An MBA program from a well known, or even local, business school can be an economic springboard; depending on the field and the hiring offers you receive in your area, it can raise your base annual income by a significant amount. Many surveys support the conclusion that, in today’s international corporate economy, and industries within the United States specifically, graduation from a business school can set applicants apart for recruiters and put them in position for the best professional salaries, benefits, and upward career mobility. Average MBA salaries, even the median starting salary for those who are moving into a new field or job, can be significantly higher than the average salary of those who are not MBA graduates.
Earning Potential by Education Level
However, before signing up for a graduate school of business, or any in-person or online MBA program, you should know that the cost of an MBA can be substantial. Full-time MBA tuition at top ranking business schools is much higher than the national averages for public and private schools. The rewards of a master’s degree in business administration go beyond income, to the valuable knowledge and professional development and enrichment of high-level education. Prospective MBA student’s decision process should include an assessment of the MBA based on costs and benefits. MBA applicants should search for information the main costs of an MBA and subtract it from the costs of lost access to opportunities had they not entered an MBA program. When factored together, most students find that they will get back their investment in the MBA and much more.
The below-listed items from a 2019 U.S. Bureau of Labor Statistics salary survey demonstrate the average annual earnings of degree holders across all categories.
- High School Diploma- $38,792 – Unemployment rate- 3.7%
- Associate Degree- $46,124 – Unemployment rate- 2.7%
- Bachelor’s Degree- $64,896 – Unemployment rate- 2.2%
- Master’s Degree- $77,844 – Unemployment rate- 2%
- Professional Degree- $96,772 – Unemployment rate- 1.6%
- Doctor Degree- $97,916 – Unemployment rate- 1.1%
Key Influences on an MBA Salary
Technology and innovations can produce high demands in certain sectors of the economy. Their impact can be remarkable. Over the course of a few years, an entire industry can take hold. Today, the demand for the information processing benefits of artificial intelligence innovations for businesses creates higher salaries and opportunities for MBA grads from business schools and top ranked MBA programs, especially those who focus their general academic learning toward AI or technology operations.
The selection of a job function can make a big difference in salary. For example, management-oriented MBAs will receive higher paying jobs than employee training positions. While salaries for all MBA groups are high on a national scale, some categories have lower ranges than others. In some organizations, finance and management and consulting positions typically rank higher in terms of total income than human resources positions.
The Bureau of Labor Statistics (BLS) notes that location is a factor in average starting salary for new and experienced MBAs (by state and region). Meaning, your income will partially depend on the site where your company is located. California, New York, Illinois, Texas, and Pennsylvania are among the leading states when ranked by salaries for MBAs. Popular cities for MBA employment include New York City, Los Angeles, Chicago, Atlanta, Houston, and Boston.
Level of experience is a constant factor that affects a starting salary offer and signing bonuses. Today’s MBAs are not always fresh grads with little life or work experience. MBA programs provide opportunities for real-world learning and the chance to network. An MBA program also attracts many students with current careers and valuable experience. Online education works well for employed students and business owners who are ready to sign up to learn more but don’t want to lose their positions. These groups often bring a wealth of practical experience and strategy to their studies for an MBA.
There can also be a large difference in each field between salaries in the public sector (government and some non-profits) and the private sector. When placed side by side, government positions often pay far less than their private sector counterparts. However, for many MBA graduates, public service is a reward that can be as significant as higher salaries, and there are programs in place to forgive student loans for those who meet certain qualifications and stay in public service for a certain period of time, meaning your education could be nearly free if you are willing to meet those requirements.
Common MBA Careers and What They Pay
Employers regard MBAs as significant resources for their businesses and organizations. MBAs add business knowledge. They bring a fresh understanding of applied business concepts and effective practices at an advanced level. MBA education instills a needed sense of teamwork. They must lead and follow to combine their talents to promote movement toward the organization’s goals. MBAs also have training in critical thinking and problem-solving; they can analyze issues, detect weaknesses, and develop or reinforce strengths.
What are the MBA Concentrations?
Securities, commodities, and financial services sales agents have a large wage premium over workers that have bachelor’s degrees. Many of these technical sales jobs require MBAs.
- Business Analytics
- Criminal Justice
- Financial Planning
- Global Management
- Healthcare Management
- Hospitality Management
- Human Resources
- Information Security
- Information Systems
- Project Management
- Public Administration
- Supply Chain Management
|Occupation Group||Median Annual wage for master's degree|
|Securities, commodities, and financial services sales agents||$133,020|
|Marketing and sales managers||$135,900|
|Transportation, storage, and distribution managers||$103,320|
|Market research analysts and marketing specialists||$71,450|
|Property, real estate, and community association managers||$71,720|
Which MBA Programs have the Highest Potential?
