If it’s true that money talks, then a master’s of business administration degree speaks loud and clear.
"The central case for getting a graduate degree, especially an MBA, is that it enhances a person's job prospects and increases their earnings potential," said Michael Gerber, president of the Atlanta Regional Council for Higher Education.
On average, an MBA graduate in Georgia earns $92,000; a person with a bachelor’s degree makes $70,000 and a worker with a high school diploma comes in at $36,000.
So what can an MBA graduate expect? First of all, a job. Even in a tight economy, 2010 MBA grads found employment. According to the Graduate Management Admission Council (GMAC), which surveyed more than 6,800 MBA graduates (including 824 from the Class of 2010), 93 percent were employed; 88 percent of the most recent class had jobs.
Higher salaries
And, they are good-paying jobs. Rounding it off, a new MBA graduate can expect to earn 50 percent more after getting the diploma, according to Payscale.com. Within five years, that salary will triple. More than 70 percent of the 2010 graduates in the GMAC survey said their starting salary met or exceeded their expectations, with the median starting salary at $78,820, an increase of 5.1 percent over 2009. The median salary of all those surveyed — regardless of graduation year — was $94,542, with the median bonus compensation at $17,565.
However, pay scales vary by region, industry sector and previous work experience. For instance, an MBA graduate going into health care can expect an average starting salary of $111,477, while someone entering the nonprofit/government field would make “only” $73,125, according to the GMAC. Average starting pay for other industry sectors include finance ($103,122), consulting ($101,736), energy/utilities ($100,263), high-tech ($98,621), manufacturing ($98,417) and products/services ($94,558).
Location also plays a role in pay. The average first-year MBA graduate earns $96,599 in California, $95,083 in New York, $79,632 in Texas and $67,130 in Florida. Drilling down even further, average MBA salaries differ from city to city, including New York City ($102,869), Boston ($95,605), Atlanta ($82,410) and Dallas ($80,595).
Return on investment
One of the first things any business school teaches is ROI — return on investment. In other words, how long does it take to earn back your costs? The depressed economy has lowered salaries, increasing the ROI time. Bloomberg Businessweek says it will take the Class of 2010 6.5 years to see an ROI on their education. It will take longer for grads from top schools like Harvard, Stanford and Wharton to recoup their costs (about nine years) than those from less-prestigious schools.
Two Georgia schools made the magazine’s list of schools with the best ROI. MBA graduates from the University of Georgia’s Terry School of Business will see an ROI in 8.84 years, with a starting post-degree salary jump of $35,000. Georgia Tech came in 15th, with graduates recouping the cost of their degree in 7.89 years, with a salary spike of $27,000.
Over the course of a career, the numbers are impressive. Bloomberg says that in general, the 30-year ROI is less than $400,000 but a low-cost school with a high rate of return — such as the California Institute of Technology — could yield a 30-year ROI of $1.8 million.
"Of course, it's depends on how you leverage it," said Peter von Loesecke, CEO and managing director of The MBA Tour, a Concord, Mass.-based independent information source for MBA admissions. "In many consulting and financial companies, it will double your salary, especially if they sponsored you.
“Elsewhere, it gets a little fuzzy. Let’s say you work for Bank of America and went part time to get your degree at a local school. There’s a strong possibility that it will increase your salary. Say you worked at Bank of America, left and went to a well-known school and came back. You would be on a career trajectory that would produce a pay raise, and with bonuses or incentives, your salary would rocket up. If you go into management consulting, you can expect a bump of $30,000 to $40,000.”
But despite the money — short term or long term — Price Harding, managing partner of CarterBaldwin, an executive search firm, says it's almost beside the point. "An MBA degree is never valueless."
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