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Wannabe McKinsey consultants and Bay Street executives are starting to realize that in today’s red-hot labour market, an MBA might be nothing more than a nice-to-have.
Driving the news: The world’s top business schools, from Harvard to Wharton, have seen a serious drop in applications, by 15% and 13% respectively, per The Wall Street Journal.
Yes, but: MBA applications tend to drop when the job market is doing well and tick up during market downturns, as students camp out at business schools waiting for the clouds clear.
- In 2008, the number of people taking the test required for most business school applications (GMAT) hit new peaks and as the pandemic struck, applications rose.
- Given current recession fears you might expect MBAs to be booming, but (for now) the labour market is still holding strong, with unemployment hitting record lows of 4.9% in July.
Why it matters: Beyond a strong labour market, there are more forces at work that are leading potential applicants to question the value of MBAs, once considered a necessity to find succes in the corporate world.
- A 2020 Bloomberg survey showed that most students in top MBA programs agreed that the price tags—some more than US$80,000 annually—weren’t at all justified.
- One recent study suggests executives with MBAs aren’t effective at increasing profits, and figures like Warren Buffet have said business school isn’t necessary.
Around the world, however, North American MBA programs are still popular, particularly with students from Asia and Africa who see them as a way to prove their bona fides and stand out in a competitive job market.
Zoom out: The real test for MBA programs will come if the job markets worsens. There is still, after all, a link between MBAs and future earning potential and a two-year stint in a business program is a much better way to explain that gap in your CV than “Thailand”.