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How Much Will an MBA Raise My Salary?
In general, more education will result in higher pay, especially when it comes to business. That's why so many professionals decide to pursue an MBA. MBAs often lead to career acceleration as well as higher salaries. In fact, according to a Graduate Management Admissions Council (GMAC) survey, MBA graduates in 2005 could expect to earn an average salary of $106,000, with some even earning average signing bonuses of $40,000. Many MBAs even find themselves in high demand after graduation with two or more job offers that give them leverage to command a higher salary.
While overall, MBAs can expect to see a salary increase, there are a number of factors that can make a big difference in your final earnings. If you want to take your MBA to a higher salary than average, be sure to pay attention to these details:
- The prestige of your school: If you're looking for a big push to launch your career, you'll need to consider the value of the "name" of the program you're going to attend. Highly ranked MBA programs are much more likely to give you a higher salary than ones that no one has heard of. If you're graduating from well known schools like Harvard, Stanford, and MIT, you can expect to earn a starting salary of around $130,000, but other schools do not fare so well. To find out which MBA programs are the most prestigious, you can check out rankings from publications like Business Week and US News & World Report.
- Your field: The GMAC survey reports that MBA graduates who decide to work for investment banks or consulting firms can generally expect to earn more than other MBA holders. Additionally, MBA holders can expect to earn higher salaries when going into the IT sector. However, MBAs who want to work for the federal government and not-for-profit organizations can also expect to do well as the Bureau of Labor and Statistics reports that demand for MBA grads in these fields is expected to increase.
- Your networking ability: Getting ahead in business has a lot to do with who you know, not necessarily what you know. So an MBA holder who actively networks with other professionals will tend to earn a higher salary than one that does not. This is because active networking will open up more opportunities and make your personal brand more valuable.
- The area in which you live: The cost of living in your area has a lot to do with your salary. If you're living in New York City, chances are your salary will increase exponentially with an MBA when compared to a comparable MBA professional in rural Idaho. It's also worth noting that demand for professionals with an MBA degree will be higher in different parts of the country than others, so this will have a large effect on salary as well.
- Your level of experience: Getting an MBA fresh out of undergraduate school may not help as much as waiting until you have experience and a higher job level. An MBA is not a silver bullet and will not automatically propel you into an executive position. You can expect to see a large difference between entry level MBAs and executives, which come in at $60,000 and $120,000 respectively.
- The type of MBA you earn: While earning an MBA will increase your salary, you can do even better by choosing to earn an MBA in a specialized field. Many business schools are creating concentrations for investment management, real estate, arts administration, biosciences, and other fields, and they tend to bring more to the table. Your specialized education in a field will make you more valuable than a candidate with a general MBA, so this is definitely a factor to consider if you've already chosen your career path.
By taking into consideration factors including specialization, experience, cost of living, prestige, and networking, you can see how an MBA degree can become more or less valuable. Put this knowledge to work when you're shopping for an MBA program, and you can make your MBA work even harder to earn you more money.