The impact an MBA has on salary varies according to several factors. In this article, we’ll walk you through the main ones, analyzing the starting salaries of MBA graduates according to their school and industry.
Does an MBA Boost Your Salary?
The answer to this is, unequivocally, yes. Candidates who hold MBA degrees have been shown time and time again to earn higher salaries than their peers in comparable jobs who only hold bachelor degrees.
For example, the GMAC’s 2021 corporate recruiters survey projected a median starting salary for US-based MBA grads of $115,000. This is an impressive number by itself, but even more so when considered alongside the median starting salaries of direct industry hires (which was $40,000 less) or for candidates with only a bachelor’s degree ($50,000 less). And this starting salary has continued to grow—projected by GMAC’s 2023 report to hit $125,000.
The Influence of Business Schools
The median starting salary offered to MBA graduates can vary according to the business school that they attended.
There’s a few reasons for this—some schools might operate particularly strong alumni networks, for example, or comprehensive career services, both of which can help students secure top roles with high compensation rates. Reputation plays a part here too, and grads from top business schools often lay claim to better salaries, since employers trust the quality and rigor of their education.
The extent to which school can affect salary is high. Let’s look at the U.S. average starting salary in 2023, which was reported by U.S. News & World Report to be $128,000 across all schools (base salary plus signing bonus). Amongst the 10 business schools whose MBAs net the lowest salaries, this average looked more like $62,000; while amongst the 10 business schools whose MBAs net the highest salaries, this rose to a lofty $210,000.
| School | Average Staring Salary, Incl. Bonus |
|---|---|
| Stanford GSB | $231,259 |
| Wharton | $213,772 |
| Chicago Booth | $212,997 |
| Dartmouth Tuck | $208,372 |
| Harvard Business School | $208,369 |
| Columbia Business School | $208,030 |
| MIT Sloan | $207,084 |
| NYU Stern | $206,374 |
| UVA Darden | $205,487 |
| Northwestern Kellogg | $205,022 |
Despite these ranges, it’s important to remember that prestige isn’t everything. Many admissions experts, U.S. News notes, say that MBAs impress employers so much that grads from any school will reap “significant professional benefits.”
The Influence of Industry
Alongside schools, industry is one of the biggest factors that influences the starting salaries of MBA grads. It makes sense—a job in finance is likely to bag you a much bigger compensation package than one at a nonprofit. The U.S. News & World Report lists the five highest-paying industries as follows (ranked by starting salary):
- Consulting: $147,178
- Financial Services: $138,834
- Technology: $128,442
- Healthcare: $116,250
- Retail: $115,48
Right at the bottom of their rankings were the nonprofit and government sectors, which resulted in average starting salaries of $90,381 and $87,675, respectively. We’ve included these lowest ranks to show that, even at the bottom of the industry list, the average starting salary is still substantial. According to the U.S. Bureau of Labor Statistics, the average salary across all industries in the U.S. is just over $58,000, more than $30,000 lower than the average starting salary for MBA grads in the lowest-paying industry that was ranked. In 2019, TransparentCareer got granular with the link between industry and MBA salary. It analyzed the extent to which MBA grads increased their salary due to their degree, evaluating their salaries before enrollment and after graduation. TransparentCareer analyzed data from graduates between 2009 and 2018 and ranked industries according to the highest salary increase. Their results were as follows (figures refer to the average amount by which salary increased for employees after completing an MBA):
- Consulting: $46,414
- Food, beverage, and tobacco: $41,249
- Investment management: $38,844
- Private equity: $37,739
- Technology, internet, and ecommerce: $36,763
Using Employment Reports
If you’re wondering how these two influencing factors of “school” and “industry” intersect, employment reports are a good place to get an answer. Every year, schools publish employment reports that detail their graduate job placement rates and average salaries, often breaking these down by industry and location. For example, let’s take a look at the average starting salaries of the graduating class of 2023 from Harvard, Stanford and Wharton, compared across five industries. The figures listed refer to base salaries and exclude bonuses.
| School | Consulting | Finance | Technology | Retail | Healthcare |
|---|---|---|---|---|---|
| Harvard Business School | $192,000 | – | $158,000 | $159,000 | $165,000 |
| Pennsylvania, Wharton | $190,000 | $175,000 | $162,750 | $128,000 | $157,500 |
| Stanford GSB | $192,000 | $200,000 | $177,500 | $175,000 | $170,000 |
Beyond The Base Salary
It’s clear that MBAs allow grads to grab high paying positions. However, the salary boost an MBA offers extends far beyond that provided by the starting salary. Once in their new roles, progression through the ranks is rapid for MBA-holders, of whom 56% secure the promotions that they aim for. This results in steady and significant salary growth for MBA holders of the course of their entire careers, the Forte Foundation reports. The growth adds up over time, and can result in $3 million more lifetime earnings than someone with just a bachelor’s degree. The Forte Foundation also notes, however, that this growth occurs more slowly for women than it does for men, leading to a gender pay gap that widens as careers progress.
Other Influential Factors on MBA Salaries
Location
Since salaries vary across different states, MBA grads will experience different salary boosts depending on where they are. In 2023, for example, the average salary for an MBA grad was $179,210 in New York, compared to $121,108 in Florida.
Company size
The size of the company to which MBA grads apply plays an important role in determining starting salary. Larger, well-established firms are likely to offer larger paychecks than smaller startups, and are often more able to provide better benefits and perks.
Bonuses
It’s common for MBA grads to be offered a signing bonus on securing their post-MBA contract. Of Harvard’s MBA Class of 2023, 57% of grads reported receiving a bonus, which averaged $30,000. For Stanford’s MBA Class of 2023, 49% of grads who reported receiving a signing bonus landed an average $42,249. And the bonuses don’t stop at signing, with many graduates (70% for HBS and 68% for GSB) expecting performance bonuses that range from $40,000 to $99,347.
Return on Investment
For many MBA applicants, discovering how much an MBA might boost their salary is crucial in determining whether the degree is right for them. In these cases, it’s worth considering the return on investment (ROI) of each MBA program. The ROI compares the average starting salary and signing bonuses of MBA grads with the average debt of students at their school. The former is divided by the latter to reach the ROI. U.S. News has ranked the 32 programs with the highest return on investment here.
