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What Is The Average Salary For An MBA Graduate?

Author: Daniel Harris

The decision to return to school after spending time working towards a bachelor's degree is a serious and often costly one. For many, it's safe to say that the motivation for pursuing a postgraduate education boils down to the potential of increasing one's annual income. More specifically, a Master of Business Administration (MBA) degree can open up several career advancement opportunities in addition to providing desired salary increases. But for many prospective students, the real concern is whether earning this prestigious degree is truly worthwhile. (For more, see: The Real Cost Of An MBA.)

Opposite Ends of the Spectrum

In terms of salary, the financial outcome after attaining an MBA can be exhilarating or disappointing depending on a person's intent. According to a 2014 study performed by Poets & Quants, some graduates landed a substantial salary upon obtaining an MBA while others secured positions with starting salaries lower than jobs for graduates with bachelor's degrees.

For example, a few individuals from Stanford and Harvard landed jobs with starting base salaries in the $275,000 to $300,000 range in industries such as investment banking and private equity. On the low end, an MIT graduate landed a $48,000 position in business development and another Harvard graduate secured a $50,000 position at a non-profit organization. Although these figures represent a small number of individuals, they paint a picture of the best-case and worst-case outcomes for MBA graduates – even those from a top-tiered school.

The Average Expectation

PayScale conducted a survey of average salaries from 34,294 MBA holders with degrees in a variety of categories. According to the survey, 1.5 percent of participants had less than one year of work experience and reported a national average salary of $50,453. Those with one to four years of experience, 1.9 percent of respondents, had an average salary of $58,092. Additionally, the 34 percent with 10 to 19 years of experience made an average $98,252 annually. The survey results clearly reveal that work experience contributes significantly to an MBA's salary.

Gender and location are other variables that can skew an average salary. Men claimed to earn between $51,427 and $122,306 while women made between $42,976 and $97,046. California had the highest paid MBA graduates with 12.4 percent of people surveyed earning $99,625. Florida had the lowest paid graduates with 5.5 percent making $73,332.

Yet again, job type is also a significant determinant in calculating average salary. Financial analysts had a national average salary of $60,704 while finance managers earned $93,978. The national average salary for marketing directors and chief financial officers was $118,654 and $128,201, respectively. The list goes on, but you can see how occupation can play a large role in dictating average salary as well.

The Bottom Line

Fortunately, the numbers seem to indicate that an MBA leads to a higher salary. Although there are instances of extremely high and low starting salaries for MBA graduates, they aren't represented in massive quantities. Attending a top-tier school will certainly position one for a six-figure job right out of school—assuming the applicant is pursuing employment in a select industry—but it isn't a prerequisite to earning a handsome wage.

Experience and job type have the most significant impact on compensation. If the time is put in for a certain career path, a higher salary should be on the horizon. Gender and location play a role in determining the level of pay as well, although not to the same extent as the two preceding variables. With numerous variables to consider, the question of average salary truly comes down to an individual's circumstances. No education is a waste, and with enough time and effort, an MBA can take a graduate as far as his or her ambition will allow. (For more, see: MBA Vs. Executive MBA: Which Is Better?)

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