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There Are Officially Too Many MBAs

Jordan Weissmann

We've all gotten used to talking about the problems with law schools and the thousands of underemployed, debt-addled J.D.s that they graduate. But perhaps its time to start taking a similarly critical look at business programs--because as the Wall Street Journal illustrates in a piece today, it looks like the U.S. now has a glut of MBA's.

The problem, it seems, is the proliferation of B-grade B-schools. Universities are now conferring 74 percent more business degrees than they did in the 2000-2001 school year. Much of that torrid growth has been driven by part-time and executive MBA programs at less-than-prestigious institutions looking to cash in. And while the supply of business grads has continued to grow, the WSJ finds that pay for young MBAs has dipped 4.6% since the recession -- reflecting both the slow job market, the fact that the degree seems to have lost some of its cache. 

Meanwhile, the cost of tuition has risen 24 percent in the last three years. 

As the WSJ illustrates in the graphs below, MBA programs aren't alone in their troubles. Schools are handing out more advanced degrees than ever, and pay for grad-school alums has stagnated in turn. Part of this is common sense: mediocre students who graduate from mediocre graduate programs are going to drag down average pay for everyone, even if Wharton and Kellogg business grads or Harvard JDs keep raking in huge paychecks. 



But it also may be a sign that degree inflation is eroding the value of putting a higher degree on your resume, at least if it comes from a run-of-the-mill institution. Employers don't appear to be chasing after grad-school alums with the promise of higher pay or perks anymore.  That's particularly troublesome for business programs, which tend to charge extraordinarily high tuition based on the promise of a higher salary. The more low-end schools that start offering online business degrees and the like, the worse the problem will become. 

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