MBA Pay: Riches for Some, Not All

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Other studies have also found a dramatic gap between the average schools and the top schools in terms of earnings. But for the most part, it has little to do with the quality of education. Andrew Hussey, an assistant professor of economics at the University of Memphis, says his research led him to the conclusion that graduates of the top-ranked schools brought in salaries almost twice as big as those of other MBAs. Much of the difference, he say, is the result of the high salaries and impressive GMAT scores that students earned before entering the program, and the school's physical location. "Once you control for those observable factors, a lot of that [pay] difference goes away," Hussey says. But not all of it. For whatever reason, there does seem to be a premium for graduates from top programs.

Robert Travis, a director of the Boyden World Corp., and managing director of the Atlanta and Calgary offices of Boyden Global Executive Search, says companies are looking for something "intangible" when they recruit from top schools. The attendant perception of a strong alumi network, the assumption of quality training, and the degree's prestige often help top MBA grads, Travis says, even later in their careers.

"When I'm showing a short list of candidates for a COO role, there's an automatic quick glance to the education section of everybody's CV," he says. Work experience still trumps all, but he says he's seen cases where degrees from top schools have tipped certain job candidates over the edge. Plus, hiring a Harvard graduate is usually viewed as a safe bet, Travis says, invoking the old maxim, "Executives normally don't get fired for hiring IBM."

MORE TO LIFE

The question of compensation has become even more urgent in the wake of the financial crisis. According to a recent study by QS, a London information company specializing in the higher education sector, return on investment has become the most important factor in Americans choosing a certain business school, beating out career placement for the top spot.

That doesn't mean MBAs aren't still pursuing idealistic, low-paying jobs, though. Most of the salaries on the low end of the pay distribution are the result of voluntary decisions, whether it's staying in the Midwest instead of heading to the Northeast, going abroad, or pursuing a career in government. This generation of students in particular, seems to be putting their degrees toward a wider variety of careers. Many students are ending up working in sustainability-related jobs or social entrepreneurship, rather than the chasing the big bucks on Wall Street. And finding students jobs they love, is the primary purpose of the MBA, career services directors say.

"We do a bit of disservice to ourselves when we go on and on about how much [graduates will] make," says Erik Medina, director of graduate career services at Indiana University's Kelley School of Business (Kelley Full-Time MBA Profile). "I think we miss the point of what we're here for."

But even if students do have money on the brain when they pursue their MBA—from a top school or an average one, in New York or in Iowa—the degree just doesn't cut it as a fail-proof get-rich-quick scheme. While some grads make hundreds of thousands, others make a pittance while they start their own companies, and still others are unemployed. No matter how you look at it, the fantastic notion of a diploma being an express ticket to a big company's corner office is probably just that—fantasy.

Click here to view a slide show of recent graduates' salaries.

Anne VanderMey is a B-schools writer at BusinessWeek.

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