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The average MBA salary in 2020 was $137,890, according to U.S. News.
Though the average MBA salary reached nearly $138,000 in 2020, the salary range for professionals with MBAs is wide. Recent graduates who went into the nonprofit or public sector reported a much lower starting salary of $65,000 per year, but the average salary and bonuses for professionals with executive MBAs exceeded $230,000 per year in 2019.
Prospective or current MBA students should understand the factors that influence MBA salary numbers. For example, MBA graduates in the Northeast earn a base starting salary of $30,000 more than those in the South. This guide walks through the different factors that contribute to MBA salaries.
What Factors Influence an MBA's Salary?
Many factors influence salary potential for recent MBA graduates. The type of MBA program, the business school, and the MBA specialization all shape earning potentials after graduation — as do location, work experience, and industry. Typically, graduates with work experience earn higher salaries than those without experience and professionals with executive MBAs report higher salaries than those with traditional MBAs.
The following sections look at factors that shape MBA salaries. By researching programs, specializations, and target industries, prospective MBA students can determine their potential salary range after earning a degree.
Best Online MBA Programs
Average MBA Salaries Based on Select Criteria
From the Michael G. Foster School of Business at the University of Washington (2019)
Management Consultant With 5 Years' Experience (2021)
Finance Manager With 10 Years' Experience
In New York, NY (2021)
In Texas (2021)
For EMBA Graduates (2020)
From a Top 10 Program (2019)
With a Concentration in Sustainability (2021)
Marketing Manager (2020)
Type of MBA
Business schools, often called B-schools, offer a variety of MBA options. Students can enroll in a full-time traditional MBA program, an executive MBA, a part-time MBA, or an accelerated one-year MBA. A traditional MBA typically takes two years, while a part-time MBA offers the same curriculum over a three-year period. Accelerated MBA programs may offer fewer specialization options.
The type of MBA influences salary expectations. Executive MBA programs admit experienced business leaders seeking advancement to top decision-making roles. Professionals with an executive MBA earn a salary higher than the average MBA salary of nearly $138,000 in 2020. According to the Executive MBA Council, graduates with an executive MBA earned an average annual salary of over $232,000 in 2019.
Area of Specialization
MBA students can specialize in a variety of areas, including finance, entrepreneurship, healthcare management, and sustainability. During their MBA program, students complete additional coursework in their specialization area. They may also pursue an internship in their field. These specializations prepare graduates for focused career paths.
The MBA specialization you choose also influences your earning potential. For example, the highest-paid field in 2019 was consultancy, followed by finance, healthcare, and technology. MBA students who choose specializations in these high-paying areas may earn more than those in other specializations. Prospective MBA students with a clear idea of their specialization should research the top-ranked MBA programs in that specific concentration.
Choice of B-School
The choice of business school influences salary — though the effect is largely limited to the top-25 B-schools. According to 2019 salary data, graduates from Wharton at the University of Pennsylvania earned an average starting salary of $172,000. Twelve of the top 25 schools reported starting salaries above $160,000 and 17 schools reported starting salaries of more than $150,000.
Nearly all of the top 50 MBA programs reported starting salaries of over $100,000 per year. And other factors — including location, experience, and industry — can play a significant role in your MBA salary.
If you like what you are doing, though, and getting regular raises and promotions, maybe going back to school is not worth the effort, time, and expense. Continuing education does expose you to the latest trends and developments, but you may be able to get that through other things like professional development, attending conferences, reading, etc.
If you cannot afford a full-time program like I did, it is worth exploring part-time and online options, and many companies may help defray the costs, too.
Where you live also influences your salary. MBA graduates living in the Northeast earn the highest average salaries, according to the 2019 GMAC corporate recruiters survey. Professionals in the Midwest and West earn average salaries of around $115,000, while professionals in the South earn the lowest average salaries, with $95,000 per year in base pay.
Job prospects also vary depending on the city. For example, cities like Houston, Texas and Portland, Oregon report high salaries for management careers. Researching the local job market, local companies, and local salary rates helps prospective MBA students determine the earning potential with an MBA.
Work experience before earning an MBA may influence salaries as well. According to GMAC data from 2012, MBA graduates with at least one year of work experience before earning their degree earned starting salaries significantly higher than those with less than one year of work experience. College graduates considering a gap year of entering the workforce before entering their MBA program benefit from pursuing job opportunities. The trend also benefits working professionals enrolled in online MBA programs.
As business professionals gain experience, their salaries tend to increase. Over time, MBA graduates often move into executive and leadership roles that yield higher pay.
