Is the MBA Job Market Slowing Down?

Employment rates at America’s most elite business schools are falling amid layoffs and pay freezes in consulting, banking and technology

Several of the world’s most prestigious business schools have reported a drop in the employment rate for 2023’s MBA graduating classes, against the backdrop of wider layoffs in some key sectors and economic malaise.  

But other schools insist that hiring outcomes remain solid, even in the face of the economic slowdown.

At Harvard, one of the world’s top business schools, placement rates have dropped to levels not since in more than five years. Harvard said that the employment rate for its latest graduating MBA class was 86 percent last year, down from 95 percent in 2022 and 96 percent in 2021.

This chimes with other elite American business schools including Yale, Chicago Booth, Dartmouth Tuck, Michigan Ross and Cornell Johnson, where placements rates have all been down for 2023’s graduating MBA classes.

This comes amid increasing evidence of a drop-off in recruitment in the three sectors that have usually hired the most MBA graduates: finance, consulting and technology. Companies in these industries have frozen salaries and delayed start dates for some new MBA hires amid the economic uncertainty, business schools say.

Consulting firms hold pay levels

Consulting firms including McKinsey and BCG have reined in costs, with the starting salaries for new MBA hires being held at 2023 levels, according to media reports. These firms have been among the most prestigious and well-paid employment destinations for business school graduates, but the pay freeze will erode the value of salaries against inflation this year.

McKinsey typically offers $192,000 in base salary to a fresh hire from business school.  

“Given the surge in consulting hiring in recent years, average salaries naturally went up since the industry is known for its generous compensation. In reverse, as hiring by top consultancies has softened this year and more MBAs look to other industries, we can expect those numbers to flatten,” says Sheryle Dirks, associate dean for career management at Duke University’s Fuqua School of Business, in North Carolina.

At Fuqua, the post-graduation employment rate has fallen to 93 percent in 2023, compared with 98 percent in 2022.

It is a similar story in the finance sector, with banks shedding jobs in 2023 as fees fell on the back of reduced dealmaking and public listings activity. Twenty of the world’s largest lenders cut more than 60,000 jobs in 2023, according to the Financial Times.

This has been troublesome for business schools not just in the US but also in Europe, which have not been immune to the recruitment slowdown.

“Capital markets in 2023 were under pressure from geopolitical tensions, rising interest rates, energy crises, and slowing economic growth, leading to a difficult equity market with very few IPOs, flat to declining M&A activity, and cautious hiring in the banking sector,” says Julia Vanderpool, Team Lead for Career Counselling at Frankfurt School of Finance and Management, in Germany.  

“Traditionally, a majority of MBAs seek out finance or consulting positions, and finance salaries have been flat, especially signing bonuses. However, consulting salaries have continued to grow,” she says.

Tech companies have also cut back with more than 25,000 lay-offs announced in 2023, according to data provider layoffs.fyi, as a pandemic-era hiring spree went into reverse.

Questions about return on investment in MBAs

The reduced hiring of graduates at some business schools comes amid a wider slowdown in demand for MBA degrees. Figures from the Graduate Management Admission Council (GMAC), which runs the GMAT entrance test for business schools, showed a 5 percent drop in applications for MBAs and all business school degrees globally in 2023.

A slowdown in hiring will concern business schools because it raises questions about the expected return on investment in the MBA degree, which can run into six figures at the elite business schools.

Not all schools are reporting a reduction in employment prospects. “I can speak best to what we are seeing at NYU Stern, and the two-year full-time class of 2023 broke records with its employment outcomes, including highest ever mean total compensation at $201,727 and median base salary at $175,000,” says Brian Ruggiero, associate dean for careers at NYU Stern in New York City.

He says that, investment banking and management consulting are still at the top of many students’ wish lists. “Other areas I’d recommend exploring include corporate finance, supply chain and consumer packaged goods, which have a lot of opportunities for b-school graduates,” Ruggiero continues.

Advice for MBA job-seekers

Yet given the uncertain hiring outlook, what advice is there for MBA students navigating the current employment landscape?

Ruggiero says to take the long view. “There are so many pathways to achieve your career goals. Give yourself both the flexibility and structure by understanding the career paths of alumni — and reflecting on what that means for your own recruiting strategy,” he explains. “It’ll help you build a wide net, with optionality to take advantage of different opportunities as they become available without losing focus on your goals.”

Frankfurt’s Vanderpool says that MBA students need a clear application strategy and should pursue their “plan B” in parallel, not sequentially. “Do not be complacent and rely on an internship to automatically transfer to a full-time position,” she adds. “Start the process early on and make sure you build and leverage your network.”

At Duke Fuqua, Dirks encourages students to let their passions, strengths, values and goals drive their job search in any employment landscape. “But doing the basics well is especially critical in an uncertain market,” she concludes.

Sheryle Dirks’ top tips for MBAs seeking jobs:

·      Create a prioritized list of target employers based on your authentic career interests and goals. Focus your energy and effort on the companies and opportunities you care the most about.

·      Develop advocates with target employers through interactions and conversations. Candidates who apply for jobs with a referral are far more likely to get hired than those without, especially when applicant volumes are high.

·      Use the resources available to you, including your school’s career center, library, and online job search tools.

·      Execute your job search with precision and intention — from writing concise and error-free resumes, cover letters, and networking emails to telling your story in a compelling way, making it easy to understand the value you’ll add. This is especially important for students who are changing careers

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