For MBAs with Jobs, Recession was No Bloodbath

Posted by: Louis Lavelle on August 20, 2009

By Anne VanderMey

Anyone who gets their MBA has a reasonably high expectation of coming out of the program with a higher salary than when they went in. That’s great in an upturn, when companies are happy to pay for the prestige and efficiency of top talent, but it might not be so great in a downturn, when the top priority is to slash payrolls. In the dark days of the recession, being able to negotiate a higher salary than your colleagues might not seem like an asset so much as a liability. MBAs have reason to fear that their degree won’t insulate them from the crisis, and that it could instead make them a target.

That’s just one of the reasons this recession looked like it might be a particularly bleak one for business school grads. The collapse of the MBA-heavy financial sector and the degree’s bad press were just icing on the cake.

However, a new report shows that those fears may have been unfounded. According to a recent Catalyst study , just 10% of MBAs lost their jobs during the downturn, and fully 34% of them received a promotion.

It’s hard to say exactly how this compares to rest of the population, says NYU professor David Backus, as fluctuations in the labor market make it tricky to track what percentage of overall workers were laid off. But it does look like MBAs were spared the bloodbath that might have been expected in the wake of the crisis. In fact, it looks like the MBA confers some job security after all.

The Catalyst study tracked 873 “high potential” employees, MBAs who graduated from one of 26 top programs between 1996 and 2007. About 94% of those employees worked the same number of hours or more during the recession, as they had before. It also found that women in executive positions were three times as likely to get fired and slightly less likely to be promoted than men.

Although the overall results will likely be comforting for MBAs, it should probably be noted that the study only paints a partial picture of the job market. One of the defining characteristics of this recession is not mass layoffs (though that’s happened too), but little or no hiring. It will be interesting to take a look at schools’ 2009 employment data when it’s released for a clearer picture of what the recession means for B-school grads.

In the meantime, let us know your thoughts. Did your MBA confer a degree of job security, or did it make you a cost-cutting target?

Reader Comments

Online Universities

August 25, 2009 6:30 AM

It good see that 34% of the MBA received a promotion. It is part of the recession world where only 10% of the MBA lost job. So it still safe to earn MBA degree.

Online Universities

Karen Dowd

August 27, 2009 9:05 AM

The fact that women MBAs were three times more likely to get fired deserved more attention in this article.

Jax - MBA

August 27, 2009 9:43 AM

I finished in April '09 with an MBA from the Univ. of Florida.

No promotion and no prospects yet. Most co's are still hesitant, but I still have my IT job at least.

BW Writer Anne VanderMey

August 27, 2009 11:10 AM

Hi Karen, that's not a bad point. Women in the workplace is such a large issue that I didn't want to tackle it in a blog post about MBAs and the crisis. I appreciate your bringing it up, though, because there are couple other data points worth noting. Overall, this seems to have been an equal-opportunity recession. Globally, there were no statistically significant differences between layoffs and promotions for men and women.

However, there were some exceptions. In Europe, women were a whopping 18 percentage points less likely to be promoted than men (26% vs. 44%), though in the U.S., women fell behind by only two percentage points (32% vs. 34%). Women were also more likely to take temporary leave (9% vs. 3%), and though they usually came back, the absences probably dampened their career trajectory. Finally, to your point, women in executive positions got by far the worst of it in terms of layoffs and firing, though men and women in non-executive positions each had just an 11% chance of getting fired. That difference is notable particularly because the sample size was so low--there were only 27 women in executive positions, while there were 131 men. That means the figure is less reliable, but also reflects the low number of women in leadership roles to begin with.

I'd be interested to hear your thoughts on these data, are they proof that there is a glass ceiling? What do you think the opportunities look like for women MBAs? And what effect do you think maternity leave has?

Thanks for commenting!


August 30, 2009 6:02 AM

26 top schools...but which schools exactly?

BW Writer Anne VanderMey

September 2, 2009 3:59 PM

Hi Jon. Here's a list of the participating schools along with a profile of the respondents. For other methodology questions, there's a pretty good breakdown on Catalyst's site.

Danielle Bahrie

September 25, 2009 12:29 AM

I am also interested in learning more about the effect of maternity leave on MBA's. Do you have any more information on this?

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