Industry and Role
MBA salaries vary depending on industry and role. In 2019, MBA graduates working in consulting earned the highest average starting salaries, at $135,000 per year. The finance industry followed closely behind with a $125,000 base salary. Technology and healthcare paid starting salaries of around $115,000 per year.
The lowest starting salaries came in the nonprofit and government sectors, where MBA graduates received offers of around $65,000 per year. When considering an MBA program, prospective applicants should research the job prospects in their potential field to get an idea of salary ranges.
A Real MBA Grad on Salary Expectations
TBS sits down with MBA grad, Paige Arnof-Fenn, to discuss salary expectations and negotiation for anyone considering an MBA.
Did you find that the job market supported your salary expectations after getting an MBA?
I know having an MBA helped my resume stand out to get interviews and gave me credibility as an entrepreneur. It also put me in a higher salary bracket, so it was worth doing for sure.
What advice do you have for someone considering an MBA?
I do have a bias for going to the very best school you can get into. It is a huge opportunity cost to go back for a degree, so it has to be worth your while. By far the most valuable thing about it were the friends I made and the network I built.
Do you have any advice for people negotiating the salary on a job offer after getting an MBA?
Do your homework and be realistic. You may need to get creative and look at perks, vacation, stock options, benefits, etc. and consider total compensation beyond just salary, since everyone values the pieces differently today. Five days per week on site vs. hybrid vs. virtual flexibility may have different salary requirements.
Preferred Pronouns: she/her
Paige Arnof-Fenn is the founder and CEO of global marketing and digital branding firm Mavens & Moguls, based in Cambridge, Massachusetts. Her clients include Microsoft, Virgin, The New York Times Company, Colgate, venture-backed startups, and nonprofit organizations. She graduated from Stanford University and Harvard Business School. Arnof-Fenn is also a popular speaker and columnist who has written for Entrepreneur and Forbes.
Frequently Asked Questions About MBA Salaries
What Is the Starting Salary of an MBA?
The average base starting salary for MBA graduates hit $105,000 per year in 2020, according to the GMAC recruiter survey. That number dropped from $115,000 in 2019.
Will an MBA Increase My Salary?
For many professionals, earning an MBA increases their salary. Professionals with an MBA earn above-average salaries, with an average MBA salary of nearly $135,000 per year.
How Much Can I Make With an MBA Degree?
On average, MBA graduates made nearly $135,000 per year in 2020, according to U.S. News & World Report. However, MBA salaries vary depending on location, school, experience, and specialization.
Should I Invest in an MBA?
Before enrolling in an MBA program, prospective applicants must consider their investment. In addition to the cost of an MBA, graduate school can mean time away from work, higher student loan debt, and less retirement savings in the short term. However, the long-term benefits of an MBA may outweigh those costs.
For example, an MBA opens career doors and often translates to a higher earning potential. Many professionals find these opportunities outweigh the costs. In addition, MBA students benefit from many financial aid opportunities, including MBA scholarships. Business graduate students also qualify for federal financial aid.
The resources below can help you evaluate whether to earn an MBA, how to pay for an MBA, and how to find the right online MBA program:
The average cost of an MBA degree varies widely. Visit this resource to learn more about costs, including GMAT fees and textbooks.
Some MBA programs cost over $100,000 per year. Discover how to pay for an MBA and how MBA students can avoid high student loan payments.
MBA students qualify for scholarship opportunities based on their school, specialty area, and career plans. Professional associations, private foundations, and B-schools all offer scholarships for MBA students. Learn more about MBA scholarships.
The MBA application process can feel overwhelming. When should you take the GMAT? How early should you ask for recommendation letters? This guide offers a step-by-step approach to completing MBA applications on time.
What is the difference between the three business accrediting agencies? Why should MBA applicants choose an accredited program? This guide explains MBA accreditation.
Online MBA programs appeal to students for several reasons, including affordability and the flexible learning format. This ranking lists the most affordable online MBA programs to help students find a B-school that fits their budget.
A growing number of top-ranked business schools offer online MBA programs. In online programs, MBA students complete coursework in a distance learning format while pursuing internships in their local area. Learn more about the best online MBA programs for 2021.
Genevieve Carlton holds a Ph.D. in history from Northwestern University. After earning her doctorate in early modern European history, Carlton worked as an assistant professor of history at the University of Louisville, where she developed new courses on the history of science, Renaissance Italy, and the witch trials. Carlton has published five peer-reviewed articles in top presses and a monograph with the University of Chicago Press. She also earned tenure with a unanimous vote before relocating to Seattle. Learn more about Carlton's work at genevievecarlton.com.
Header Image Credit: SDI Productions | Getty Images
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