It's not a myth: having an MBA is strongly associated with earning higher-than-average salaries. On average, a person graduating with an MBA can expect a 119% increase in salary within three years, says Marco De Novellis, senior editor for Graduate Management Admission Council's BusinessBecause networking site and GMAC Media.
People in management positions make the highest wages of all major occupations. Chief executives may earn a median salary of $206,680 per year, according to the U.S. Bureau of Labor Statistics (BLS).
MBA Career Paths and Salaries
Here are some examples of jobs that often recommend or require an MBA:
Career
Median Annual Salary
Human Resources Managers
$136,350
Management Analysts
$99,410
Accountants and Auditors
$79,880
Financial and Investment Analysts
$99,010
Computer and Information Systems Managers
$169,510
How Much Does an MBA Increase Your Salary?
According to the Graduate Management Admission Council's most recent survey of business recruiters, the average MBA makes about 77% more a year than the average person with a bachelor's degree. The GMAC report concludes that over the lifetime of your career, you can earn $3 million more with an MBA than with a bachelor's degree.
In addition to base salaries, many executives earn annual bonuses and other perks, such as stock options or profit sharing.
"Your earning potential is much higher with an MBA," says Michael Biarnes, a manager in the New Products and Business Development division of The Janssen Pharmaceutical Companies of Johnson & Johnson. Biarnes adds that a number of other factors will affect how much you can make.
What Factors Influence MBA Salaries?
In any career, an individual's salary may be substantially higher or lower than the average. Several factors besides education level influence the salary of a person with an MBA.
"It depends on the type of company, the location, and the position," explains Marco De Novellis. The ranking of your school may also be a factor, he points out, with the top 20 ranking business schools generally securing positions in the companies that pay the highest salaries.
Your MBA salary will depend on the type of company, the location, and the position.
The earning potential of an MBA is often measured in what's referred to as "return on investment," or ROI. In other words, compare the amount of money you'll invest to earn your MBA to the salary increase you hope for or the goals you hope to achieve, De Novellis explains. (Don't discount the amount of time you'll spend earning your MBA as a factor, as you may choose to work part time or not at all while going to school.) The majority of graduates will find a favorable ROI, De Novellis says.
Industry as a Factor
At present, the highest-paying positions tend to be in consulting, finance, and technology, according De Novellis.
Technology is not only one of the fastest-growing industries, but one where the earning potential of MBAs looks most promising, the GMAC survey reports. More than half of corporate recruiters believe that MBAs hired by a technology firm will have a "fast track to upper-level positions" in their companies.
Healthcare management is also a growing field that pays well. The BLS reports the median annual salary of a health services manager is $110,680, with a top range of more than $216,750 a year.
People with MBAs who want to work in government or nonprofit organizations might expect a salary that is lower than the average salary. For entrepreneurs and owners of start-ups, the financial benefits of an MBA may be longer in coming.
Type of MBA as a Factor
Some MBA concentrations tend to pay more than others. These align closely with the industries that pay the highest average salaries. According to the GMAC survey, MBAs in management, accounting, finance, and data analytics have high earning potential.
Yet, any type of MBA—no matter the concentration or manner in which it is earned—will likely be beneficial in helping you land a high-paying job, De Novellis says: "Whatever path you want to do, the skills you learn in an MBA will open you up to be able to work in any industry."
Geography as an MBA Salary Factor
Another factor influencing salaries is location. A position with a company located in one state may offer higher salaries than a similar position with a company in a different state. Also, an urban area will tend to pay better than a smaller town environment. The reasons for the pay differential can be attributed to the cost of living in that area and the supply of qualified workers versus the demand.
The BLS compiles salary data by state for comparison purposes, though it is not sorted by specific educational levels. As an example, consider how salaries vary for chief executives—many of whom hold an MBA—in different geographical areas:
Metro Area
Median Annual Salary
Charlottesville, VA
$238,990
Grand Rapids-Wyoming, MI
$237,770
Gainesville, GA
$235,410
Lansing-East Lansing, MI
$235,410
Austin-Round Rock, TX
$234,910
Spartanburg, SC
$232,070
Green Bay, WI
$231,810
Richmond, VA
$227,750
Battle Creek, MI
$227,640
Mount Vernon-Anacortes, WA
$227,270
Do Companies Pay Bonuses for MBAs?
Some companies do pay bonuses for MBAs. In fact, graduates of top-tier business schools may be offered sign-on bonuses by recruiters. For most workers, however, bonuses are paid after employment begins.
