Has COVID-19 Impacted the Market for MBAs and Other Business Graduates?
April 26, 2022
The COVID-19 pandemic dealt a potent blow to the job market across all sectors, including at the management and executive levels. Has the downturn reversed for MBAs and other business grads?
For the last two years, prospective students considering an MBA program have scrolled LinkedIn, Poets & Quants, and other online sources for news of the COVID-19 pandemic's impact on how companies view b-school graduates. Before devoting thousands of dollars and countless hours to one of these programs, students understandably want to know whether they'll get a solid return on their investment.
Their searches may have led them to several reliable sources, including reports from the Graduate Management Admissions Council, the official organization representing graduate business schools. These reports gather data from current students, b-schools, and prospective employers to measure the latest trends in MBA and business master's hiring. Keep reading to learn how COVID-19 impacted the job market for these professionals.
COVID-19's impact on the US labor market
In February 2020—just before the coronavirus pandemic hit—unemployment in the United States stood relatively low at 3.5 percent. Two months later, this figure had ballooned to 14.8 percent, the result of countless companies' shuttering and sending workers home to keep the virus at bay. In no year had unemployment reached such high numbers since statisticians began collecting data in 1948.
Fast forward to July 2021, when unemployment rates had dropped to 5.4 percent. As of March 2022, the rate had fallen even further to 3.6 percent, only one-tenth of a percentage point above pre-pandemic figures.
While it will take some time to emerge into a post-COVID economy, businesses in many different sectors gleaned adaptability lessons during the worst of COVID-19 and are now moving full-steam towards growth and expansion. That's a move MBA grads should find advantageous.
Demand of Graduate Management Talent report
The Graduate Management Admission Council (GMAC) produces the yearly Corporate Recruiters Survey (CRS) to highlight trends around MBAs and hiring practices. The 2021 report includes results from 569 corporate recruiters received in February and March of 2021. Specifically, the 2021 CRS looks at the period during which the COVID-19 pandemic impacted MBA and business graduate hiring. In the following sections, we summarize its findings.
Impact on employer growth
Companies' expectations of continued growth hit a four-year high in 2021, with 71 percent of respondents stating they anticipated expansion. This number had fallen from 69 percent in 2018 to 66 percent in 2020. Interestingly, results from 2019 show the highest percentage of companies anticipating challenges (at 15 percent, a figure that dropped to 8 percent in 2021).
Unsurprisingly, the healthcare and pharmacology industries anticipated the widest expansion in 2021 at 78 percent—the same number reported for 2020. The technology sector anticipated the most growth over this period; in 2020, recruiters anticipated 66 percent growth, but raised the number to 80 percent for 2022. Conversely, product and services industry recruiters expected the smallest amount of growth for 2021 at 66 percent. While that figure lags other industries, it's still an encouraging number.
Overall, hiring projections across five major sectors (consulting, finance/accounting, healthcare/pharmaceutical, products/services and technology) looked robust for 2022. 95 percent of consulting firms anticipated hiring MBA grads along with 98 percent of healthcare/pharmaceutical companies, 96 percent of products/services, 96 percent of technology, and 83 percent of finance/accounting firms.
Impact on domestic hiring
In the United States, 94 percent of companies anticipated hiring MBAs throughout 2021. That's a 10 percent increase over 2020, an encouraging trend. Interestingly, the overall projections in 2020, made before the coronavirus pandemic took hold, showed a 92 percent hiring rate, compared to actual figures of 80 percent.
Impact on international hiring
European recruiters anticipated rebounding the most in 2021, projecting a 54 percent increase in hiring MBA students over the next five years. Only 6 percent of recruiters in Europe anticipated a decrease in hiring business school graduates.
The United States ranked second behind Europe with a 34 percent increase overall. The impact of COVID-19 was particularly felt by Asian-Pacific recruiters, only 32 percent of whom anticipated an increase in hiring between 2021 and 2026. Still, this number did rise from 2020, when Asia-Pacific recruiters anticipated a 26 percent increase.