Over the course of a ten-year period, the MBA programs at Stanford University and Harvard University have produced a return on investment ratio of more than 300%. The current average MBA salary for alumni from these schools is above $150,000 per year. The demand for MBA’s in the marketplace can determine the amounts of pay offered to attract top talent. While all MBA fields share a level of demand that responds to that field’s needs, some fields have high levels of need relative to the supply. A supply-demand imbalance often occurs when economic trends, innovation, or technology creates some new demand or a sharp increase in an existing category.
MBAs who center their schooling around IT Management, Sales Management, Financial Management, Human Resources Management, and Management Analysis have ranked as the top five sub-fields for average salary, especially for MBA graduates. Each field has a strong job growth prospect as estimated by the BLS Occupation Outlook through 2030. In some cases, students choose to pursue an online dual MBA program in two of these areas to make themselves more marketable.
Today, innovation drives businesses to discover new ways to use large amounts of data. Advanced data analytics can find patterns and options that drive new levels of business success. The MBA fields in high demand in 2020 included those with some experience and education in artificial business intelligence and the finance industry. A new wave of software-based tools can examine complex data and suggest critical improvements.
How Choice of MBA Degree Colleges Affect Potential Salary
The choice of college or university can affect the full potential for MBA salaries. Employers may have preferences for certain schools when they post a position requiring an MBA graduate. These preferences sometimes reflect views about the strength of faculty, institutional expertise, and events in the employer’s history.
The school can influence their MBA graduates’ salaries with the coursework chosen, style of instruction, and concentrations offered. Coursework can develop a depth of knowledge in one or more areas that may be of particular importance to an employer’s business. The style of instruction can have a big impact on potential salary data, both average annual salary and median starting salary. Schools that emphasize hands-on experience, internships, and real-world projects prepare business school graduates to make an immediate impact in the modern business environment.
Finally, the reputation of the school for excellence can influence salary. MBA’s from nationally or regionally prestigious schools can enhance a company’s ability to get and keep valuable clients and lines of business. In a recent report from US News, MBAs that lead to employment with high salaries are highly accredited programs. Two of the most popular accreditations are the AACSB & ACBSP. You can find some of the highest paying graduate salaries by college below.
Highest Potential Average MBA Salary by College
|Salary Rank/ School||Average Salary and Bonus|
|University of Pennsylvania Wharton||$181,900|
|New York University (Stern)||$173,500|
|University of Chicago, Booth School||$173,400|
|The Tuck School, Dartmouth University||$169,900|
|Massachusetts Institute of Technology (MIT)||$168,700|
|The Darden School, University of Virginia||$168,600|
How an MBA Degree Can Help You Reach a Better Career
An MBA can set you on the career path to reach mid-level, senior-level, and top executive positions. You may even be able to skip some of these steps if you earn an advanced degree early in your career. It provides higher pay than that commanded by similar employees that do not have an MBA. Business, financial, and sales occupations are among the leaders in wages for MBA holders. According to the BLS, these occupations reflect the most significant boost to salary and earnings for an MBA over those with lower levels of education. For example, securities, commodities, and financial services sales agents, as a class, had the best wage premium. In these occupations, workers with master’s degrees had earnings 90% higher than those without a master’s degree. Many of the surveyed workers were MBA or EMBA graduates.
An MBA is an enhancement for most jobs that ask for a bachelor’s degree. It is a requirement for many high-level and specialized positions that will not accept applicants with only a bachelor’s. The MBA opens career options that require far more time and experience to reach without the degree.
However, an MBA also requires an investment of time, energy, and money. Beyond MBA salaries, many students seek knowledge and skills that come with MBA program's training and concentrations. For the pure benefit of increased earnings or a signing bonus for MBA hires, many MBA fields support the decision on an economic basis. In these fields, the MBA repays the investment and far more.
Frequently Asked Questions
What kind of salary increase can I expect from earning an MBA and is it immediate?
Well, whether or not a salary increase is immediate for MBA graduates is likely dependent on where you’re working and whether you worked out some deal with your employer beforehand that they would pay you more for your increased expertise. Otherwise, it will depend on how often promotions come along and whether or not you are ready to go out and look for a new, higher-paying job after spending that time earning your degree. However, as for the increase in pay that you can expect over time, the return on your educational investment can be as much as $20,000 per year. This may include other forms of compensation other than just your base income, but it can still be a significant increase. How much you end up making after earning your degree will depend on the industry you are in, how competitive a market you find yourself in, and how aggressive you are in finding better pay.
Which MBAs earn the highest compensation?
There are a number of high-paying careers that only get better after earning an MBA, but there are a few that are well known for being the highest paying careers with this degree. These include, unsurprisingly, business analytics, finance, and economics. Finance careers are often high earners because of the detailed knowledge needed and the amount of money they can make and/or save a company. Other high-paying MBAs include marketing, information technology, data analytics, and international business. These are roles where those who succeed can make huge dividends by earning an MBA. However, the surprise on this list is entrepreneurship. While many think of people dropping out and starting huge companies, the truth is that many earn higher-level degrees in order to more easily convince investors that they know what they are doing and can be trusted with their money.