MBAs at selective colleges tend to start the MBA program after having a good amount of work experience and a high salary. Most would have excellent earnings had they continued working and not pursued the MBA. You need to instead look at how the pursue MBA vs continued working earnings compare. A paper that attempts to do this is at https://eml.berkeley.edu/~webfac/card/jalz_grad_earnings_v24revised-1.pdf . A brief summary estimated earnings change due to various post graduate degrees is below, listed from high to low. While MBAs have higher salaries than other masters, the expected earnings increase from getting an MBA is lower than many other fields.
MD: +78%
JD: +52%
MA in Health Services: +32%
MA in Health Related: +28%
MA in Life Sciences: +27%
MA in Nursing: +27%
MA in Psych/Social Work: +23%
MA in Business Related: +21%
MA in Public Administration: +18%
MA in CS/Math: +18%
MA in Education: +17%
MA in Physical Sciences: +17%
MA in Engineering: +11% MBA: +10%
MA in Humanities: +0%
MA in Arts: -2%
No one (at least that I know of) pursues a PhD degree for financial reasons. They all seem to have a deep interest in a subject where a PhD degree is essentially an abolute minimum requirement. Some of them may end up in some extremetly desirable positions: a tenured position at a prestigious college (utmost job security), or a quant at a HF like Renaissance Technologies (utmost compensation). However, most PhDs, even those in STEM, arenāt properly rewarded because of the basic economics of supply and demand.
Good paper. We discussed above that M7 MBAs tend to have good work experience prior to matriculation.
I expect M7 MBAs would fare better than the rest, and second tier better than an online mba from WGU. The paper did breakout the differences by type of undergrad major too (spoiler alert: engineering undergrads donāt get a good return on an MBA, although going to an M7 program likely still worth it).
Lots of good info to unpack in the rest of the paper, for example this confirms that many life science majors (and others) need to get a masters to get a good job, sometimes necessary to get any kind of job in their intended field.
Another point is, the MBA doesnāt add much value once someone has reached a high level within a company say Senior Director or higher. At that point it makes next to no sense to add an MBA and take off a couple of years. Not only in the sense of lost income but it doesnāt add value to the resume. This happens a lot in some industries.
I like the points someone added that infer that MBAās often have more work experience so that would certainly change the pay equation. Maybe seeing stats by age would be helpful to compare.
Overall, some good points for folks to ponder before pursuing post Bac education.
I have 2 siblings in a hot engineering discipline who both received PhDs from a school ranked within the USNWR top 10 schools in graduate engineering who never wanted to teach. I also have two kids in undergrad right now who plan to get STEM PhDs and only one is considering teaching right now. For both my siblings and my one child, income is not really a big factor in the equation. My siblings both work for government entities after finishing post-docs and could make a lot more in the private sector, but they love what they do and still live pretty great lifestyles. My one child has been directly influenced by this and looks at the world similarly to her role models.
One thing that makes choosing that path easy for them is no debt (full rides scholarships in undergrad) and early planning (IRAs started in early 20ās and immediately maximizing contributions to retirement for siblings once working and my child is following the same plan). My siblings have travelled the world, bought very nice homes, started families, and are able to max out retirement contributions/529 contributions while not even being out of Grad school 10 years. I have asked all 3 why go to school so long when you do not want to go into academia and all 3 have returned an answer dealing with the ultimate pursuit of knowledge. That pursuit does not end with a PhD, but it signifies an important milestone on that journey.
Except that masterās degrees in the sciences, at least in the US, are not common. Most students pursuing post-graduate studies in STEM at least go straight into PhD programs that incorporate masterās level studies within the programs. The degrees being cited by the paper are predominantly 1 year for STEM and Iām not aware that there is a proliferation of such degree programs. Outside of the US it is certainly different as possession of a masterās degree (usually 2 years in length) is a requisite for being admitted to a PhD program and as a result is more common in being a terminal degree.
Other than in engineering or CS, few pursues a standalone/terminal masterās degree in STEM because of cost (PhD is typically funded) and limited utilities (in math, physical or life sciences). A masterās degree that can be obtained in 1 year is usually not thesis-based, so it is more like an advanced undergraduate degree and will likely be treated as such.
Thanks for this, @Data10. That was exactly my experience and the primary reason I left my elite MBA program in the first year. People drool over MBA starting salaries, but they donāt understand that most students were making very good money going into these programs, so those foregone earnings are not a mere bag of shells. Itās the delta between the incoming and outgoing salaries that is the telling metric. For me, even if I gave myself a 10% earnings boost due to being one of the older, more experienced students in my section, the breakeven was almost ten years. I knew that going in, but once I was actually in the program, it became clear that it was the network more than the material that was valuable, but that was not relevant enough to keep me from wanting to get back to my paycheck and adult life.
DH is the least educated among his four siblings who, along with his parents, all have PhDs. (DH with an econ/CS background, but without an MBA, was a headhunter for years and ended up a partner in a major MC firm.) We have always had the highest incomes but none of his family pursued their educations for money. His father was chairman of the art department at a Midwest university where his mom taught English. Then she left to be a stockbroker for a few years and eventually ended up running the publications department for an aerospace corporation from which she recently retired. One of his siblings is an elementary school principal, one is CTO of a major airport system, one is an architect, and one is a software developer. All do well, but the PhDs did not boost any of their incomes beyond the masterās stage, and theyāre OK with that.
My feeling is that, outside academia, PhDs are a luxury good, well worth the personal enrichment but not a good income bet.
My husband has an MBA, acquired while working full-time and paid for by his employer. Certainly it took longer that way, but at no cost and with no hit to income. It was a unique program in that all the members from the class all worked for the same employer and was in partnership with the university that ran it.
Unfortunately his employer has since discontinued the program due to cost.
Thatās a great benefit, @gwnorth. None of the elite two-year programs I applied to in 1989 allowed students to maintain outside employment. One of them had a separate evening program for working professionals, and one offered a short-term executive MBA, but none allowed students in their main residential programs to be distracted by outside jobs. I DID choose the wrong school. Had I enrolled in the school with the evening program, I probably would have completed it.
It really was @ChoatieMom unfortunately theyāve scaled back employee benefits significantly since then. They also paid for his undergrad before that which he completed while working full-time as well. It was an arrangement that worked well for him. He much preferred it to being a full-time in-person student.
I did a STEM PhD and went into consulting. I had no interest in teaching (and know Iām useless at it) or even an academic career, it was just to enjoy a few more relaxing years at college instead of getting a job. I picked a tech strategy consulting firm that valued PhDs more highly than people coming from undergrad (firms like SRI) - about 80% of recruits were PhDs who liked the money and had no interest in staying in academia. Nowadays I think the equivalent pipeline is to quant type jobs in finance, where the PhD simply represents a multi-year test of intelligence and persistence, and the pay is even better. But Iāve also met lots of similar people at big tech companies in Silicon Valley.
Thatās not what I meant. Iām thinking of theoretical physicists who ended up doing business development/strategy, who were hired because they were super smart not because their PhD had any relevance.
DSās current employer will pay him AND pay for his one year FT masters in EE. The employer helps pick the EE specialty and has great interest in the additional year of technical knowledge acquired. Seems like a win-win to me.