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Methodology for "Long Term Pay by PayScale" on Bloomberg Businessweek MBA Rankings

Overview:

PayScale provided the 25th, 50th, and 75th pay percentiles for two experience levels: 5-10 years and 10-20 years of experience, across five job fields and nine industries for 115 MBA degree granting institutions based in the U.S.

Definitions:

Total Cash Compensation (TCC): TCC combines base annual salary or hourly wage, bonuses, profit sharing, tips, commissions, and other forms of cash earnings, as applicable. For example, when overtime is typical for a given job, TCC also includes overtime pay. It does not include equity (stock) compensation, cash value of retirement benefits, or value of other non-cash benefits (e.g., healthcare).

Median Pay: The median pay is the national median (50th Percentile) annual total cash compensation. Half of the applicable MBA graduates from the given school earn more than the median, while half earn less.

Range in pay across alumni can be very wide depending upon job choice, years of experience, scope of responsibility, number of employees, etc. For example, pay can be higher than the stated median pay if the graduate has higher levels of experience and responsibility or they work at a larger company.

Confidence Level: For all median pay values, the uncertainty is 10 percent or less, with the following exceptions:
  • Small programs (e.g., Dartmouth and Iowa) may have uncertainties greater than 10 percent
  • Less common job families or industries for MBA graduates (e.g., human resources or health care) may have uncertainties greater than 10 percent.

Please note the calculated error on the median factors in both the spread in pay, as well as the sample size. The potential spread in pay for MBA graduates is quite large and thus it is still reasonable to be highly confident about a pay report that has a 10 percent error.

25th/75th Percentile Pay: The 25th (75th) Percentile Pay is a barometer for low (high) earners as 25 percent of applicable alumni will earn less (more), while 75 percent will earn more (less).

Job Field: Except for the case of business consultants, PayScale utilized the Standard Occupational Classification (SOC) to define Job Fields:

  • Business Consultants - These are jobs that contain the word "consultant" and are focused in the business world (e.g., Management Consultant)
  • Finance - SOC Code 13-2000.00 (Financial Occupations), SOC Code 11-3030.00 (Financial Managers), SOC Code 11-1011.00 (Chief Executives)
  • HR - SOC Code 11-3040.00 (HR Managers), SOC Code 13-1070.00 (HR, Training and Labor Specialists) and SOC Code 43-4160.00 (HR Assistants)
  • Marketing/PR/Sales - SOC Code 11-2000.00 (Advertising, Marketing, PR and Sales Managers), SOC Code 19-3021.00 (Market Research Analysts), SOC Code 41-1014.00 (First-Line Supervisors/Managers of Non-Retail Sales Workers), SOC Code 41-3000.00 (Sales Reps, Services), SOC Code 41-4000.00 (Sales Reps, Wholesale & Manufacturing), and SOC Code 27-3030.00 (PR Specialists)
  • Technology - SOC Code 15-1000.00 (Computer Specialists) and SOC Code 11-3020.00 (Computer and Information Systems Managers)

Industry: PayScale utilized the North American Industrial Classification System (NAICS) to define the industries:

  • Finance & Insurance - NAICS Code 52
  • Government & Nonprofit Services - NAICS Code 61 (Educational Services), NAICS Code 92 (Public Administration), and NAICS Code 624 (Social Assistance)
  • Health Care - NAICS Code 621 (Ambulatory Health Care Services), NAICS Code 622 (Hospitals), and NAICS Code 623 (Nursing and Residential Care Facilities)
  • Hospitality & Entertainment - NAICS Code 71 (Arts, Entertainment and Recreation) and NAICS Code 72 (Accommodation and Food Service)
  • Manufacturing & Warehousing - NAICS Code 31-33 (Manufacturing) and NAICS Code 493 (Warehousing and Storage)
  • Mining, Utilities & Construction - NAICS Code 21 (Mining, Oil & Gas Exploration), NAICS Code 22 (Utilities), and NAICS Code 23 (Construction)
  • Professional Services, including Consulting - NAICS Code 5441 (Legal Services), NAICS Code 5412 (Accounting and Payroll Services), NAICS Code 5413 (Architecture and Engineering Services), NAICS Code 5414 (Specialized Design Services), NAICS Code 5416 (Consulting Services), NAICS Code 5418 (Advertising and PR Services), and NAICS Code 5419 (Other Professional and Technical Services)
  • Retail & Wholesale Trade - NAICS Code 44-45 (Retail) and NAICS Code 42 (Wholesale Trade)
  • Science & Technology, including Information - NAICS Code 5415 (Computer Systems Design and Related Services), NAICS Code 5417 (Scientific Research and Development, and NAICS Code 51 (Information, Media and Telecommunications)

Years of Experience (YE) Range: Years of experience are the number of years a respondent has spent in their respective career or field. We focused on the following two ranges: 5-10 YE and 10-20 YE.

Data Set Characteristics:

All data used to produce business school profile pay reports were collected from employees who successfully completed the PayScale employee survey in the last year. Data were based on a sample of over 100,000 domestic MBA graduates; most median figures shown represent approximately 200 to 1500 actual salaries per school.
People complete PayScale’s survey to price themselves within the labor market. The survey asks questions about their job, employer, educational background and various demographics.

Since the main motivator for completing a PayScale survey is to find your labor market price, the school data is secondary. Therefore, the data doesn’t suffer from the “happy alumni bias.” This bias typically exists when schools survey their own alumni, as the majority of respondents are those with success stories. In other words, if an alumnus went to Harvard to get an MBA and now works as an accounting clerk, they are likely not to inform their school. However, in PayScale’s case, we get data from both groups: the success stories and those whose school backgrounds do not match their current career choices.

MBA Degree Only: Only employees who possess a MBA degree and no higher degrees are included. This means MBA graduates who go on to earn a MD, JD, PhD or any other advanced degree are not included in the sample.

Furthermore, careers that require advanced degrees, such as law or medicine, are not included.

The dataset includes both part-time and full-time MBA graduates, when applicable. For schools that offer more full-time degrees than part-time degrees, the dataset has a heavier representation of full-time MBA graduates and vice versa. The representation of each degree is proportional to the number of degrees granted by the institution.

U.S. Only: All reports are for graduates of domestic schools who work in the United States. The sample does not include U.S. territories, such as Puerto Rico or Guam.

Full-time, Civilian Employees Only: Only graduates who are employed full-time, not on active military duty and paid either an hourly wage or an annual salary are included. Self-employed, project-based, and contract employees are not included.