An MBA is one of the most sought-after degrees, especially for those who aspire to become a chief executive officer (CEO) or chief financial officer (CFO). Many vice presidents, directors, managers, and other members of leadership teams also have an MBA. If you already have your bachelor’s degree in business or a related field, or you’re in the middle of a program, then you might already be thinking about taking the next step in your education by earning a Master of Business Administration (MBA).
Many CEOs of Fortune 500 companies have MBAs, and it can safely be said that they enjoy healthy annual salaries. However, is there really a huge difference between what a Bachelor of Arts (BA) graduate and an MBA graduate make? How much does an MBA increase your salary? The answers to the questions depend on a few factors, such as industry, job title, experience, and geographic location. The average MBA salary estimates range from $75,000 to well over $100,000. However, to get a more comprehensive outlook for what your starting salary may be, it’s best to look at several data points.
What is an MBA?
An MBA is a graduate degree that helps to prepare you for a career in business. In your MBA program, you’ll learn the business acumen and skills to become an entrepreneur or apply for a leadership role at an established company.
A general MBA degree program will have a curriculum that covers all of the basics. Although the core coursework of an MBA degree may include finance, marketing, accounting, leadership/management, communications, economics (micro and macro), and business ethics, MBA programs offer different concentrations which can have different salaries. For example, if you choose marketing as your MBA concentration, then your classes will become more focused on areas such as e-commerce, analytics, and sales and marketing, whereas an MBA with a concentration in accounting will focus less on areas such as leadership and marketing. It’s helpful to have an idea of what you want your career path to be when selecting a concentration.
Data shows that STEM (science, technology, engineering, and math) MBA degrees generally command the highest salaries.
Before delving further into the average MBA salary, a brief review of the types of MBA programs is also pertinent as those can also impact salary.
Types of MBA programs
Remote learning is becoming more prevalent, which means you have more MBA program options to choose from. Which program you choose really comes down to your personal learning style and what’s ideal for your schedule. Universities now know that education isn’t a one-size-fits-all type of affair, so most of them offer on-campus, online, accelerated, executive, and part-time MBA programs.
The fastest path to an MBA is the accelerated MBA program, which condenses the traditional 24-month MBA program down to 12 months.
If you work or have family obligations that keep you from attending school full time, the part-time MBA program is designed to provide a flexible schedule. The part-time MBA program generally takes three to five years to complete, depending on how much time you can devote to coursework.
The executive MBA program (EMBA) can be completed in two years; however, the caveat is that you must have several years of managerial experience. Although you can take your classes at night and on the weekend, this might be a challenge if you are looking for work-life balance.
Part-time vs. full-time MBA salary
The part-time MBA program is a good fit if you have other obligations or need to keep working for the two years that it would take to get an MBA through the full-time program. Some advantages of the part-time MBA route are:
● You can hold a full-time job while pursuing your MBA. Students in full-time MBA programs are attending school for two years before they have the opportunity to look for a job and put their degree to use.
● Sometimes employers are willing to pay for all or part of your tuition. Of course, if your employer pays for your tuition, expect to sign some kind of employment or loyalty contract. They will want to see a return on investment.
Remember, as a full-time MBA student, you won’t have a full-time job because of the time commitment. At most, you’ll have a part-time position.
After graduation, part-time MBA graduates will face the challenge of convincing their employers that they deserve a higher salary and more responsibility. If your current company doesn’t have a higher-level position available, then the salary renegotiation could be brought to a standstill. Even if your employer paid for your MBA, it doesn’t have to promote you or increase your salary. Historically, this has been a challenge that part-time MBA students face. One way that some MBA recipients have gotten around this is by seeking employment at an entirely new company or searching for a new role that is a good fit for their newly acquired skills and degree.
Both students who earn part-time and full-time MBAs tend to see significant salary increases. However, these jumps in salary are situational and may not take effect immediately in the case of the part-time MBA graduate.
Why should you get an MBA?
As an MBA graduate, you’ll be applying for roles that offer a higher salary than someone with only a BA or no degree at all. In the current competitive job market, MBA graduates have a distinct advantage because they qualify for a wider range of positions (even without on-the-job experience) and higher entry-level positions than BA graduates. According to U.S. News & World Report, compensation projections published by the National Association of Colleges and Employers predict that the average starting salary for MBA grads in the class of 2021 will be $87,966 – 11.3% higher than the average starting salary among 2020 grads.
Beyond salary, your MBA can provide the following benefits not available to BA graduates:
● A wider professional network that includes industry professionals and other MBA holders you’ve met through your MBA program
● More education and an advanced skill set acquired through your MBA program
● The prestige that comes with having an MBA — a credential that most investors and potential partners like to see
Your MBA can help you qualify for more job opportunities, give you a more solid network, and even offer you a higher salary than someone with only a BA. How much does an MBA increase your salary? We’ll delve deeper into salary information specifics by job title and location (state) below.
How much does an MBA increase your salary?
How much you earn is going to depend on several factors: Your education, experience, location, and the industry you’re in all play a role and are in constant flux. The salary estimates you get today could very well be different next month, so think of them more as indicators and guides as opposed to hard facts.
One consistent data point is the salary range between those without a degree, BA graduates, and MBA graduates. BA graduates earn more than those without a degree, but MBA graduates earn the most out of the three groups.
