MBA Salary Expectations: Sober Reckoning or Wishful Thinking?

Photograph by Peter Dazeley/Getty Images

New research suggests that business school applicants have ratcheted back their post-MBA salary expectations, but in the U.S. and elsewhere they may still be wildly optimistic.

The research comes from QS Quacquarelli Symonds, the company behind, which publishes university and business school rankings. A QS survey of 4,122 applicants found that the average target salary dropped to $113,000, from $126,500 a year earlier. That dramatic decline syncs up nicely with the study’s other findings—fewer applicants plan to change industries, start businesses, or work for small companies—to paint a portrait of a newly risk-averse B-school generation.

Is $113,000 a reasonable expectation? Yes, if you consider that average base salaries for MBAs worldwide, according to QS data, now range from $90,000 to $115,000 for top programs, and that by the time these applicants graduate in two years, those salaries may very well be higher.

But in six countries expectations seem to have outstripped reality. In Germany, Japan, Russia, Switzerland, the U.S., and the U.K., the QS data show, applicants now expect salaries well in excess of the $129,650 average salary earned last year at Stanford, the Bloomberg Businessweek top-30 full-time MBA program with the highest graduate salaries in the U.S. In the U.S. the average target salary is now $140,000, and in Switzerland it’s $200,000—in both cases the target salary as well as the expected post-MBA salary increase have both declined. In the U.K., MBA applicants are expecting $153,000, an increase—that’s not a typo—from $138,000 the year before.

While an increase is predicted for this year, MBA salaries worldwide have been stagnant for five years, and in the U.S. MBA purchasing power has been losing ground to Europe and Asia for much longer than that. So what gives MBA applicants from these countries the idea that they’ll be rolling in cash when they graduate?

If you don’t accept cockeyed optimism as an explanation, it’s a bit of a mystery. For these MBA applicants to graduate with the kinds of salaries they’re expecting, it seems as if they would all have to get into a small handful of schools that produce MBA graduates with high starting salaries like Stanford (which only accepts 7 percent of MBA applicants) or pursue careers in the highest-paying fields, namely financial services and consulting, neither of which seems plausible.

Nunzio Quacquarelli, the founder and managing director of QS Quacquarelli Symonds, says one possibility is that even though the QS survey asked specifically for expected salary, MBAs instead supplied a figure that includes bonuses and other benefits. He notes that MBA applicants getting ready to spend a fortune on a degree tend to do their research and, with salaries stable or growing in many regions and many fields, they have plenty of reason to be optimistic, even if the uncertainty of the global economy is tempering their optimism.

“There are some candidates who are genuinely delusional, but candidates are pretty thorough,” he says. “MBA salaries have been very robust, and they continue to be quite robust. But that’s not the perception among most applicants. MBA applicants are a little bit risk-averse and cautious.”

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