Entering The Workforce With An MBA
MBA Salary

For many people who decide to get their MBA, a great salary is one of the primary reasons they make the decision to go back to school. And it is a great reason; studies and surveys consistently show that MBA graduates can expect to make significantly more than they did before they enrolled and to earn more than their colleagues who only possess an undergrad degree. To figure out what kind of salary to expect, be aware that each of these factors will affect what you will earn after graduation.

Years of work experience

Some people have very little real world business experience when they are accepted into an MBA program; others have been working in the business world for more than a decade. Obviously, those with more experience can expect to earn more after graduation.

Pre-MBA salary

Your post-MBA salary will be strongly related to your pre-MBA salary. For example, someone who earned $40,000 a year prior to enrollment can expect to earn less after graduation than somebody who earned $75,000 a year prior to enrollment.

Your school

When school rankings are being compiled, the average starting salary of MBA graduates is often an important ranking consideration. Someone who graduates from Wharton or Harvard can expect to command a higher starting salary than someone who has graduated from a program known for having very low standards.

Your employer

Obviously, where you ultimately decide to work after graduation will have an impact on how much you will earn. If you are working for a big corporation that employs many people or your employer is a well-known company like Microsoft, you can expect to earn more than another MBA graduate who chooses to work for a small business that is only locally known.

Your industry

The type of job you accept after graduation will also affect how much you earn. For example, those who accept positions in banks will usually earn less than those who are employed by computer software companies.

Where you live

Areas where there is a thriving business community will probably allow you to make more compared to towns where there is not a great need for MBA graduates. Of course, this must be balanced against other factors like the cost of living and personal satisfaction.

There are many factors that can affect how much you will earn after graduation, but the good news is that most MBA graduates experience a significant jump in their salaries, meaning that, for most, the financial investment necessary to obtain an MBA definitely pays off.

Average MBA Salary

While many schools provide the average MBA salaries of graduates, these numbers can be somewhat misleading for several reasons.

Figures are often self-reported

This means that most of the data obtained by the universities was voluntarily provided by MBA graduates. Those who are making less than desirable levels of pay may choose not to respond. In addition, some may report earnings that are more are less than what they actually earn.

Averages can be affected by atypical values

Average MBA salary figures are compiled based on data from a very diverse population of students. There are those with significant work experience, for example. Or, some students may have entered areas like consulting, which tend to pay more than marketing. These unusually high salaries can cause the average salary figure to increase. In addition, perks like pensions, health benefits, child care, and vacations are not represented by these numbers. So, for example, somebody with an MBA in marketing who decides to work for a company that provides all of the perks mentioned above will likely earn less than the stated average.

Many factors are not considered

There are a huge number of factors that can influence whether you will make more or less than the average MBA salary that is provided by the school. Where you choose to live, whether you are working for a large company, and how you performed in the MBA program can all affect the salary you will receive.

Return on investment

Many sources recommend that, rather than measuring your success by whether your starting salary aligns with the average MBA salary of other recent graduates, you consider your return on investment. This includes comparing your salary before you started the program with what you are earning or will earn after graduation, considering tuition costs and lost wages, and calculating how long it will take you to pay back any student loans.

The good news is that most MBA graduates find that they get a good return on their investment within a short period of time. Many, for example, make 100 percent or more than they did before they completed their degree, which will allow them to pay back loans, make up for time spent away from the workforce, and start reaping the rewards of their graduate degree within a relatively short time frame.

MBA starting salary

There are many factors that will influence exactly how much an MBA graduate will earn after graduation, including their prior work experience and salary and the industry in which they are hired to work. However, the vast majority of MBA graduates can expect to command a very respectable starting salary, particularly if they have obtained an MBA from a highly-ranked and prestigious school. Compared to those who have master's degrees in other academic areas and those who possess only a bachelor's degree, MBA graduates earn significantly more.

The Graduate Management Admission Council, the organization that oversees GMAT testing, compiled salary data for 2006 MBA graduates. They report that the average MBA student made about $60,000 per year before they were admitted into the MBA program. The typical starting salary after graduation was slightly over $85,000 per year. This is obviously a marked increase, and, for the average student, the high cost of obtaining the degree is definitely worth it.

According to The Wall Street Journal, the number of years of work experience prior to MBA study has perhaps the most dramatic effect on starting salaries. Those with less than three years of experience earned slightly under $70,000, while those with more than six years could expect to make just over $100,000. These figures do not include signing bonuses, which are often offered by corporations. Considering that these are merely starting salaries, it is quite apparent that having an MBA offers both highly-experienced and less-experienced individuals the potential to earn an incredible living.