make that back.