So you want to major in business? Good choice. You’ll certainly be in good company. Business is the undisputed campus heavyweight, covering nearly 20% of all bachelor’s degrees.
So what’s the appeal of business? Well, forget the easy A. Instead, think waves of projects and cases. Like everyone, you’ll suffer from PTSD long after intermediate accounting is over.
No, the attraction of business is the payoff. Business majors quickly land jobs after graduation — and high-paying ones at that.
NOT ALL BUSINESS PROGRAMS PRODUCE THE SAME EARNINGS
According to the 2016 Job Outlook Study from the National Association of College and Employers (NACE), 63.7% of employers surveyed planned to hire business majors — a demand that far exceeds their appetites for majors like physical sciences (24.2%) or social sciences (16.1%). Business majors also enjoy greater opportunities and job security. Just look at the economic recovery, with 2.5 million of the 4.7 million jobs created since the collapse coming in consulting and business services. Best of all, employers are paying a premium for talent, with NACE reporting that business grads are expected to command median starting salaries ranging from $50,000 (marketing, sales, and human resources) to $60,000 (management information systems).
Of course, you’re not looking for an ordinary job or an average salary — not after you’ve socked six figures into your education. You want to maximize your earnings. Make no mistake, some business degrees are worth more than others. That was one takeaway from PayScale’s annual College ROI Report. Published in April, the data covers the 20-year return on investment (ROI) by school according to states, school types, job types, and academic majors. And when it comes to the value of an undergraduate business degree, the University of California-Berkeley’s Haas School of Business towers above everyone else.
GO BIG AND GO BERKELEY
According to the data from PayScale, a leading data warehousing firm that specializes in employee compensation, in-state Berkeley business majors can expect a 20-year return of $1,270,000 on their bachelor’s degree. That comes out to a 12.7% net annualized return on investment, provided the graduate lived on campus and didn’t receive financial aid. And that’s a conservative estimate. For example, in-state Haas business majors who receive financial aid can tack on another $60,000 to their 20-year return, raising it to 16.6%. Not to mention, living off campus can shave $10,000 off graduates’ costs, which goes directly to their ROI.
How dominant is Haas in this category? Out-of-state Berkeley business majors actually rank second in ROI, with a $1,170,000 annual return over 20 years (a number dampened by out-of-state students paying $92,000 more in tuition and other costs). If you add grant aid to the equation — and 53% of Berkeley students receive it — out of-state business majors average a $1,240,000 return.
That’s big news for Haas, which finished a head-scratching 36th in the 2016 Bloomberg Businessweek undergraduate business rankings. In terms of scale, Haas boasts 350 juniors and 350 seniors in its business undergrad program, making it one of the largest schools of its kind in the U.S. However, Dean Richard Lyons attributes the school’s chart-topping ROI to the program’s selectivity. “It’s hard to get into any good university, including Berkeley, but when you apply as a sophomore to the business school, only 30% get in. So there is a double selection process which is quite intense. Also, a quarter of the slots go to community college transfers due to state law and only one in 12 of those students get in. You put all that together and it’s quite a potent mix of students.”
ROI DATA COVERS GRADUATES WITH A BACHELOR’S DEGREE ONLY
This is the third consecutive year that Haas’ in- and out-of-state graduates have ranked among the top undergrad business programs for ROI with PayScale. To calculate the 20-year return on a business degree, PayScale mined data collected from “approximately 1.4 million college-educated workers who successfully completed PayScale’s Employee Survey between 2/1/2013 and 2/1/2016.” On average, each school included in the various rankings averaged 392 alumni profiles, with 962 schools qualifying, including 442 public and 505 private schools. As a side note, PayScale focused exclusively on graduates from American schools who work in the U.S. and are “full-time and paid with either an hourly wage or an annual salary.” (Translation: No freelancers allowed.)
Notably, the salary data is derived from graduates who only hold a bachelor’s degree. As a result, graduates who earned post-graduate degrees after finishing their undergraduate business degree, such as an MBA, JD, or Ph.D., were removed from the sample. That’s because graduate degrees often increase earnings, according to the 2015 report, “From Hard Times to Better Times,” from Georgetown University’s Center on Education and the Workforce. Georgetown found that a bachelor’s degree holder who majored in marketing and market research, for example, was earning $37,000 to start in 2011-2012. Similarly, a new graduate degree holder in that field was making $58,000. On the plus side, this eliminates any questions relating to cause and effect. However, it also underestimates the earnings of business majors by shoehorning them into a bachelor’s degree.
(Twenty-year earnings for business majors, along with average loan amounts and financial aid information, are found on pages 4-5.)