The Economist Asks: Is the MBA Still Worth It?
Maria |
March 6, 2025

In this episode of Business Casual, the hosts dive into a controversial article from The Economist questioning the value of an MBA. They dissect the article’s claims, highlighting the cyclical nature of employment trends and the selective job acceptance of top MBA graduates. The discussion also explores the impact of AI on the job market and reaffirms the long-term value of an MBA in navigating complex business environments. Tune in to hear why the hosts believe the MBA is far from obsolete and remains a powerful asset for future leaders.

Episode Transcript

sM[00:00:00] John Byrne:

Hello everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host, Caroline Diarte Edwards and Maria Wich-Vila. We were astounded to read, in a recent issue of The Economist, a piece that basically questions the value of the MBA. The title of it is, Why Elite MBA Graduates Are Struggling.

Is the Degree Still Worth It? And basically what The Economist did was, it took the latest employment reports from the top schools and showed that obviously in the past year, MBA graduates have had a more difficult time finding the jobs that they want. It noted that at the top 15 business schools, the share of students who sought and accepted a job offer within three months of graduation fell by six points to 84%.

If you compare that to the average over the past five years, the share declined by eight points. And it goes on from there and gives a bunch of different reasons why it thinks that business schools are in trouble and the MBA is in decline. What it doesn’t know, in fact, is that still the numbers of people getting jobs within three months are very high.

At schools who reported the worst numbers, like at Harvard and MIT, where 23 percent of the graduating class did not accept a job three months after graduation. It makes no note that a lot of this has to do with selectivity, meaning the graduates who quit jobs that paid them a fair amount of money are very effective in the jobs that they want to get after their MBA.

And in many cases, they jobs. With companies that don’t do recruiting of MBAs on the natural cycle of recruiting and that’s primarily because they don’t recruit a lot of MBAs. We’re talking about employers like hedge funds, private equity firms, some wealth management places, early stage companies, and some startups that obviously it’s onesie and twosie kind of recruitment of MBAs.

And they don’t recruit on a cycle where, okay, the everyone’s graduating at this date. And so we’ll start them in August. And that’s part of what has gone on at some of the schools that are reported these lower numbers. The other thing is, yes, the economy was little uncertain and consulting firms did cut back on their hiring and certainly tech firms did as well, but all signs are for already a recovery.

You talk to career management people at the business schools and they will tell you that the number of companies returning to recruit people for internships and for job offers and the job boards have become just loaded with a lot more jobs than they had a year ago. So Maria, what do you make of the economist’s sort of negative take on the MBA?

[00:02:58] Maria Wich-Vila:

Everything old is new again and whatever gets clicks, you can’t fault them for going after the clicks, although I do wish that their their analysis would have been a little bit more in depth and a little bit more trying to get at some of the core reasons behind some of these numbers, so the title says why elite MBA graduates are struggling to find jobs, but then the It doesn’t really answer that question.

It just talks about these numbers are going down. And, I think economies are cyclical. And as the economy cycles through its ups and downs, the hiring is also going to cycle through ups and downs. And one year real estate might be the hot industry that everyone goes into and then two years later, no one’s going into real estate and the same thing happens with tech.

I’m sure that we’re going to start seeing an influx into manufacturing probably in the next year or two. So these cycles come and go. And so I think that overall the death of the MBA reports of the death of the MBA have been greatly exaggerated. One point that the article made was that they thought that perhaps these consulting firms might start looking more towards people who have advanced degrees in technology instead of only going after MBA talent.

And that might work in the short term, but I do think that is not sustainable long term because the technological aspect of it. That’s only one piece of it. The technology, without knowing how to implement the technology alone doesn’t do a whole lot. You need to know how to implement it, how to implement it well, and how to implement it efficiently.

Even in this nascent age of ai, we see so many hallucinations in ai, for example, where an AI algorithm or a chat bot will give you an answer that is absolute nonsense. Waving, throwing your hands up in the air and saying that’s it. It’s over for the MBA because the AI is going to take over everything and only the engineers will have jobs.

If that were the case then there would have never been the rise of the MBA in the first place because it’s not like degrees in computer science did not exist until this year. That technological talent has always been out there. And yet, employers have found that there is in fact a benefit towards having a managerial education that looks at the different moving parts of an organization, operations, marketing, finance, etc.

