MBA Salary Guide: Starting Salaries & Highest Paying MBA Concentrations
New data on the average starting salaries for graduates with MBA degrees recently appeared. The roundup below summarizes those salary surveys, then presents data that correlate salaries with MBA concentrations and industries.
The average salary and bonus package that MBA graduates earned in 2018 was $102,495, according to new data from U.S. News. The publication based this average on reports from 130 full-time MBA programs the publication ranks in their 2020 U.S. News Best Business Schools chart.
Elite business schools disclosed much more generous compensation, reporting a $166,999 average. The ten MBA programs revealing the highest average salary and bonus packages exceeded the average for all schools by $64,504—a staggering 63 percent gain. These programs fell within the publication’s 12 highest-ranked programs.
The Graduate Management Admission Council’s Business School Hiring Report
In 2019, employers now offer MBA graduates the highest inflation-adjusted salary ever recorded in the United States: a median of $115,000 annually. That’s according to the Graduate Management Management Admission Council (GMAC), who in collaboration with the MBA Career Services & Employer Alliance (MBACSEA) and the European Foundation for Management Development (EFMD) published the data in their latest Business School Hiring Report.
The President and CEO of GMAC, Sangeet Chowfla, remarked:
Employers clearly place a high value on acquiring MBA and business master’s graduates. We are seeing a highly active candidate marketplace in terms of geographical shifts in study destinations, but the value that both employers and graduates see in an advanced business degree is a constant.
GMAC, best known for their Graduate Management Admission Test (GMAT) and Executive Assessment (EA) business school entrance examinations, pointed out that this MBA salary is more than twice the median of $55,000 reported for new hires with undergraduate business administration degrees.
Compared with historic trends, MBA hiring remains strong. However, for the second year in a row, fewer firms expect to hire MBAs. According to the report:
Among U.S. employers, 77 percent plan to hire MBA talent in 2019, down for the second consecutive year. A slightly smaller proportion of responding U.S. companies report plans to grow and expand this year (66 percent) compared with last year (69 percent), as worries associated with talk of trade wars and higher tariffs may be impacting employer plans.
The National Association of Colleges and Employers’ Average MBA Salary Survey
NACE is an association made up of corporate recruiters and university career advisors. The group reports that the MBA class of 2019’s average salary increased by 8 percent over last year’s average to $84,580. That’s almost $27,000 greater—about 47 percent more—than the association’s average starting salary estimate for undergraduate business administration graduates, $57,657.
Average MBA Salary by Concentration
Obtaining a master’s degree in business administration (MBA) is a major decision. Along the path of completing an MBA—beginning with the application process and ending at graduation—students must make many small decisions which will determine the course of their lives. These decisions not only include selecting a business school and type of program but also encompass other choices, such as whether to study abroad, choosing an internship, and picking where they want to work and live after graduation.
Perhaps the highest priority before tackling that list of decisions involves choosing a field in which to focus, known as a concentration or specialization. The concentration a student selects is possibly the second most important commitment a student can make next to enrolling in graduate management education itself.
Granted, some schools like Harvard Business School do not offer formal concentrations, and in those cases, students create de facto fields of concentration from their electives. In either case, such specializations amount to critical choices in an MBA student’s career. They permit students to deliver highly marketable skills to an employer immediately upon graduation—value for which most employers will gladly pay a handsome salary premium.
However, before covering the salary values of different concentrations, it is worthwhile to understand some ways the benefits of concentrations translate into those salaries.
The Benefits of MBA Concentrations
Many experts agree that MBA graduates with a concentration have substantial competitive advantages over those without one during recruitment. Raghu Sundaram, the vice dean of MBA programs at New York University’s Stern School of Business, told the U.S. News and World Report that, “Having a specialization will not get you the job, but it certainly will make it a lot easier to get the interview. It opens the door and that’s the reason why students are so fond of specializations.”
Rob Weller, the associate dean at the University of California Los Angeles Anderson School of Business, adds that “specializations really provide structure and a roadmap to students, so they’re able to walk out of here and signal to the job market that they’ve acquired a certain set of skills and can transfer that knowledge to the job.”
Furthermore, some concentrations lead to higher-paying jobs. There is a dramatically wide range in the earning potential corresponding to different concentrations, and MBA aspirants would be wise to familiarize themselves with these earning potentials before selecting target schools.
Better-paying MBA concentrations align with sectors with higher salaries, according to Phil Miller, the assistant dean of MBA programs at the Carlson School of Management at the University of Minnesota: “Students who specialize in finance and go into banking earn a disproportionate amount of higher salaries.”
He also advised students to look at where previous students of a program land in the following three years after graduation. This will help them gain a better understanding of what each specialization yields for graduates.
To wisely select a concentration, most MBA aspirants first want to know which concentrations offer the highest pay. The website PayScale, which provides compensation data focusing on salary and benefits, has reported the average salary associated with MBA program concentrations for the last several years.
PayScale produces these reports using the website’s database of about 1.5 million university graduates who disclose data about themselves when they search for salary information. PayScale is a labor market database similar to other platforms, including Glassdoor, RelishCareers, and TransparentCareer.
The PayScale data does present some limitations. For one, PayScale needs a controlled vocabulary that better differentiates among concentration names. For example, the term “finance” or “financial” repeats in four concentration names and “marketing” repeats in three. It is difficult to understand the precise differences in how these overlapping names represent actual fields of concentration at different schools.
Furthermore, these self-reported pay statistics only consider annual salaries. However, bonuses account for significant income sources in management consulting, investment banking and financial services compensation. Moreover, equity—i.e., stock options and redemptions—accounts for a considerable portion of income in the compensation packages of startups and tech firms. PayScale counts neither of these income sources in their statistics.
