MBA Graduates Are Struggling to Find Jobs. Are B-Schools Finally Getting Their Comeuppance?
That MBA might not pay off like you hoped
Hiring of new MBA graduates slowed down across multiple key industries last year, including Finance, Professional Services, and Tech.
Starting real salaries have dipped as well, but changes to starting seniorities are more positive, with more new grads starting at a mid-senior level than in years prior.
ESG-focused MBA students - a growing cohort - have found a slight advantage amid the general decline.
Today’s new MBA graduates are wading into a job market not quite as friendly to their kind as it used to be. As recently as two years ago, the market for MBA graduates was close to red-hot, with tech and consulting companies bouncing back from early pandemic struggles. This week, in work done alongside the Financial Times, we’re taking a look at a downturn in the outlook for new MBA grads.
Observing industries that drove the recent boom, Revelio Labs sees signs of corrections in each. Compared to the end of 2022, the hiring rate of new MBA grads in the Tech industry is down by 26%. Hiring rates in the Professional Services and Finance industries are down 10% and 8%, respectively, compared to December 2022.
The hiring slowdown also coincides with a yearslong drop in real salaries for not only MBA grads but also undergraduate business students. Looking at MBA grads three years post-graduation, we find that average real salaries have fallen to 87% of their 2016 level, just 2 percentage points higher than economics and finance grads in 2016.
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This decline in real starting salaries is mostly in line with where on the corporate ladder new MBA grads find themselves after graduation. Years of experience in managerial roles before the MBA has fallen by 34% over the last decade, from about 7.5 years to 5 years. As a result, we’re seeing a smaller share of MBA graduates being hired into director- and executive-level positions. However, our talent insights also reveal fewer graduates starting their post-MBA careers in entry/junior positions - a sign of the degree’s continued effectiveness as a stepping stone into higher seniority.
Even so, a seniority boost might not be much comfort to MBA students facing declining salaries. How are some gaining an edge? One way is through an ESG focus. MBA programs are geared toward equipping students with the tools and network to become forward-thinking business leaders. This includes thinking through the big issues and topics of the day, such as societal justice and climate change. Indeed, Revelio Labs talent insights show that an increasing (albeit small) share of MBA programs include an explicit ESG focus. Interestingly, this specific focus has given graduates from these programs a boost: They have been making higher salaries on average.
