An analysis of ABS data, published by the ABC in 2019, said people in the highest income bracket in Australia earn over $156,000 before tax annually, or over $3000 per week.
At the time, this top bracket included just 3.8 per cent of all income earners in Australia.
When the analysts looked at that highest earning group by occupation, they discovered that people in five specific professions made up 29 per cent of that top-earning bracket.
More than 62 per cent of the top earners in this group have at least a bachelor degree.
This compares to the workforce average of 25 per cent of people having a bachelor degree or higher. And people in this group tend to work longer hours, with 42 per cent working for 49 hours or more each week.
It was a fascinating and revealing view into the earning patterns within the Australian employment market, highlighting specifically the clout of university degrees and the potential earning power of people in business management roles.
Three of the top five earning groups relate to business management.
And so, it appears that those with a higher, business-related degree, such as MBAgraduates, would have an excellent chance of finding themselves in the top two to three per cent of income earners in Australia, meaning the course should well and truly pay for itself.
But what does the research say?
Here, we look into the evidence behind the average salary of MBA graduates, to figure out exactly how valuable the degree is, in terms of dollar figures.
It’s a valuable exercise, particularly when considering whether MBA fees will pay themselves off and, if so, how long that could take.
A deep study known as the 2020 Graduate Outcomes Survey, funded by the Australian Government Department of Education, Skills and Employment and carried out by the Social Research Centre at the ANU, among many other factors looked into short-term (four to six months after graduation) and medium-term (three years after graduation) salary outcomes for graduates of higher education institutions.
Over 40,000 graduates were surveyed for the most recent study, meaning it’s a thorough and reliable piece of research.
Undergraduates in general, the research revealed, enjoyed a short-term median salary of $60,000 and a medium-term median of $75,000.
Postgraduates, on the other hand – graduates of higher degrees such as Masters degrees – had a short-term median salary of $83,300 and a medium-term median salary of $98,800.
The numbers vary slightly for graduates in the field of business and management, where undergraduates experience a short-term median salary of $79,300 and a medium-term median salary of $92,900, and postgraduates had a short-term median salary of $89,900 and a medium-term median salary of $95,100.
Salary comparison business PayScale, utilised by over 8000 employers to help manage their salary requirements, says the average salary of an MBA graduate, irrespective of time since graduation, is $101,799.
Typical types of jobs that MBA qualifications tend to be required for will attract certain amounts, PayScale says.
A CEO, for example, will average $180,000. A project manager salary will average $108,000, and an operations manager will average $110,000.
Other typical MBA-qualified roles, and average salaries for the MBA graduates holding those roles, include general manager at $129,000, senior business analyst at $115,000, and marketing manager at $93,000.
Importantly, the job satisfaction rating of MBA graduates, their data says, is four out of five, or ‘highly satisfied’.
According to PayScale major employers of MBA graduates include
It’s not just in Australia that MBA graduates are in demand.
Many of the world’s most successful businesses, including Google, Amazon, PwC, Microsoft, McKinsey, Boston Consulting Group, Facebook and EY, are major employers of MBA qualified graduates.
The world of startups is also getting in on the MBA action.
A global, 2019 study by the Graduate Management Admission Council revealed 62 per cent of businesses that define themselves as startups intend to hire MBA-qualified talent within the next 12 months.
Of course, MBA graduates also launch their own startups, often with astounding success. Some of the best known businesses, including Deliveroo and Atlassian, came from the minds of business entrepreneurs recently graduated from an MBA.
The same report says that in the US, the starting salary for MBA graduates is at a record high – US$115,000 – with 56 per cent of businesses intending to increase starting salaries.
Of course, salary may not be the aim of the game at all for certain MBA candidates.
Many take the degree in order to be the master of their own domain, to launch and run their own business. If that’s the case, then the sky is the limit in terms of what sort of income, or lifestyle, a graduate might achieve once the powerful qualification is theirs.
A graduate salary means nothing if it’s not an improvement over what the graduate earned prior to the MBA.
Of course, it would be expected that an employer would pay more for an MBA graduate, compared to the same individual without such a qualification. But, once again, it’s important to look to the data to find out what the evidence says.
The 2019 BOSS MBA Raking study showed that graduates from Australian MBA programs did, indeed, earn quite a healthy pay bump.
Those graduating from MBA degrees saw a very impressive combined average pay rise of 28 per cent, to an average of $157,000, a report in the Australian Financial Review said.
Even more remarkable was the Executive MBA salary increase. Those that graduated from EMBA courses, the AFR said, saw their average salary rise from $154,000 before the course to $222,000 afterwards.
That’s an average salary increase, post EMBA, of 44 per cent!
The increased employee value that comes from an MBA, researchers say, is evident on a number of levels.
Leadership skills and knowledge are vastly improved, teamwork and collaboration capabilities and management of related processes are dramatically enhanced.
Also boosted are strategic thinking skills and knowledge, communication capabilities in a broad array of business environments and, of course, a deep understanding of specific business specialisations such as finance, accounting, marketing, HR, IT and more.
For an employer, it’s a potent offering that is clearly worth significantly more in terms of salary.
Do MBA graduates from all industries experience the same enormous income boost once they have completed their studies, or is the pay rise confined to specific areas of business.
The simple answer is that research has shown impressive salary increases across all industries, but they’re not all equal.
One powerful piece of research conducted by Transparent Career, a US-based compensation and culture platform that specifically targets its studies around what businesses are paying MBA graduates, looked into pre-MBA salaries and post-MBA salaries from individuals who graduated between 2009 and 2018.
The post-MBA salaries came from any time up to five years after graduation and while it was an international study, most data came from US-based business schools. The research took in over 11,400 salary points and revealed an average pre-MBA salary of U$79,505 and an average post-MBA salary of US$116,248.
“Our data suggests than an MBA degree confers an immediate increase of US$36,742 in annualized salary – a nearly 50% increase in compensation,” the resulting report says.
As this data is heavily US-based, it doesn’t mean quite as much to those considering an Australian MBA. However, great insight can be taken from their industry breakdown.
The five industries in which salaries increased most dramatically by percentage were:
The five industries in which salaries increased most dramatically by dollar figure were:
Finally, the five industries with the lowest gross salary increases after graduation from an MBA were:
From the numbers they crunched, the team at Transparent Career claim that those attending the top-flight MBA schools can likely pay off their course fees within three years if they’re in a top industry such as finance and consulting. And they only need to use their pay rise to do so. Those in industries that experience lower percentage or gross salary increases will still pay off the course, with their pay rises, within ten years.
What, then, does the evidence say about salary increases emanating from an MBA? The evidence overwhelmingly shows that salaries are affected, often quite dramatically, in a positive way. While the difference may vary according to industry, most graduates realise a considerable increase in salary within just a few years of graduating from their MBA.
The payback period is typically three to ten years but, more importantly, the career opportunities that open up to graduates, and the resulting job satisfaction and lifestyle improvements, are immeasurable.