Parsing through data from its 2015 Global MBA rankings, the Financial Times has come to the conclusion that the earlier you get your MBA degree, the more you stand to boost your salary, both in percentage and absolute terms. Combining survey responses from the MBA class of 2011 with analyses of their career progress and salaries, the latest FT rankings data reveal a more significant jump in pay for younger graduates in the three years after graduation than for their older classmates.
According to the FT analysis, participants aged 24 and under when they began their degree enjoyed salary increases of nearly $69,000 three years out from graduation, a 145 percent increase over their pre-MBA salary. Those who were 27 to 28 when they began their degree program reported an average pay increase of $67,000, to nearly double their pre-MBA salary. The oldest members of the class, those aged 31 or above, had an average pay increase of $56,000, representing a roughly 70 percent bump over their pre-MBA salaries. This pattern was observed in all industry sectors and countries, regardless of whether graduates worked overseas or changed industries, according to the FT.
In citing these statistics, the FT made no mention of the fact that the opportunity costs for younger students would likewise be lower, serving to impact ROI even further. Younger lower-level employees who opt out of the workforce for one or two years (depending on the length of the program) stand to lose less in potential income than their older counterparts in more senior roles. The FT did note that older participants were more likely to enroll in one-year European MBA programs than in the two-year MBA programs more common in the United States, presumably in part driven by opportunity cost considerations. Of those surveyed by the FT, 75 percent of MBAs 26 or under opted for two-year programs, compared to only 43 percent of those aged 31 or older.
Of course, only 4 percent of respondents to the FT survey were 24 or younger when they started their MBA. Especially among top-tier schools, admissions offices prefer applicants who bring multiple years of work experience to the classroom discussion. The vast majority of FT respondents – 75 percent – were between 25 and 30, while 21 percent were 31 or above.
The FT data also reveal shifting motivations in pursuing the MBA degree depending on the age of the students. “While the younger participants are primarily motivated by salary, the more senior ones want to develop their managerial skills. Those aged 27 to 30 wish to achieve both,” read the FT analysis.
Overall, the FT found the MBA to be living up to expectations among graduates, even as those expectations differed from one age group to the next. A full 95 percent of graduates reported they had achieved their goals, whether in terms of ROI or in terms of advancing to a more senior role.
When to pursue your MBA degree is a decision that warrants significant forethought and research. As this FT data show, while ROI is of course a consideration for all applicants, it may not be the primary driver depending on your individual goals.
Read the complete FT analysis, “MBA by the Numbers—Return on Investment.”
