The world economy is taking substantial hits to its health in recent days. On the one hand, COVID-19, a global pandemic according to the World Health Organization, has led to everything from travel restrictions to country-wide quarantines; on the other, you have Saudi Arabia and Russia entering a price war over oil, leading to plunging crude prices—an issue that has been nearly buried by news of the recent viral outbreak. At this point, as markets repeatedly tumble, debates about a global recession have shifted away from whether it will occur, with a large and growing number of economists, including those at Goldman Sachs, Morgan Stanley and S&P Global, declaring that it has already begun.
So, what does all this talk of gloom and doom mean for Business Schools? Looking beyond 2020—which will be a complicated year for school administrations and graduates—it seems, the present situation will lead to more business. As Stanford economist Caroline Hoxby has observed, graduate school applications are counter-cyclical: the worse the economy is doing, the more applicants want to head to grad schools. Why’s that the case? If the global economy enters a recession, many individuals in or planning on entering into the job market are faced with a difficult environment: limited opportunities, less job security, flat salaries, low or absent bonuses and worse job progression prospects. In theory, for such individuals, business schools serve as a bridge over the economic slump, allowing them to enter the market during the recovery period when job options and salaries are stronger.
In fact, according to admissions officers from 156 MBA programs surveyed by Kaplan in 2019, the most common reason (42% agreed) given for the drop in applicants was a strong economy. And, while most of the admissions officers did not see a reversal to this trend in the near future, they naturally could not have anticipated the health and energy crises we face today. This new situation augurs a possible change in graduate admissions for the coming application cycles: higher competition causing lower acceptance rates.
What Potential Applicants Need to Consider
For many who are looking to transition into a new industry, progress towards management, accelerate their careers, move to a new country, expand their education, or, to simply put it, pursue a business school for classical reasons, while a recession may only further cement your plans, it may also make it more difficult to achieve them; larger qualified applicant pools will likely require individuals to competitive graduate schools to put more effort into the admissions process in order to stand out.
Those who are on the fence on whether to apply to a business school, especially for seemingly expensive, full-time MBAs, need to carefully evaluate their potential opportunities:
How well is your industry positioned to handle a recession?
What would be the length of a possible recession? What is the recovery period expected to look like?
What kind of job progression can you expect over the next 2 to 3 years?
What will your full compensation (salary and bonuses) look like over an extended period?
What is the likelihood that you will have a period of unemployment?
What is the chance that your organization will fold?
Assuming you do enter into a b-school, how will your position and compensation compare in 2 to 3 years?
Will the degree have a longer-term impact on your opportunities/compensation/job progression?
What unknowns are you willing to tolerate (i.e., what’s your risk appetite)?
While the previous list of questions is far from exhaustive, it can provide you with an idea of what the ROI of an MBA might be in your particular case, as well as the security it may afford you.
Moreover, right now there are three concrete ways that you can get help:
If you’re considering or planning on applying to a competitive business program, we recommend more than ever that you join us for our upcoming webinar on COVID-19 Admissions: Building Competitive Applications for 2021 Intakes, as we’ll be covering key admissions factors ranging from school choice to application strategy.
If you’re unable to make it to our webinar, you’re in the middle of the application process or you’re unsure of whether you should apply, don’t hesitate to sign up for a free consultation with an Admissions Circle Consultant.
And, if you have any other questions, our team is ready to help—just reach out to us.
Beyond all of the above, if you happen to be in a country impacted by the coronavirus, we very much hope that you and your loved ones are staying safe.