Job Market: Changes on Both Sides, Supply and Demand

The recession largely spared the class of 2008, only to catch up with the succeeding year. Unfortunately demand for MBA's is declining at a time when supply is growing: more people have been enrolling in business schools because they are a refuge for people who are finding the job market tough. As a result many students, some of whom left secure jobs for business school, are worried about whether they will recover the money they have invested.

The impact of the downturn is hitting non-citizens in the U.S.A. particularly hard. Following the government’s bail-out package, Congress has made it more difficult to hire foreign talent. As a result only one out of three of foreign MBA’s at American schools had a job offer a few months before graduation in 2009, down from 54 per cent in 2008. By comparison, 57 per cent of their American class mates had job offers, down just seven points from the 2008 figure.

But it would be a mistake to see the latest criticism of some of the schools' curricula as a sign of a broader backlash against MBA’s. Some 98 per cent of corporate employers report that they are satisfied with their MBA hires, a figure that has not changed since 1998. MBA’s are more likely to get a job than people without the title and employers continue to pay them twice as much as people with undergraduate degrees, and a third more than people with other master degrees, such as Masters of Finance.

Still, this does not mean that the economic turmoil will have no impact on the education industry, in terms of both supply and demand. Business schools are likely to adjust their curricula in response to the criticisms that they helped to create the crisis. And potential MBA students are also much more conscious of getting value for money. Some are abandoning high-profile business schools for their less well-known rivals. Others are searching the world: one trend is for American MBA students to turn to Europe, where courses are shorter, and therefore cheaper, and where international experience is thrown in for free. This year American students outnumber all other nationalities at France's INSEAD for the first time.

MBA’s may also find themselves working in areas beyond the traditional career path: The CIA, for example, has been particularly keen on recruiting people with a business background. Many governments regard the economic slowdown as a chance to hire people who would not normally give them a second look. Amongst them is the American government, which has posted more than 46,000 job openings. Similarly, many small businesses are hiring business-school talent who would normally be outside their price range. The result of all this may be ironic: the economic crisis could end up increasing the influence of MBA’s as they are now invited to apply their skills to new areas.