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July 16, 2021

Is an MBA still worth it?

This week, we launched Fortune's first-ever Best MBA Programs ranking. Our goal was to find out how much employers value MBAs, while building a ranking that gets back to the basics—looking for programs that not only send their graduates off into good jobs right out of the gate but also have a track record of producing alumni who reach the highest echelons of corporate America.

Along the way, I collected a ton of data. Including our business school brand study done with Ipsos. To conduct the study, Ipsos polled 2,500 U.S. business professionals.*

For this week's issue of Fortune Analytics, we look at some of that MBA data. Here's what we found.

The numbers to know

$150,000

... median base starting salary for 2020 MBA grads from No. 1 ranked Harvard Business School. On top of that, 60% received a signing bonus (median of $30,000) and 72% were eligible for a performance bonus (median of $35,000).

47%

... how much starting MBA base salaries have increased at the University of Chicago's Booth School of Business (No. 4 in our ranking) over the past decade.

52%

... of business professionals say the value of an MBA is more in who you meet than in what you learn, finds the Fortune-Ipsos poll.

65%

... of business professionals say choosing the right business school opens the door to a successful career.

42%

... of business professionals say MBA degrees are not as relevant as they used to be.

$105,000

... median starting base salary among the 69 MBA programs we ranked in our first-ever Fortune's Best MBA Programs list.

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The big picture

It is common for new HBS and Stanford MBA grads to earn $200,000. Right off the bat, grads of many elite MBA programs are often making around $200,000 in their first year when all compensation, including signing bonus and performance pay, is factored in. Simply put, top ranked B-Schools are among the surest ways into the $200k club. Keep in mind, the price tag can easily exceed $200k.

No the MBA isn't dead—but not all programs have a massive payoff. While the typical MBA grad at No. 9 ranked Yale School of Management earns a median $140,000 base salary in their first year out of school, that number is just $52,000 at No. 69 ranked Lindenwood University. In recent years, some lower-ranked full-time MBA programs have even shuttered as some students turn to alternatives like online MBAs or bootcamps. You can check out our full ranking here.

A few deeper takeaways

1. The value of an MBA is still strong...but nothing beats hands-on learning.

Among business professionals, 66% say choosing the right business school can open up doors to a successful career. But it isn't all because of the curriculum: Among that same group of business professionals surveyed by Fortune and Ipsos, 52% say the value of an MBA is more in who you meet than what you learn in B-School. Additionally, 67% say that on-the-job experience is more relevant than what you learn at business school.

But obviously business schools are doing something right: Our research finds that Harvard Business School alone has more than 100 MBA grads in the Fortune 1000 C-suites.

Last week, Ann Harrison, dean of No. 13 ranked UC Berkeley Haas School of Business, explained it to me this way: "Generally speaking, corporate America is very much run by individuals who have these really valuable degrees [MBAs] that combine both quantitative skills, [like] the ability to sift through massive amounts of data, and leadership skills."

2. There's a big payoff for students who get into top-20 MBA programs.

The Wall Street Journal published a piece last week highlighting the woes of graduate degree recipients across America. The article zoned in on Columbia University's film program—where half of their alum don't earn more than $30,000 two years after leaving. That's a starkly different picture than No. 6-ranked Columbia Business School, whose median new MBA grad is earning $150,000 base salary.

Among the top 20 schools in our full-time MBA ranking, the lowest median starting salary was $125,000. That's nearly double the nation's median household income ($68,703)—and it doesn't even include signing bonuses, equity, or performance-based pay. Among UC Berkeley's 2020 class, 43% received stock options.

Our salary figures are for 2020 classes—who graduated amid the worst months of the COVID-19 recession and a double-digit jobless rate. School deans tell me that their 2021 grads are getting much larger compensation packages. (We won't get that data until later this year).

3. Demand for business school grads from elite programs is as strong as ever.

In 2010, new MBA graduates at Stanford Graduate School of Business (No. 2 on our list) earned a median base salary of $120,000 right after graduation. Fast forward to 2020, and that number is up 30% to $156,000. Stanford isn't alone: Other top programs saw similar gains, including a rise of 47% at No. 4-ranked Booth School of Business during that same ten-year span.

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I’d love to know what you think of the newsletter. Email me with feedback at lance.lambert@fortune.com.

Lance Lambert
@NewsLambert

*Methodology: Fortune-Ipsos poll interviewed a total of 2,500 professionals. These professionals work in a corporate role, have attended college and/or an institution of higher education, and know at least two of the schools in our selection. Ipsos completed the fieldwork between March 16 and March 24, 2021. The total length of each interview was 13 minutes. The results yielded a 95% confidence interval, which gives us a maximum ±1.96% margin of error.

For the full Best MBA Programs methodology, go here.

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