And knows how to keep all of those pieces in balance when making decisions. I, Do you think that this is just a temporary glitch in things? And I think that we will reach an equilibrium again, once the economy starts to turn around.

[00:05:21] John Byrne:

Caroline, your take?

[00:05:24] Caroline Diarte-Edwards:

Yeah, I’m a big fan of the economist usually, but I find this article rather sloppy.

And we’ve seen it before. Every time there is a downturn in the recruitment market. And there is a downturn with every economic cycle. And there’s another generation of journalists who jump on this and think they’ve discovered something new and make a big song and dance about it, predicting the downfall of the MBA.

And then surprise, 12 months later, they’re writing about the uptick in recruitment for business school graduates. I think the article completely fails to take into account the longer term perspective and how we have seen this happen again and again over the decades. So I think, unfortunately, it’s a rather poorly informed journalist who doesn’t understand the context who’s written this article.

And it’s a shame because The Economist has a very big platform, and this article, I’m sure, has had a lot of visibility. So I think it’s a bit unfair to knock the MBA and question its fundamental value just because there’s been a batch of disappointing recruitment statistics. And, you make a very good point, John.

I think a lot of graduates from the top schools are incredibly picky about the positions that they want to take up. And I’m sure that if they took the first job offer they got, or they were willing to take any job offer that came their way, then all of those Harvard and MIT grads, etc, could have jobs lined up pretty damn quickly.

And that is backed up also by the data that you note in your article about some of the mid tier schools who actually have. Pretty strong recruiting statistics, right? So it doesn’t mean that if you’re graduating from Manchester business school, you have better opportunities than if you’re graduating from Harvard business school, but Harvard’s had a downturn in their recruitment stats and Manchester’s had an improvement in their recruitment stats.

So what it means is that those Manchester graduates are taking jobs that probably the HBS graduates are not going to take, right? So those top tier school graduates are are taking their time and. Yeah, rightly they have fantastic credential under their belt. They will have amazing opportunities and they don’t have to jump on the first thing that comes knocking at their door.

Yeah, it it’s a disappointing article in my view.

[00:07:55] John Byrne:

And then the writer even quotes in books that are negative on the MBA that are more than a decade old, which is really astounding. Now, Maria, you made note of this in our pre podcast call. Maybe you can talk a little bit about that.

[00:08:14] Maria Wich-Vila:

Yeah, in the middle of this article, there’s a really superfluous paragraph that cites a study from 2007 that says that when compared with firefighters, MBA students are more likely to be upset if a friend bought the same car as them. Okay, what? This study is from 17, almost perhaps even 18 years ago.

And what does this have to do with employment?

I’m used to using the phrase apples and oranges a lot. So comparing apples and oranges, comparing firefighters with MBAs, what does this have to do with. Anything, a study from 17 years ago about what MBA students think about car purchases oh this doesn’t even belong in the same publication, much less the same article, it almost felt like to me there was some sort of like a word limit that the writer was trying to get at.

And they’re like here’s some stuff that I put together for a completely unrelated article. Let me just paste it in here. So I just, I don’t understand that at all. And then also at the very bottom of the article, there’s a heading right before the end that says Donald Trump, MBA. And not only does the following paragraph not really have anything to do, I guess indirectly with Donald Trump, but Donald Trump doesn’t have an MBA.

So when Caroline, again, our resident diplomat, our resident ambassador said, I think that the author does not fully understand the context. Yeah, they don’t. Do they think that Donald Trump has an MBA? Cause Donald Trump does not have an MBA. So right off the bat I whoo, this is a head scratcher of an article.

And unfortunately it, I think it does make some interesting points. It certainly raises some interesting questions, but then unfortunately it doesn’t then proceed to answer them. And then what other, what few interesting points it does make or interesting questions it does make it it, it discredits itself with this random article about by the way, while we’re talking about how McKinsey is hiring fewer people from Harvard let’s also bring up a study about MBAs and firefighters and how they compare with their, what, with their car purchase decisions.

Okay. Okay. Yes, sorry. Sorry, sorry economist.

[00:10:11] John Byrne: Caroline your favorite magazine is really did a boo here I think.

