There’s no doubt that senior-level roles in business management can be lucrative. That’s the reason why the Master of Business Administration (MBA) is one of the top degrees for the highest-paying business careers. However, salary potential is only part of the equation. Another question to ask is how employable you will be with your MBA degree, since a high rate of pay doesn’t do you much good if you can’t find a job in the first place. Some prospective business students fear that the demand for an MBA isn’t strong enough and that having this degree could actually decrease their career opportunities because companies would be reluctant to hire them at a salary commensurate with their advanced level of education. Although this fear may be the reality in some organizations, it isn’t as widespread as you might worry.

Companies Look at Value, Not Just Salary Costs

Is It True Companies Might Not Hire You to Avoid Paying Higher Salaries to Someone With an MBA

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Companies don’t all have the same policies, procedures and outlooks. What one organization views as a salary expectation that isn’t feasible for their company, another might see as merely a good investment in the business. The trick is figuring out what career opportunities you want and what path is most likely to lead you there – and then how to secure those opportunities.

There may be some small companies that truly can’t afford to pay what a job candidate with an MBA is worth, as well as companies that could afford it but would rather save the money and hire someone less qualified. If you’re hoping for a position at a company that fits one of these descriptions, then yes, having an MBA may cause you to seem, as Forbes put it, “overqualified.” Similarly, if the work you want is more in the realm of low-level supervisory job roles or mid-level management, you might be pricing yourself out of the position by having a degree consistent with senior-level roles.

If you can bring a great deal of value to an organization, employers may feel that you are worth the expense of even a six-figure salary. After all, MBA hires aren’t just rank-and-file employees. They work in the high-level roles that allow their efforts to have a profound effect on the company. A business that’s looking to grow will often be willing to pay more for promising new talent that it expects will greatly improve the company’s productivity, profitability or growth potential.

The risk of becoming overqualified by your MBA means that you need to think carefully about what you want to do with your career. If you want to work at a small startup or in non-supervisory roles, an MBA may not be the right choice for you.

An MBA May Not Raise Your Salary as Much as You Think

How much do you think MBA graduates earn? In the United States, the 2020 starting salary projections for candidates with a master’s degree in business was $75,197, according to the National Association of Colleges and Employers. That’s more than $17,000 per year than the $57,939 salary projected for candidates with only a business degree, which would seem to attest to the higher earning potential of MBA graduates. In an international study, the Graduate Management Admission Council put the median base salary for new MBA hires at $115,000 for 2019 and found that more than half of companies expected to increase salaries for new MBA hires. Despite some decreases, hiring projections for MBA graduates for 2019 were “strong,” the Graduate Management Admission Council reported.

With a master’s degree, professionals in different business occupations can see a wage premium that ranges from 36 percent all the way to 89 percent, according to the United States Bureau of Labor Statistics (BLS). This increase may seem huge – and it is, adding between $20,000 and $80,000 per year onto your annual earnings. However, it is a relatively small percentage of these occupations that hold an MBA or other master’s degree, the BLS data shows. Plenty of business professionals without a graduate education also earn well above the median wage for their respective occupations by cultivating a combination of managerial experience, professional certifications and consistent positive results for the organizations that employ them.

The impact of having your MBA on your salary potential depends considerably on the current stage of your career. If you’re among the 75 percent of MBA graduates who switch careers – and you’re presumably moving from a low-paying field to a high-paying one – you can double your salary, The Wall Street Journal reported. Similarly, if you are still early in your career with only an undergraduate degree, you’re likely not making that much yet. Getting your MBA can help you increase earning potential sooner rather than later.

However, when you get to the point in your career that you have decades of experience and a lot to show for the work you have done, you’re likely to be making a good salary even without the MBA. One reason why the average age of MBA students is in the late-20s is because going back to school later in life doesn’t increase pay rates that substantially at this point in your career, according to The Chicago Tribune. If you earned your MBA earlier in your career and got a pay boost at the start, it’s likely that by the time you reach the senior-level management roles that pay the best, your colleagues without a graduate education will have to some degree caught up with you salary-wise.

That certainly doesn’t mean that an MBA isn’t worth it – but it does mean that some employers are prepared to pay a premium for the most qualified candidates who bring the most value to their organization. The most successful employers view your degree as just one part of your application, in conjunction with your work experience, your reputation, your measurable successes and how well you fit into the company culture.

Ideally, a company won’t automatically hire or disqualify a candidate based on having an MBA but will instead look at the bigger picture of how much you can bring to the table.

Additional Resources

What Is the Salary Potential for Someone With an MBA?

What Is the Demand for an MBA?

What Kind of Job Can You Get With an MBA?

What Should You Know When You Interview for a Job With an MBA?