MBA Pay: A Crystal Ball

Exclusive new research shows how much graduates of top business schools earn over the course of their careers

By Lindsey Gerdes

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What's your MBA really worth? Well, a lot depends on what you mean. In their marketing materials, elite business schools focus on starting salaries, which can be quite impressive. But what about 5, 10, even 20 years out? For a long time, that's been terra incognita—a no-man's-land of guesswork and supposition. Not anymore.

New research commissioned by BusinessWeek suggests that when it comes to the post-MBA earnings accrued by graduates of top business schools over the span of their careers, not all schools are created equal. Some schools that start out strong with six-figure salaries sometimes sputter and stall, leaving grads with less-than-impressive salaries after 20 years in the workforce. And some schools where grads earn modest salaries out of the gate end up with the strongest of finishes, in some cases doubling their cash compensation after 20 years and overtaking better-ranked rivals. (See our interactive table MBA Pay Through the Years at 45 Top Programs.)

The research comes from PayScale, which collects salary data from individuals through online pay comparison tools. BusinessWeek asked PayScale to dig into its database of 80,000 graduates of 45 top MBA programs and calculate their median cash compensation—salaries and bonuses—during the first five years of their careers and after they have an average of 5, 10, 15, and 20 years under their belts. BusinessWeek then used that data to calculate an estimate of median cash earnings over the entire 20-year span.

The data suffer from some inherent limitations—it doesn't include stock or options, and the pay data for some smaller schools at the 20-year mark may be based on fewer than 100 pay reports. It also does not track the same graduates over time; it reflects the experience of individuals who graduated at various points throughout the last 20 years.

Surprises at the 20-Year Mark

But as a rough benchmark to the earning power of MBA graduates who go on to become top executives, it's enlightening. While for the most part the new research confirms that you get what you pay for—graduates at expensive top-ranked programs such as Harvard Business School and University of Pennsylvania's Wharton School fare the best long after graduation—it also produced a number of surprises.

After 20 years, graduates of three schools have cash compensation that is double, or more than double, what today's students make at graduation, and none of them are high-profile schools: Georgia Tech, University of Connecticut, and George Washington University. The graduates of 10 schools—including No. 15 Indiana University's Kelley School of Business—had median cash compensation at the 20-year mark that is no better than what Harvard Business School grads make shortly after graduation. And at the No. 5 University of Michigan Ross School of Business, where median cash compensation for new graduates was a respectable $109,000, the pay for graduates with 20 years' experience was just 28% more, or $140,000—the worst showing among the top 10 schools.