[00:10:15] Caroline Diarte-Edwards: Yeah, they certainly did. Bad marks. Zero out of 10 for the economist , it’s a shame because,

[00:10:24] John Byrne: yeah, go ahead.

[00:10:25] Caroline Diarte-Edwards: I was just gonna say, it’s a shame because I think as Maria said, it does raise some interesting questions and I think there is an important debate to have about how the job market may transform.

We are living in an age of unprecedented change with artificial intelligence, and that is going to transform the job market. And it may be that schools are feeling the impact of that already. It may be that, for example, consulting firms are not needing to recruit as many junior staff as they needed to in the past because of AI.

We also know that AI is going to create a lot of jobs. And we know that business schools have done a great job in integrating AI into the curriculum. So they are preparing graduates to, to take leadership roles and manage change and do all of that implementation work that Maria talked about, but they’re just, they’re going to be massive shifts, right?

In the jobs that People took coming out of business school 10 years ago will look very different from the jobs that people will be taking out of business school in 10 years time. And I think those shifts are starting to play out. And I think, they could have done a bit more research to understand.

What is happening on how that transformation is playing out. And you also cite in your article, an interesting report that talks about the expectation of a growth in demand for MBAs. And AI is predicted to create more jobs than it destroys. And I think MBAs are going to be very well positioned to take advantage of that, right?

Because MBA graduates are well prepared to to manage Organizational change, transformation, take the lead in a context of ambiguity in a fast changing environment they are well equipped with those skills, so I think the business school graduates are going to be very well positioned in this new job market.

And it’s a shame I think The Economist didn’t dig into that a little bit more.

[00:12:23] John Byrne:

Yeah, if anything, AI is going to have a greater impact on business undergraduates who, have done very well. In the past, but the truth is that the enrollment in undergraduate programs at a number of universities now it’s just astounding.

There are some universities where business undergrads make up well over a third of all the undergraduates at a university and everybody has been expanding these programs over the last decade. Because they’re in such demand. But you wonder how AI is going to eliminate some of those entry level jobs for undergraduates and will undergraduates be finding themselves working for insurance companies and not meeting the expectations that have been met by a previous generation of undergrads.

In terms of the graduate degree, I agree with you. Look, business is not getting simpler. It’s getting more sophisticated, more challenging, more competitive, more global, more disruptive. And that calls for higher education, smarter people not dumber people and not less education. So as the world becomes more challenging and more complex, it’s going to require managers who can deal with that complexity.

And I think. That graduate education is a great start for training people to basically deal with and manage the complexity of business today. Caroline, I think you have recently absorbed a future of work report from the world economic forum. What does that say?

[00:14:03] Caroline Diarte-Edwards:

I was just reading an article about that, and they say that 60% of employers expect digital access to transform their business by 2030.

And it says that analytical thinking remains the most sought after course skill with seven out of 10 companies considering is it essential in 2025. So I think that’s very relevant, right? Because business schools are definitely giving. graduates great frameworks and cultivating analytical thinking.

It goes on to say, this is followed by resilience, flexibility, and agility, along with leadership and social influence. So it talks about creative thinking, et cetera. So all of those skills are skills that are cultivated through an MBA program. So I do think that this research that the World Economic Forum has done.

really speaks to the the skills that will be required. And I think that MBA graduates will be very well positioned in that environment. And I think it’s also important to keep in mind that as a graduate degree, Business school prepares you for so many different paths, right? There are other graduate degrees that are much more specific and I think can get you locked into a specific career path.

And that is not the case with business school. I think one of the beauties of this this degree path is that it means that you can Tackle any role in a business environment in the future. It just gives you that amazing foundation and business school graduates often are changing careers and they often reinvent themselves, not just when they graduate, but again and again in their careers.

And it gives them the confidence and the skills to do that. But also I think that the network gives you. A fantastic safety net, because it means that if things don’t work out in your current career or your current position, you have an amazing network of people you can reach out to who can help you with your next step and help you move to a new position or help you transform your career again if you need to.

That’s an amazing resource and asset to have that stays with you. Without throughout your career. So I think that it’s a great asset to have that equips you for an environment. That is where the pace of change is increasing and you will need to reinvent yourself in a way that you can’t even anticipate now.

So I think those softer skills that the MBA cultivates will continue to be relevant and probably even more relevant in 10 years time than they have been in the past.