Impact on salaries
When the pandemic effectively shut down millions of businesses overnight, those that commonly hire b-school graduates were not immune. Just before COVID-19 hit, median base salaries for MBA grads reached an all-time high of $115,000. Three months into the pandemic, this number fell to $105,000 as employers tightened their financial belts and braced for the unknown. For 2021, median salaries were projected to return to pre-pandemic $115,000 levels.
Data from the study shows that b-school graduates enjoy substantially higher salaries than both professionals with only a bachelor's degree and those hired direct-from-industry. While overall MBA salaries for 2021 were expected to reach $115,000, direct-from-industry hires' salaries hovered around $75,000. Those with a bachelor's degree were anticipated to earn median wages of $65,000.
Impact by sector
The effects of the coronavirus pandemic were not felt evenly across sectors, with some experiencing longer recovery times than others. When looking at the technology sector, actual 2020 hiring of 89 percent beat projections of 86 percent. Actual hiring data for 2021 remains forthcoming, but 96 percent of technology recruiters anticipated hiring MBA grads in the year, including those with STEM MBAs. Overall, 32 percent anticipated an increased demand for MBA graduates.
Asked to project hiring over the next five years, 46 percent of consulting recruiters anticipated an increase in 2021, a substantial increase over the 21 percent in 2020. In finance and accounting, 36 percent expected an increase in 2021 (up from 24 percent in 2020), as compared to 46 percent within healthcare and pharma (up from 37 percent) and 29 percent in products and services (up from 25 percent).
While all major sectors surveyed anticipated growth for 2021, companies with fewer employees may need more time to recover. While 97 percent of companies with 1,000 or more employees projected MBA hiring to increase in 2021, this number decreased to 67 percent for those with fewer than 100 employees.
Impact on hiring of non-MBA business graduates
Not all students interested in earning a business master's degree go the MBA route. Plenty of graduate-level programs are available outside this traditional path.
Approximately 56 percent of recruiters stated they planned to hire Master in Management graduates in 2020; actual hiring rates fell to 44 percent due to the pandemic. For 2021, 54 percent of recruiters projected hiring graduates from these programs. Based on collected data, these types of graduate programs tend to be favored by European and Asian-Pacific recruiters more than U.S.-based recruiters. While only 37 percent of recruiters in America hired these types of graduates in 2020, 77 percent of those in Europe did so.
Additionally, recruiters in the technology sector most favored Master of Management graduates, with 71 percent stating they anticipated hiring from these programs in 2021.
Looking at Master of Accounting graduates, 52 percent of recruiters anticipated hiring from this graduate pool in 2021. Europe once again projected the highest percentage of new employment at 69 percent, while the U.S. and Asia-Pacific both projected 50 percent. The healthcare and pharma industries projected the highest percentage of hiring for Master of Accounting graduates at 72 percent.
In the case of Master of Finance graduates, 48 percent of recruiters anticipated hiring one of these professionals, with Europe leading the pack with a projected 75 percent (compared to 39 percent of surveyed American recruiters). The healthcare and pharma sectors anticipated hiring the most at 65 percent, while products and services anticipated the fewest at 43 percent.
Lastly, 62 percent of recruiters thought they may hire Master of Finance graduates in 2021, with Europe once again anticipating the highest percentage of new hires at 72 percent. Asia-Pacific recruiters, conversely, anticipated the fewest at 59 percent. Nearly 80 percent of companies with 10,000 or more employees projected they would hire someone with this degree, as opposed to only 33 percent of recruiters with fewer than 100 employees.
The impact of COVID-19 cannot be overstated, both in terms of economic downturn and bleak job prospects during the worst of it. Two years after the pandemic hit, the global economy is poised to return to pre-pandemic numbers and even expand upon them.
While recruitment of MBA graduates remains uneven across the industries highlighted in GMAC's survey, recruiters from all five sectors anticipated vacancies for these professionals in 2021. And with unemployment numbers in 2022 only one-tenth of a percentage point off pre-COVID numbers, the market for those seeking job offers looks bright.
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