The Most Lucrative MBA Concentrations
For the last three years, strategy has been the top paying concentration according to PayScale’s rankings—not just because it offers the highest pay immediately following graduation, but also ten years later. In a 2017 report disclosed exclusively to Poets & Quants, PayScale noted that alumni who specialized in strategy made $94,800 a year upon graduation and averaged $150,000 at mid-career.
It is important to look at mid-career averages as well as post-graduation numbers because the former will provide a better indication of growth potential. Besides strategy, several concentrations earn handsome annual salaries by mid-career. These include entrepreneurship at $139,000, corporate finance at $138,000, innovation management at $134,000, and economics at 132,000.
Other lucrative concentrations that earn well ten years later are business finance and finance (both at $130,000), marketing at $123,000, and both information technology (IT) and strategic management, each averaging $122,000 a year.
Trends in Top Paying Concentrations
Quantitative Careers Are Favored Earlier, Verbal Later
Along with strategy’s consistent lead, a couple of trends become apparent. First, quantitative concentrations dominate the top early career rankings. Following strategy, the four following top paying concentrations are technology management at $78,200, corporate finance at $77,900, operations management (OM) at $75,400, and information technology (IT) at $72,200. The top five early-career winners are quantitative-focused.
However, this trend changes at the mid-career mark. Ten years after graduation, three of the top five paying concentrations are more verbal in nature: strategy, entrepreneurship, and innovation management. The top ten list is split evenly between verbal and quant concentrations. However, it is interesting to note that finance concentrations account for three of the top ten spots: corporate finance at $138,000, business finance at $130,000, and finance at $130,000.
This trend amounts to what one might expect. Most early-career MBA jobs tend to emphasize quantitative and technical skills, while jobs emphasizing verbal skills predominate among the more senior positions held by seasoned executives.
Concentrations Where Earnings Double
The second trend relates to how some concentrations start out with rather modest earnings which approximately double by mid-career. These concentrations also appear to be those that place a premium on verbal concepts and reasoning rather than technical or quantitative skills. They include international business ($62,600 to $121,000), marketing ($61,400 to $123,000), entrepreneurship ($70,300 to $139,000), and innovation management ($62,600 to $134,000).
The innovation management concentration sees a 114 percent increase in average pay over ten years and takes the top rate of growth among all concentrations. Other concentrations displaying 80 percent growth or more include finance, general business, economics, management information systems (MIS), business finance, and global business management.
By contrast, the concentrations displaying the least growth include technology management, strategy, operations management, marketing management, business management and marketing, information technology, and information technology management.
One other interesting trend in this data is that MBAs with the least lucrative concentrations in management and business management earn at mid-career only about $10,000 more than what the alumni with strategy concentrations earned fresh out of school, about ten years earlier.
Salary Examples for Key Industries and Roles
Below are some examples of salaries for specific roles at companies that heavily recruit MBAs.
Consulting firms recruit about a third of each class at many of the top business schools. Firms recruit most of these hires from strategy concentrations and some from other specializations like general management.
These examples come from lists published by Management Consulted, a coaching firm and online resource for MBA students pursuing careers in consulting.
|Base||Performance Bonus||Signing Bonus||Relocation|
|McKinsey & Company||$152,500||$35,000||$25,000||$9,000|
|Boston Consulting Group||$147,000||$44,100||$30,000||$8,000|
|Bain & Company||$148,000||$37,000||$25,000||$5,000|
|Deloitte||$145,000||$31,900||$25,000||$2,500 – $10,000|
The following tables have been created from the TransparentCareer website.
About 80 percent of the of jobs summarized in the following table fall within only three categories of functional roles: product management, marketing, and corporate finance, in declining order based on the proportion of all roles for MBA graduates.
|Total Compensation||Average Salary||Average Hours/Week|
Functional roles in the hardware industry vary widely; most of the jobs summarized in the following table fall within product management and operations roles. Note the average hours worked that the Apple employees reported.
|Total Compensation||Average Salary||Average Hours|
E-Commerce and Internet
Just like the table above, about 80 percent of the of jobs summarized in the following table fall into three categories: product management, marketing, and corporate finance, in declining order based on the proportion of all roles for MBA graduates. Note the part that stock compensation plays in addition to salary.
|Total Compensation||Average Salary||Average Stock Comp.|
The following table includes data from TransparentCareer. Many of these hires likely graduated with finance concentrations.
Three of the four banks on the list display average hours worked that are almost double the standard United States 40-hour work week. Such astonishing hours persist within this industry despite widespread reports that MBAs are increasingly accepting technology jobs with better work/life balances instead of those offered by Wall Street. Find out more in our Guide to MBA Careers – Business Administration Career Paths.
|Total Compensation||Average Salary||Average Bonus||Average Hours Worked|
|Bank of America Merrill Lynch||$251,750||$128,500||$76,750||75|
|Goldman Sachs Group Inc.||$247,521||$128,571||$53,571||75|
The following table consists of data from another TransparentCareer report.
|Total Compensation||Average Salary||Average Hours|
|The Vanguard Group||$157,205||$100,180||60|
Consumer Product Marketing
About 70 percent of the roles summarized in the following TransparentCareer table are for marketing jobs geared to MBA grads with marketing concentrations. The salaries appear to be almost one-third lower than those paid by the top consulting firms.
|Total Compensation||Salary||Signing Bonus|
Brand Management and Strategy
Finally, data in this TransparentCareer table parallels the consumer product marketing table above.
|Total Compensation||Salary||Signing Bonus|