[00:16:48] John Byrne:

I think getting an MBA degree is a heck of a lot easier than getting a medical degree, a law degree, or a computer science degree.

And yet, you’re not locked into law, medicine, or computers if you get an MBA degree. So I think that’s for all things to they support the notion that the most popular graduate degree in America, in part because of all of these attributes that you can place on it. And the flexibility the degree gives you in the world of work.

So I, I think we can pretty safely conclude that the economist is badly misinformed and misread a slight decline in employment stats for one year to go on and extrapolate that to say the degree may not be worth it anymore. And And we’re going to even cite studies that are over a decade old to tell you how MBAs aren’t as good as firefighters as people,

[00:17:49] Maria Wich-Vila: …which in fairness is probably a valid statement to make!

I just want to be clear, but it’s just not super relevant to the discussion at hand.

[00:17:58] John Byrne: …says the Harvard MBA marry to another Harvard MBA? That’s right.

[00:18:04] Maria Wich-Vila: And we thank our firefighters here in LA every day. So…

[00:18:08] John Byrne: And you know what, Maria, I think of you as a firefighter anyway.

[00:18:13] Maria Wich-Vila: You know what? We MBA graduates are putting out fires of different sorts.

Slightly less perhaps a little bit less fatal, but fires nonetheless (?) .

[00:18:24] John Byrne: There you have it. Take a look at the Poets and Quants commentary, The Economist Asks, Is the MBA Worth It? And take a look at The Economist article and see if you draw the same conclusions as we did about it. This is John Byrne with Poets and Quants.

Thanks for listening.

Business School News | General | P&Q Podcast "Business Casual"
The Economist Asks: Is the MBA Still Worth It?
Maria |
March 6, 2025

Video transcript, for you skimmers out there: 

I love the fact that they. Report on this metric, right? The salary percentage increase, I think is an incredibly valuable metric because there are so many business schools out there that are great for so many people. And at the end of the day, these programs are in fact able to do what a lot of business school applicants are hoping for.

They are in fact able to provide a real change in the trajectory of someone’s career. They are, in fact, able to help people leapfrog. Into a higher career stratum than they would’ve otherwise been able to be in. So from that perspective, I love the fact that the FT reports on the salary percentage increase.

So valuable. I think it helps, when sometimes I talk to people at the beginning of the business school journey, I will frequently hear something like, well, it’s M seven or bust, you know, it’s Harvard, Stanford, Wharton, or bust.

And I’m often like, look, slow your roll, man. There are so many programs out there that are going to get you. They might not be the first ones that you think [00:01:00] of, but wow, does that even matter? I mean, whew. Look at some of these numbers. $170,000. That is nothing to sneeze at, especially if it’s one and a half times more than what you were making before business school.

I mean, wow. , That is life changing. , And these schools can really change people’s lives. And I think it’s important to have this metric available because I think it helps open people’s eyes. To, To be a little bit more open-minded. , And I think that’s wonderful.

Where my little quibble is. Is that I believe this is an important metric to report upon. However, I do not believe that it is a metric that should have significant amount of weight in the rankings because if we think about what is the purpose of a ranking, it is meant to be some sort of a representation of relative quality.

Now rankings. The entire concept of them is flawed the entire, for me, the entire concept of an ordinal ranking is ridiculous. Like school versus two versus four, versus seven versus six . You know, like, there, there’s sort of [00:02:00] these tiny miniature marginal differences. I think that school rankings should instead be in buckets.

Like, here is the top bucket, and then here is the also very good, but just underneath the top bucket, the next bucket. Um, but no one, no one listens to me. Uh, but so anyway, to the extent that a ranking. Is intended to be some sort of a measure of a program’s quality. I don’t think that this metric is one that should be included in the weighting.

Look, again, . Life-changing levels of improvements in salary. But when I look at, okay, so these were the top five programs by the salary percentage increase, but now when I look at it by the weighted salary, right, the top five US programs, by weighted salary, it’s not entirely accurate to say that.

