MBA No Longer Guarantees Success

It was the educational status symbol of the 1990s, the must-have tool for climbing the corporate ladder. For years, the MBA seemed like an automatic ticket to a six-figure salary, in many cases a pathway to a new career and a more prosperous life. But that perception appears to be changing. Demand for master’s degrees in business administration is falling for the second year in a row, report several MBA admissions directors across the country. At some business schools, the number of applications has slid as much as 25 percent or more. Regard for the degree is so low that a FedEx television commercial even mocks it. “You don’t understand. I have an MBA,” says Tom, a new employee who’s asked to ship some deliveries using FedEx.com. “Oh. You have an MBA. In that case, I’ll have to show you how to do it,” his supervisor replies. “FedEx.com makes shipping so fast and easy even an MBA can do it,” chimes in the voice-over narrator. Three years into an economic recovery creating few jobs, the MBA no longer carries the cachet it used to. Going to business school — even the top ones — no longer leads to three or four job offers. Although corporate recruiting of MBA students has picked up, jobs are still scarce, and many recent graduates are struggling to find work.

When Mark Davidson entered Duke University’s Fuqua School of Business in the fall of 1998, he had high expectations about what an MBA would do for him. “I thought I would be walking with Dorothy and the Tin Man down the Yellow Brick Road,” he says. “I thought people would be knocking at my door.”

Instead, the 31-year-old is living with his parents in San Diego and doing part-time contracting work in commercial real estate investment. He’s been searching for a permanent job since being laid off 11 months ago from a property management company that didn’t have enough work for him.

The grim job outlook has led many potential business school applicants to either give up the idea of earning an MBA or wait until the economy shows further improvement, admissions officials say. Others opt to take night classes while working full time. As a result, business schools are working harder than ever to market their programs.

“The applicants are not seeing the guaranteed job at the tail end,” says Daniel Garza, director of domestic admissions at the University of Texas at Austin’s McCombs School of Business. “It’s making them hesitant.”

Last year, a majority of the 289 graduate business school programs reported receiving fewer applications, according to a survey released in July from the Graduate Management Admission Council, a nonprofit organization of graduate business schools. This occurred despite some of the lowest interest rates for student loans in years.

The fall-off in applications appears to be continuing this year, several admissions directors report. At McCombs, the number of applications is down 26 percent. Garza noted that four other top business schools at state schools around the nation had reported an average drop of 33 percent.