How to Interpret MBA Salary Data

It should come as no surprise to anyone that earning a Master of Business Administration (MBA) degree opens the door to a new realm of opportunities. A 2010 study in the Journal of Education for Business found that the MBA graduates saw a 41 percent increase in their overall pay in the first year after graduation and an additional 56 percent increase within five years. Looking at those numbers, it’s easy for one to expect that putting in the time and effort to get an advanced business degree is the first step on the path to a six-figure salary.

MBA Salary Guide

In fact, it’s the promise of greater earning power that compels many prospective students to take the plunge and enroll in an MBA program. The problem? Many students look at their degrees as “golden tickets” to high salaries, without considering their own personal earning power and the actual factors that contribute to salary data reports. While generally speaking an MBA does mean you’re likely to earn more than those who don’t have the degree, it’s important to understand what the salary data really means before choosing a specific program and course of study.

How Data Is Collected

Students can turn to a number of sources to learn more about the post-graduation salaries of particular programs. Most schools will include some mention of the average salary of graduates in their marketing materials, or one can turn to organizations like the MBA Career Services Council, a professional organization for MBA career services professionals, which collects data from most colleges and universities in the U.S.

Most salary data is collected via surveys of former students. In the late 1990s, the CSC developed a set of standards that schools must adhere to in order for their data to be considered accurate and ethical. The Standards for Reporting MBA Employment Statistics include such regulations as:

  • The sample must include at least 80 percent of graduates from each class
  • Employment must have commenced within three months of graduation
  • Only those jobs that were accepted – not offers – can be counted
  • The compensation figures must be exact, not rounded
  • Only salary, bonuses and overtime can be counted; data cannot include tuition reimbursement, relocation expenses or stock options

These are only a sample of the CSC’s recommendations, which are designed to provide an accurate picture of how students have fared after earning their degrees from individual schools. However, while the vast majority of programs adhere to these standards, other factors influence salary potential as well.

Additional Considerations

When comparing employment and salary data from multiple programs, pay close attention to the number of students who actually landed jobs after graduation. It’s important to keep in mind that salary data is only based on those students who actually got jobs after school, as unemployed students generally either don’t participate in the survey or are not counted in the data. That is why you need to consider the percentage of graduates who landed jobs compared to the overall class size, and assess their salaries from that standpoint.

It’s also important to consider the types of jobs that graduates are getting after graduation. Different specializations lead to different salaries; currently finance, international business, marketing and technology-related concentrations lead to some of the highest-paying jobs. There’s certainly earning potential in other areas, but if graduates are landing jobs primarily in these high-demand areas, it could skew the data.

Years of experience also plays a role in determining salary data. Consider the demographics of the program graduates when evaluating salary figures. Are the students primarily mid-career professionals with several years of experience? Executive level? Or are they career changers or recent college grads, and new to the industry or occupation? Experienced professionals are likely to return to their high-paying jobs or earn a promotion after graduation, allowing them to earn more than their less-experienced colleagues do.

Of course, when evaluating your own earnings potential, you need to consider your own unique circumstances. Where you live, for example, can play a significant role in your earnings potential, with salaries in major metropolitan areas usually much higher than those in smaller cities or rural areas. Your industry and overall market factors can also influence your personal earning power.

As an MBA student, you will undoubtedly build skills in data collection and interpretation. Get a head start by carefully examining all of the data about your prospective program and enrolling in the program that most closely aligns with your personal career goals.

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