A college graduate with MBA degree can expect a median entry level salary of $100,000. Some have scored as much as $680,000 depending on the student and the hiring company.
It’s not easy pinning down exact MBA salary numbers because it’s such a varied field. An MBA can be an accountant, marketing manager, CFO or HR manager. That said, $100,000 is a solid middle-of-the-road figure. Students who graduate from one of the top ten business schools will see a higher median pay of $140K. After ten years of solid work, many MBA graduates can see their pay rise into the $200,000 to $500,000 range or even higher.
An MBA is a two year add-on for a four year business degree. By some accounts, it nearly doubles the starting salary of many business jobs. We break down all the MBA salary facts below.
MBA Salary Facts
Just how much money does an MBA make? The short answer is, about $100,000 straight out of college. That goes up to $300,000 for those with talent after a decade of hard work. On the outside of the bell curve, some MBA graduates can make as little as $50,000 a year or as much as $700,000. Meanwhile, those with only a four-year business degree typically land work for $60,000 a year fresh out of school. The table below breaks down the top-line MBA pay facts.
MBA Salary Facts
|Median MBA new graduate salary||$100,000|
|Median business bachelor degree salary||$60,000|
|Median MBA salary according to the Graduate Management Admission Council||$100,000|
|Median salary of all 45,000 MBA jobs listed on Indeed.com||$95,000|
|Median MBA salary according to the U.S. Bureau of Labor Statistics||$118,000|
|High end MBA salary (for example top jobs in the hedge fund world)||$700,000|
|Average MBA salary for graduates of the top 10 business schools||$140,665|
|Probable MBA salary after 10 years of solid work||$175,000|
|MBA salary for top workers after 10 years of solid work||$300,000|
How We Know an MBA Grad Earns $100,000
The typical MBA salary of $100,000 comes from several different sources. First, the Graduate Management Admission Council (GMAC) conducts a survey of 800 corporate recruiters every year. That survey lists the median MBA starting salary at $100K a year. It also reports typical yearly pay for standard four-year bachelor’s program business graduates at $55,000 a year. That would mean a two-year MBA degree can nearly double a business school graduate’s annual salary.
One downside of swallowing a fact like this whole is that it pays to consider the source. The GMAC is a nonprofit organization of leading graduate business schools. In other words, the top graduate business schools all got together and released a study that says buying what they’re selling will nearly double any business grad’s salary. It’s kind of like asking a car salesperson if you should buy a car from him or her. We’re absolutely not saying GMAC is lying. We’re saying it doesn’t help them any to say an MBA’s not worth the money. In fact, it turns out GMAC’s study isn’t that far from the truth. We just thought we ought to mention it because so many online publications cite it as a source for MBA salary data, including the Wall Street Journal.
Digging a little deeper, a check of Indeed.com reveals a handy tool. If it’s impressive that GMAC conducts an annual survey of 800 recruiters, what about a by-the-minute survey of 160,000 actual jobs? That’s what Indeed.com has hidden in a corner of its website. Indeed lists 160,000 business admin jobs and 45,000 of them require MBAs. The MBA jobs have an average salary of $95,000. The jobs requiring only a BA average $65,000. That’s not quite the same thing GMAC advertises, but it’s not apples to apples either. Averages aren’t the same as medians, and the jobs listed on Indeed.com are likely to skew somewhat lower salary-wise than the pool of all jobs in general. Still, it at least gives evidence that GMAC’s data is in the ballpark of reality.
How Much Money an MBA Makes According to the U.S. Government
The U.S. Bureau of Labor Statistics (BLS) puts the median pay for employees with MBA degrees at $118,000 a year. The BLS has a useful online tool called the Occupational Outlook Handbook. We checked the median salaries of the five popular MBA jobs in the table below. The numbers given aren’t for new hires but for established employees. According to the data, IT managers are among the highest paid MBAs with $132,000 a year. Other salaried employees who do well are marketing managers with $125,000 and financial managers with $118,000.
If these numbers seem low for people with MBA’s who’ve been in the workforce for 10 or 20 years, don’t panic. Though BLS figures may seem incredibly official, it’s just mass data collected and in many cases estimated by the government. For example a deep analysis of firefighter salaries found that in many cases, firefighters made a lot more than BLS data indicated.
The Ted Talk below suggests an alternative to the MBA education path.
Median MBA Salary for the Top 10 Business Schools
Getting into specifics, the table below shows average salaries for the top 10 business graduate schools in the United States. The average of all those averages is $140,665. That’s the average starting salary of every new hire MBA from all ten schools. That’s according to 2015 data from U.S. News and World Report’s annual survey of the top business schools.
Starting MBA Salaries from the Top 10 Business Schools
|School||Average MBA Salary|
|Stanford Graduate School of Business||$142,834|
|Harvard Business School||$144,750|
|Pennsylvania - Wharton||$142,574|
|Chicago - Booth||$137,615|
|Columbia Business School||$139,006|
|Northwestern - Kellogg||$136,357|
|MIT - Sloan||$142,936|
|Dartmouth - Tuck||$142,489|
|Duke - Fuqua||$137,154|
|UC-Berkeley - Haas||$140,935|
|Average of All Top 10 Schools||$140,665|
Down the Road: Long Term Pay for MBAs
If MBA grads can expect to earn a median of $100,000 right out of school or $140,000 if they graduated from a “top 10” school, what about later on? How much will an MBA earn ten or twenty years after college? It’s difficult to give a definitive answer on that question because an MBA grad could have a degree in accounting or marketing, in IT or sales. MBAs can end up with jobs as CFOs or CEOs, accountants or Human Resource managers. The business field is one where talent and hard work can pay off big. A MoneyNation analysis reveals that MBAs with talent who work hard can reach the $250,000 to $300,000 a year salary level after a decade in the workforce. Some standouts in the field can earn as much as $700,000 a year. The highest paid new-hire MBA grad on record got a starting pay package of $680,000 a year, fresh from the Wharton Business School. Some employees in the hedge fund field can pull down salaries of $500,000 to $1 million a year. Those jobs are rare, but they give a good idea of the top-end outliers.
MBA vs Business Degree
The million-dollar question for business students is, “Should I hit the workforce now and start earning a paycheck, or should I stick it out two more years and make more money later?” The MBA vs business dilemma is a tricky one. The table below breaks it down in real terms. Once we figure in tuition and all other expenses such as cost of living, an MBA from a top school costs about $140,000. Add in $110,000 from two years spent not working as a four-year business school graduate and the total bill comes to a quarter of a million. The median extra pay from an MBA is $55,000. That means it will take the typical MBA grad 4.5 years to pay off their MBA degree. That’s not the end of the story though. Generally speaking, the employee with the MBA degree will earn a lot more than the non-MBA worker for the rest of his or her career.
MBA vs Business Degree
|Cost of MBA (including tuition and all other expenses)||$140,000|
|Lost income from not working for two years||$110,000|
|Extra pay per year from an MBA||$55,000|
|Years to break even||4.5|
Interested in finding out more about how much money people make in different careers? Check out our articles on nurse salary, firefighter salary and doctor salary by clicking the links here. For fun, see our article on NBA salary too.