The specifics of how much an MBA increases your salary will be broken down below using a few different examples and industries.
MBA vs. bachelor’s salary
Before delving into hard numbers, you should know that the salaries mentioned here come from multiple sources and salary studies that were conducted at different times. Salary data is subject to fluctuation, but the core principle that MBA salaries are higher than those of BA graduates stays consistent throughout.
According to a 2019 wage study from the U.S. Bureau of Labor Statistics (BLS), the median weekly earnings for BA graduates were $1,248 compared with $1,497 for MBA graduates — a difference of nearly 20%.
The National Association of Colleges and Employers (NACE) salary projection for MBA recipients in 2021 is more than $29,000 higher than the projection for individuals who receive a bachelor's degree in business this year. Experts say that an MBA often serves as a gateway to business leadership positions, and management roles typically involve higher salaries than nonmanagement jobs.
Finally, 2019 salary projections from the NACE Salary Survey show significant differences in salaries by degree type in the following broad categories:
● Engineering: $69,188 with a bachelor’s vs. $82,589 with a master’s (19% increase)
● Computer science: $67,539 with a bachelor’ vs. $81,466 with a master’s (21% increase)
● Math and sciences: $62,177 with a bachelor’s vs. $75,347 with a master’s (21% increase)
● Business: $57,657 with a bachelor’s vs. $77,347 with a master’s (34% increase)
Based on the data of MBA vs. bachelor’s salary estimates, it’s likely that you’ll earn about 20% more as an MBA graduate than you can earn with just your BA. The 20% can be applied to careers both within and outside the business industry. Sometimes, MBA graduates venture into industries completely different from what their MBA program prepares them for.
However, if your career path is going to be in the realm of business, the numbers show that MBAs make at least 30% more than BA graduates. Regardless of the industry you choose, you’ll likely see a salary bump with an MBA, but staying within the business realm will help you maximize your earnings.
What is the average MBA salary?
The following data regarding the average MBA salary by concentration has been sourced via PayScale. The salaries are national averages.
● MBA, no concentration, $89,219
● MBA, leadership, $81,864
● MBA, business management, $85,594
● MBA, supply chain management, $86,405
● MBA, marketing, $93,523
● MBA, operations management, $104,780
● MBA, business administration, $81,971
● MBA, accounting, $75,593
● MBA, management, $87,199
● MBA, international business, $95,590
● MBA, business and marketing, $92,799
● MBA, accounting and finance, $91,895
● MBA, project management, $83,191
● MBA, management information systems, $104,052
● MBA, entrepreneurship, $100,286
● MBA, strategy, $119,914
The following data regarding the average MBA salary by job title has been sourced via PayScale. The salaries are national averages.
● VP of marketing, $164,000
● Senior accountant, $69,000
● Financial coordinator, $90,000
● Staff accountant, $53,000
● Project manager, $83,000
● Operations manager, $76,000
● CEO, $187,000
● Marketing director, $109,000
● Marketing manager, $78,000
● Senior marketing manager, $118,000
● CFO, $148,000
● Financial controller, $92,000
● Corporate controller, $103,000
● Project manager (specializing in information technology), $87,000
● IT director, $141,000
● IT manager, $103,000
● Product manager, $105,000
● Management consultant, $124,000
● Senior product manager, $133,000
● Director of strategy, $151,000
● Senior financial analyst, $84,000
● Supply chain manager, $96,000
● Director of supply chain management, $138,000
● Director of operations, $117,000
What is the average MBA salary by state?
As previously mentioned, the salary fluctuates based on many factors, such as job location. The following data from ZipRecruiter covers the average MBA graduate’s salary by state.
The BLS has salary information for several job titles. For the average MBA salary by state, we’ll examine the careers of project management specialists and business operations specialists, as these positions tend to require an MBA.
Regardless of gender, the likelihood of a higher salary is greater for an MBA graduate than a BA graduate.; Although an MBA doesn’t erase the gender wage gap, it does help narrow it. According a recent study from the Forté Foundation, a nonprofit organization promoting female leadership and workplace equality
● Women with MBAs saw a 35% to 40% increase in salary upon completing their degree, and a 55% to 65% increase in salary within the next five years
● Women of color saw a 70% post-MBA salary bump
● The average amount of time to recoup the return on investment for the MBA degree averaged four years
In short, the average salary for women with an MBA is higher than those without one, but the wage gap remains present despite educational advancement. Historically, men have always earned more than women, and the data sourced since 1979 backs this up. According to data from the Current Population Survey, women who were full-time employees made 82.3 cents to the dollar that men made in 2019. Having more female MBA holders in positions of power and leadership can help improve this statistic and hopefully eliminate it altogether.
Earn your MBA and prepare to increase your salary
If you’re interested in increasing your current salary, the data is clear: an MBA gives you the best opportunity to qualify for leadership roles and higher-paid positions. Multiple sources show that MBA holders are likely to have higher salaries and enjoy improved career opportunities than those with just a BA degree. Pursuing an MBA will take some upfront investment of time and money, but both the short-term and long-term benefits make the degree a worthwhile investment if you’re interested in a higher salary or additional leadership opportunities in your industry.
The first step to getting an MBA is to research MBA programs. Our recommendation engine can help you find the perfect program for your learning style, schedule, and career goals.
With Pearson Pathways, you can start researching MBA programs today.