MBA Job Outlook Dims

New research suggests fewer companies will be hiring MBAs this year, and salaries in tech, financing, and manufacturing will be flat or down

By Anne VanderMey

By all objective measures, the summer of 2008 was a bad time for new MBAs to venture into the job market. The fed was slashing interest rates, CEOs were stepping down, and people were starting to mutter about recession. Unfortunately for the 2009 class of MBAs, that was just the tip of the iceberg.

This year, students will enter the job market with unemployment at a 16-year high, coveted jobs in investment banking and finance gone after the downturn gave way to a full-blown financial crisis, and an overall job picture for MBAs that is suddenly far darker than it was just a few months ago. While many companies are still expecting to hire MBAs, new research suggests that many others have hiring plans that are far from certain, and for the first time since the dot-com bust, overall salaries for new graduates may be flat or even down in some industries.

For Brian Hall, who will receive his MBA from the University of Michigan's Ross School of Business in the spring, the mood is one of "cautious optimism." Last summer the 27-year-old dual music and business student had an internship at Steinway & Sons (LVB), and though the legendary piano company initially talked about creating a new position for him once he graduated, it ultimately did not. For now, he has a few leads from potential employers, but most companies he talks to aren't willing to commit until their financial outlook is more secure. One of the problems is that the economy seems to fluctuate on an almost day-to-day basis. "Tomorrow there's an earnings report coming out, and believe me, I'll be on the Webcast," Hall said.

If the news is good? "I'll be on the phone with the recruiter."

Even if many can no longer take their pick from several jobs offers, MBAs are still a reasonably hot commodity. According to a November survey by the Graduate Management Admission Council, 59% of the employers said they would or probably would hire at least some new MBAs in 2009. However, one out of four said they will not or probably will not hire any MBAs this year. That's in sharp contrast to 2008, when only 17% of the employers said they did not plan to hire any MBAs.

Salary Stagnation

For new hires, the study predicts that the average MBA starting salary would likely remain at or below 2008 levels, a departure from the usual annual increases that MBA graduates have come to expect. In all, half the employers said MBA salaries would remain flat, while 35% predicted higher salaries and 15% said salaries would decrease or didn't know. High tech, finance and accounting, and manufacturing all had substantially more than half of all companies predicting no change in salaries, while energy, health care, and nonprofits/government all had more than half of all companies predicting higher MBA salaries in 2009.

The salary stagnation is likely a result of supply and demand being knocked "off kilter" by downsizing, says Steve Gross, a compensation analyst for Mercer Consulting. The employee retention rate is higher than it's been in years, and Gross says companies are looking to take care of their own before they start bringing on "new mouths to feed." Although 2010 will probably be a better year for graduating MBAs, it's hard to say for sure without an easy fix for the economy in sight. "There's just nothing on the horizon," he says.