Once the premier graduate degree that guaranteed a path to lucrative careers in consulting and finance, the MBA is losing its luster. The share of MBA graduates securing jobs within three months of graduation at the top 15 ranked U.S. schools fell by six percentage points to 84% in 2024, a decline of eight points compared to the five-year average.
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The Massachusetts Institute of Technology (MIT Sloan), arguably the world’s number one university, saw a dramatic decrease from an average 82% placement rate to 62% in 2024. The situation is so severe that some professors suspect that the reported entrepreneurial activity of some graduates may mask actual unemployment.
The American economy by most measures is healthy. So why is the MBA losing its value? Some have posited cyclical factors, such as the post-pandemic slowdown in consulting and the tech sector’s boom-and-bust nature. But others warn of more profound issues at play. The traditional pipeline to consulting and finance, which absorbed the majority of MBA graduates, is weakening. The number of graduates landing jobs at major consulting firms dropped by a quarter in 2024 compared to the preceding three years. Simultaneously, the tech industry’s hiring of MBAs has more than halved from its peak between 2018 and 2022.
Companies appear to be reevaluating the value of professional managers with MBAs, favoring candidates with more specialized skills in areas like science and engineering. While the consulting industry may recover, the MBA’s centrality in future hiring is questionable.
Business schools behave like factories for the consulting world. Yet, the largest firms in the world today are tech firms, and tech firms seem to be more interested in consulting expertise that is not business-centric. Innovation, new technologies, leveraging large language models (LLMs) are areas that firms are increasingly centered on. In response, some graduates are turning towards entrepreneurship, leveraging “search funds” to acquire and run established businesses. While this path offers a lower-risk alternative to starting a new company, its suitability for the large volume of MBA graduates, however, remains uncertain.
Lastly, the challenges faced by business schools go beyond employment numbers. There is a growing consensus that a disconnect exists between the curriculum and the realities of the business world. This criticism of business schools has existed for decades, with accusations ranging from fostering an unethical profit-maximizing culture to being out of touch with the practicalities of real-world business. At the University of Pennsylvania’s Wharton School of Finance, MBA students may major in Diversity, Equity, and Inclusion (DEI). Contrast this with the corporate world running away from DEI and the disconnect could not be clearer.
Savvy business leaders adapt with the times. Business schools will likely do the same, but the unhurried pace is concerning.
