Business Majors Are Bad With Numbers When It Comes to This
WHY YOU SHOULD CARE
Humanities students aren’t the ones who most need to adjust their expectations about postgrad life.
By Philip Kowalski
Increasingly, higher education in the United States looks like a bubble. As more and more students enter universities and subsequently the job market, the value of an undergraduate degree decreases — leading to a wide gap between expected earnings and cold, hard reality. To put that in numbers, the average undergrad student expects that they’ll be making $57,964 just one year into their career. But the national median salary for recent grads is $47,000.
It’s conventional to joke about English majors, debate the value of “useless” majors and lambaste those in the humanities for being delusional about the value of their degrees. But in fact, it’s not those studying Marcel Proust who are most unprepared for what happens after graduation.
It’s business majors who have the largest gulf between their expected and eventual earnings.
According to a study published by Clever Real Estate, business majors believe they will make 31 percent more on average than they do when launching their careers, expecting $61,085, which is far from their average early career salary of $46,500. And according to study author Thomas O’Shaughnessy, these delusions don’t tamp down during business majors’ fantasy mid-career period: They expect to be making $127,470, a nearly 60 percent bump from the actual average of $80,400. This doesn’t afflict all majors: Nursing and computer science students actually underestimate on average how much they’ll make during their early careers, as do those who fall into the humanities, liberal arts, English and history categories — though that last group underestimates their salaries by an average of $17.
Majoring in business is generally believed to be one of the wisest moves one can make when entering a university, so what gives? According to O’Shaughnessy, there are a few factors at play. Universities often use vague wording when advertising the successes that their business students go on to have after graduation, glossing over the multiple internships many business majors are expected to undergo before landing a full-time entry-level job. But plenty of professions require internships (cough, cough, journalism) and don’t see such oversize salary dreams.
Business majors, O’Shaughnessy says, also sometimes experience an illusion of superiority. “If you think about other popular majors like nursing or education, students don’t go into those professions solely for monetary reasons,” he says. The study indicated that most business students go into the field for the money it promises. “Money is the driving factor and reason for them pursuing their education. And everyone wants to believe they’ll make more or be more successful than their peers.”
Money, according to Danny Collins, a liability claims adjuster at Root Insurance, was the main impetus behind his decision to major in business at the University of Cincinnati. Entering the work force five years ago, Collins graduated with the expectation of making between $60,000 and 80,000, eventually settling on a position that earned $45,000 a year. “I was one of the first members of my family to go to university, so I knew that I had to take it seriously and major with the end goal of establishing a good career in mind; thus, business seemed like the best choice,” Collins says. While his early earnings were lower than expected, he quickly went on to make an annual salary above $70,000 before burning out due to overwork and leaving his job.
Those who are privileged and fortunate enough to enter one of the more elite universities in the country can expect to match or even exceed average early career salary expectations. MIT has the highest reported early career earnings for its business majors, boasting of a whopping average of $86,200 for those entering the job market, while graduates of Harvard’s business school overall make the highest average salary of all business majors, earning a median of $160,100. O’Shaughnessy believes that the high earnings aren’t necessarily due to the quality of the business school. “It’s possible gifted students happen to go to high-profile schools, rather than the business school giving them the skills they need to succeed,” he says.
While business majors not attending elite universities may be the most delusional about their expected earnings, many still go on to make a comfortable salary that puts them well above other majors. Collins now has mixed feelings about his business degree. “Having a business major did not necessarily land me in the career I am in now,” he says. “But I do believe it helped me to bypass an entry-level position that I would have otherwise needed to prove myself with.”
- Philip Kowalski, OZY Author Contact Philip Kowalski