Well, these programs, you start with people who have lower incoming salaries and they end up in the same place as the other programs. The numbers do not [00:03:00] really, , the numbers would tell a slightly different story. So if you look at the weighted salary a few years out for the top five programs by salary,

we’re talking about a $70,000 a year difference, roughly 240 a year versus 170 a year. That’s about a 40% difference, which I don’t think is a small, you know, if we were talking 5%, even 10%, I’d be like, yeah, 10%, that’s nothing. It’s, you know, nothing but 40% I do think is a pretty, I think it’s a pretty significant difference, uh, that is worth noting.

And so. Your point about like, well, they were letting in the people who were already on a, you know, if you were making, let’s see if we can, if we figure out, okay, so if we take this, these numbers, then we can sort of back into what’s an implied pre MBA salary, you know, that would indicate maybe something in the mid sixties before MBA versus, you know, one 10 something, [00:04:00] 1, 1 10, 1 15, for these other programs.

I get your argument. Your argument is like, look, these people were already clearly high achievers prior to business school, and so, mm-hmm. Is it not true then that the business school, like they would’ve continued to be high achievers And in fact, this is true, some of the most successful, financially successful people I know skipped business school altogether and they didn’t need it.

, However, I think GMAC often does, polls or surveys of MBA graduates, and I think the vast majority of them, at a minimum say that they’re glad that they went to business school, that they do feel that it was worth, their time. So. How much of this is,, nature versus nurture.

We, we will never know. , But I would gently push back on the fact that I, because these numbers essentially to the extent that they’re lower than say these numbers, it effectively penalizes thes e schools in this ranking. And for that reason, I don’t think that it should be part of the ranking because you’re penalizing a school for letting in more successful people.

But there’s a benefit. [00:05:00] To attending. Like, first of all, if you are a more successful person, think of the opportunity cost that you’re giving up. So the fact that these schools are able to lure away people to give up two years of their salary, in order to go to business school in the first place, I think is a pretty good indicator of the desirability or the perceived desirability of those programs.

Also, I do think that there is merit to thinking about like, who are my peers going to be in a business school? and. If a school is attracting people who were more successful prior to business school, I actually think that that is an indicator of the quality of the school, not only because it shows the people that are willing to give up those two years of salary, but also think about who the peer group is once someone is in the school.

Right? That means that if you are attending one of these schools. This percentage isn’t as high, but you’re surrounded by people who, prior to business school, were already achieving on a different level. And also after they graduate, they continue to achieve on a different level. True. The slope is not as sharp.

Right. But the.

[00:06:00] Result is a larger number. So I think that this implies that perhaps at the school itself, you might be surrounded by people who are driven. some people might say more competitive, which might not be everyone’s cup of tea, but people who are more driven and also after they graduate, they continue to be driven.

And so I think that also implies something pretty powerful about the ultimate benefit of the network because business school isn’t just the two years you go there and it’s not just that first job you get out of school or that third job you have five years out of school.

it’s also who’s your network gonna be and, and who are you gonna call 10, 15, 20 years after graduation? To invest in your company or to partner with your company or to start a company with. so I do think that there is value to attending a school and to have your peers during school and after school be people who were, for lack of a better term, high performers.

[00:07:00] I don’t think that this should be punished because I do think that this does yield a better business school. Experience and a better result in the long term. And so my quibble, again, I love this metric. I think this is an amazing metric to provide, but my quibble is that this should not be given honestly, any weight at all, and certainly not the high level of weight that it’s given, because again, you’re punishing the schools that, you know, you’re basically indicating that I, what I would say is an indication of quality.

An indirect indication of quality, but an indication of quality all the same. You’re basically punishing the schools that have sort of higher quality, quote unquote, coming in. And, and that to me is. Counterintuitive and kind of wrong. And so that’s why I continue to think that this should not be, uh, reported upon.

Absolutely. Tell us. It’s important. I think it’s great to know. I love using this information, but I don’t think it should be used in terms of like, let’s figure out which programs are the , [00:08:00] quote unquote highest quality programs. But what do you think? What did I miss? let me know. Thanks.

Maria

New around here? I’m an HBS graduate and a proud member (and former Board Member) of AIGAC. I considered opening a high-end boutique admissions consulting firm, but I wanted to make high-quality admissions advice accessible to all, so I “scaled myself” by creating ApplicantLab. ApplicantLab provides the SAME advice as high-end consultants at a much more affordable price. Read our rave reviews on GMATClub, and check out our free trial (no credit card required) today!