A recent Wall Street Journal article focused on the steep decline in elite MBA program applications. In an era of an increasing divide between the economic haves and have nots, you’d think that the vaunted Masters in Business Administration degree would be valued more than ever. After all, with the recent boom in the stock market coinciding with a steep reduction in corporate taxes, big corporations are awash in profits to reward their highest achievers. Though there has been only slight progress in wage increases for rank and file employees, the top brass is enjoying greater compensation than ever. And a quick look at the CEOs of the companies with highest market caps reveal at least one thing in common: both leaders obtained MBAs from prestigious institutions. Apple’s Tim Cook graduated from Duke’s Fuqua School of Business, while Satya Nadella of Microsoft received his MBA from the Booth School of Business at the University of Chicago.
Yet MBA applications are down sharply, even at the most celebrated institutions. The Journal article has highlighted declines between 5-20% in applications to the top U.S. MBA programs. What gives?
The article points out that a major source of the decline is the uncertainty of current U.S. immigration policy. Getting an MBA in the U.S., but not being assured of long term U.S. residency, is causing more potential international MBA candidates to look locally for their higher education. The result is increased attendance at international MBA programs and reduced focus on American programs.
In the Journal article’s accompanying video, a student points out the opportunity cost of obtaining a business masters. MBA candidates are often already accomplished college grads well into their business careers, which may mean forgoing $100K+ jobs for two years, in addition to piling on tuition costs of $50-100K or more per year. Digging out of that potential $400,000 financial hole just doesn’t make sense for many candidates, especially if they’re already saddled with existing student debt.
LinkedIn Senior Editor George Anders points out that the current strong economy is leading to an increase in business majors at the undergraduate level. “Business is now the most common major by far. If you can learn a lot of finance, marketing, etc. by age 22, why not chase the financial glory right away? There’s no need for an MBA.” Commerce-focused undergrads are entering a hot job market already armed with the skills they need for remunerative careers. With unemployment at record lows, corporations are more likely to snap up less highly trained candidates to fill current pressing needs, offering training opportunities as part of an attractive employment package.
There might be something else going on, as well. Many recent undergrads I’ve spoken to just want off of the nonstop hamster wheel of success and stress. They see the top jobs becoming more and more remunerative, but also requiring more and more dedication and specialization. Giving up two years of their young lives and investing hundreds of thousands of dollars in financial and opportunity cost just isn’t worth it to try to reach the level of becoming mega-rich. Being a billionaire just isn’t what it used to be.
I entered the business world in the 1980s era of “greed is good,” Yuppies, and Donald Trump 1.0. The Official MBA Handbook was a highly publicized bestseller. Three-piece suits, suspender braces, and cufflinks were de rigueur for the legions of ambitious. But the underbelly of that era has been laid to bare in past years—from income inequality to uncontrolled algorithms to #MeToo. There are myriad forces at work driving down the demand for a Masters in Business Administration. Surely one of them is the unseemly side of aiming to become a Master of the Universe.