Obtaining a Master of Business Administration (MBA) degree is a significant accomplishment, offering many benefits to young and mid-career professionals for career growth. The acquired knowledge and training can position the graduate to introduce and implement sound business practices into their career.
Beyond opening up career advancement opportunities, the level of salary offered to MBAs is one of the most coveted benefits of getting the degree. In fact, it's safe to say that the motivation for pursuing a postgraduate education boils down to the potential of increasing wages.
So, what can you earn with an MBA? And which factors influence your compensation?
The MBA Average Salary
Among the 132 ranked full-time MBA programs that reported to U.S. News & World Report for its annual MBA survey, the overall average base salary plus bonus paid to 2020 graduates was $101,034. Compensation projections published by the National Association of Colleges and Employers predict that the average starting salary for MBA grads in the class of 2021 will be $87,966—11.3% higher than the average starting salary among 2020 grads.
The 2020 average starting salary plus bonus for those emerging from Stanford University's Graduate School of Business. Stanford MBAs consistently rank highest on the starting pay scale.
Still, these numbers must be taken with a grain of salt. Many grains of salt. MBA salaries vary based on each individual, specific career path, and the school from which they got their degree. Those six-figure starting salaries tend to be at the top 25 business schools, where they range from $119,000 (Indiana University's Kelley School of Business) to $159,544 (Stanford University's Graduate School of Business), according to Poets & Quants, an online publication that covers the B-school industry.
At other schools, base starting salaries are in the five figures. Even graduates of the same program will earn very different amounts, depending on where they land. For example, base salaries for MBA grads of the Stanford University ranged from a low of $35,568 to a high of $400,000 in 2020.
According to PayScale's survey of tens of thousands of MBA graduates, the average salary of MBA graduates is estimated much lower at $89,935, with typical jobs ranging from financial analyst ($65K average) to financial controller ($92K average) to chief financial officer ($152K average). Of MBA graduates, approximately 1.5% of participants had less than one year of work experience, whereas 32% were experienced, and 26% reported that they were mid-career graduates. Based on these results, work experience and rank contribute significantly to an MBA’s salary.
Geography and Gender and Salary
Where a job is located can influence the salary. ZipRecruiter—which uses data compiled by ADP, the payroll services provider—has a similar overall number to PayScale: As of May 10, 2021, the average pay for MBA jobs in the U.S. was $82,721 a year.
However, ZipRecruiter also parses MBA pay by state, revealing some interesting disparities. Annual average salaries on the East and West Coasts tend to be the highest: $95, 694 in Washington and $85,331 in California; $89,875 in New York and $87,018 in New Hampshire, to name the top four states. The southern states of Missouri ($64,796) and North Carolina ($60,326) are the survey's two lowest.
Gender is another variable that can skew an average salary. Men on average earned between $57K and $169K, while women earned between $49K and $140K , according to PayScale (whose gender measures compare only men and women). When it comes to comparing the average MBA salary, there is still a lot of progress to be made in terms of the gender wage gap.
No matter what the industry, the median annual wage for those with an MBA is greater than for those with just a bachelor's degree. The disparity is greatest among securities, commodities, and financial services sales agents, where those with MBAs earn 89% more, according to the BLS.
Salary Variations by Profession
The average MBA salary also varies according to industry and profession. Some graduates made close to twice as much as others based on the field entered. For example, according to the U.S. News survey, MBAs specializing in consulting topped the list, having an average base salary of $152,470—$22,500 better than financial services, the second-highest industry. From there, technology management followed, with $124,289. Retail ($108,270) and real estate ($107,552) were other hot areas. Not surprisingly, nonprofit ($85,154) and government sectors ($80,520) were at the bottom.
Depending on the field, however, some MBA career investments also age better over time, according to PayScale data provided to Poets & Quants for a recent joint study. For example, although innovation management started at a lower early-career pay of $62,600, it had doubled to $134,000 by mid-career. The same was true of entrepreneurs and the average MBA salary of those who had concentrations in marketing and finance.
The Bottom Line
For many prospective students, perhaps the greatest concern is whether earning a prestigious MBA degree is cost-effective. With numerous factors to consider, the question of average MBA salary is based on individual circumstances, usually involving a combination of factors.
While the individual B-school can be important, experience and job types are the biggest influencers on MBA compensation. As an employee invests time on a specific career path, it is reasonable to expect progressive increases in salary. Gender and location also play a role in determining the level of pay, although not to the same degree as the two preceding variables.
No education is a waste. With time and effort, obtaining an MBA can provide access to certain career opportunities. It can help take the graduate as far as their ambition will allow.