JD vs. MBA pay Forum

[icpb]

Take Stanford for example (Stanford used simply because data is readily available and the rankings of SLS (apart of HYS) and GSB (apart of HSW) is about the same), the median pay at law firms is about $160000 for SLS grads, while the median salary (comp+bonus) for MBA from GSB is $132000. Why is this so? Do significant percentage of MBA's pursue lower paying fields (social work, etc.)?

[bk1]

It has to do with the way the systems are structured. For law at least, there is a standard market rate for paying new SA's. In big markets (i.e. Chicago/NYC/DC/etc), this is $160k (it is less in smaller markets). So almost all SA's except at maybe 1-2 firms, make $160k. Since over 50% of Stanford law grads go into these big firms, the median salary is $160k because all of these grads make $160k.

I have no idea how the market works for MBA grads, but I would expect the reason for them getting paid less is systemic.

[HITeacher2]

This conversation again... Long story short, there are two reasons why. 1) MBAs take more of their compensation in bonuses and such, in total they get paid more holistically and paid more per hour but less of that pay is guaranteed. 2) The range of jobs available to MBA is much, much wider than the range available to law grads. Many MBAs take on GM positions which pay in the low 6-figures, but you only work 40 hours a week so your per-hour pay is good.

The truth is that many MBAs take on consulting positions, which pay $120k base, but if you include bonuses and other compensation it's $192k. Many MBAs take on banking positions, which also compensate in the low 6-figures, but then your bonus is ALSO 6-figures. And then there are those that go into private equity and hedge funds, in which case you're making as much money as a partner for less stress than a banker.

In comparison, the elite job for SLS grads is clerking. The next option is big-law at $160k across the board. If you don't get one of those, you're f'ed.

[icpb]

Ok. I guess GM positions would drag down the median. The number for Stanford GSB is from USNews, and it includes bonus. I always wondered why it seems low because undergrads straight from college sometimes make 6-figures including bonus, and MBA's are a lot older.

[chopper]

Everyone is pretty much spot on. For an MBA it's not unusual for a top employee (say, in investment banking) to have a bonus of $80,000. Also those numbers may be starting salaries. And for an MBA, the base salary goes up significantly after a few years of work. You may start at $132,000, but in 5 years you could be over $300,000 depending on the job.

[Patriot1208]

Ok. I guess GM positions would drag down the median. The number for Stanford GSB is from USNews, and it includes bonus. I always wondered why it seems low because undergrads straight from college sometimes make 6-figures including bonus, and MBA's are a lot older.

It does not include performance based bonuses.

EDIT: here: http://www.gsb.stanford.edu/mba/career_ ... ation.html

If we just take the median pay as the same, which i'm sure is wrong but ok for comparison. The median person makes 120k base, 20k signing bonus, 25k "other guaranteed compensation" which is guaranteed bonuses. That is 165k. Then, you take into account things like performance based bonuses it gets even higher. Also, some of these people, if you will look at the stats, can make up to 400k in guaranteed bonuses.