In recession, MBA students seek backup plan
CAMBRIDGE - For decades, investment banking was a well-worn path to affluence for business-school graduates. But as Wall Street teeters, many are scrambling to find alternate routes into a brutal job market.
Facing one of the worst economic downturns since the Great Depression, some Masters of Business Administration students are lowering expectations. Aspiring investment bankers are looking elsewhere, while international students wonder if they will have better luck at home than in the United States.
I'm going to attempt to create an analogy here: Aspiring BigLaw Corporate Lawyer are looking elsewhere, while international students with JDs are saying, "Crap, this degree is only worth something if I use it in the States. Other JDs are saying, "How can I go back home when I signed up to take the New York Bar?"
My law school was associated with a business school and I did notice that 1/3 of the students enrolled there were foreign. The same cannot be said of law schools. At least foreign MBAs can go home to another country. JDs are forced to commit to taking a bar exam in one state and must pay to take it. If that state doesn't cough up a job, they have to wait another 6 months and pay more fees to move on to another job market. So, I'm thinking MBAs are more versatile in terms of locale.
As big banks including Citigroup Inc., Bank of America Corp., and Goldman Sachs Group Inc. cut tens of thousands of jobs, MBA students who just a few years ago would have been aggressively recruited by companies now expect to fight for the handful of positions available.
Meghan Gallery, 24, enrolled at the Massachusetts Institute of Technology's Sloan School of Management in September with hopes of working on mergers and acquisitions at an investment bank. Now she would consider a summer job at a start-up company, ideally in corporate finance. Wow! This sounds like a great option. I would love to be invited onboard as in house counsel to a start up in solar energy or a social networking site. The people that jumped onboard Google when it was a start up are millionaires now. What are the options for a JD that can't get a job in BigLaw like he expected? Document review or solo practice. There is NO chance of making millions in either of those field. Never mind the fact that most JDs never wanted to make as much money as a investment banker. Most JDs just want to be middle class.
"I've literally had people say, 'Hopefully, when you get out it will be different. But if not, there will still be a lot of bodies floating around who have been in finance for five to 10 years more than you'," she said.
Shrinkant Dave, 26, an MBA candidate at Boston University who is originally from India, made a similar decision, accepting a corporate finance job at a retail chain rather than holding out for investment banking. Once again, is this a bad option? It sounds like a job to me? I have very little sympathy.
"I knew there were not enough jobs to go around, so I had to improvise," Dave said. "It's slightly disappointing, but not too bad. It's still in line with my goals."
MBA students face a radically changed job market.
US employers in January cut payrolls by the most in 34 years, and President Barack Obama has called for a $500,000 cap on pay of chief executives of companies that receive federal bailout money. Wall Street has shed more than 19,000 jobs since the start of the financial crisis. General Electric Co. chief executive Jeff Immelt summed it up in a presentation in New York in early February: "Financial services ain't going to be the same in our lifetime." Oh, woah is me. A $500K cap is horrid, isn't it? How many attorneys make that much? Very few. I admit that 19K jobs lost is a huge amount, but not all corporations are doing horribly. Everyone that I know that worked at Lehmans and Bear Stears were quickly absorbed by companies that are doing well during this recession.
LOOKING WAY BEYOND WALL STREET
Career counselors at MBA programs are urging students to be open-minded about the jobs they will accept and to pursue aggressively those that are available. While companies are still sending recruiters to campuses, they are not hiring as many people. MIT officials estimated that recruiters on its campus were offering 20 percent fewer positions this year. 20% is laughable. That is right in line with the unemployment statistics for the nation at large. With law schools, I would argue that 50% of graduates are unemployed, which is far worse than the rest of nation.
Moreoever, MBAs are not a rare breed. More than 150,000 MBA degrees were awarded in the United States in the 2006 to 2007 academic year, according to government data. Okay, I'll admit it. That's A LOT of students for the market to absorb. But unlike a JD, which is often used to make an unmarketable degree marketable (i.e. history, english), an MBA is often used to enhance an underlying major which was already pretty marketable (i.e. finance, accounting). But that's just my opinion. I think that an MBA can leave his professional degree on his resume and be considered an asset, whereas a JD needs to be dropped to succeed in other fields.
"They have to be open" to different routes to getting a Wall Street job, said Diane Riemer, assistant director for graduate career services at Boston University's School of Management. Riemer said she advises MBA candidates to think about "bridge strategies," positions that could serve as stepping stones to get students toward their dream jobs. Do we have "bridge strategies" in the legal world?
In addition to considering a wider variety of jobs and industries, students said they are considering more geographic options -- like moving to emerging nations where multinationals and big local companies are still beefing up staff.
"People need to be a little more flexible," said Ignacio Diaz, 28, a native of Venezuela studying at MIT's Sloan School. "Not thinking only about moving to New York for finance, for example, but looking at other centers, like perhaps London, perhaps the Middle East or Asia."
Some students from outside the United States are considering whether they would be better off returning home, particularly those from still-growing economies like Brazil, China and India - though growth there has slowed too.
"I was looking to do a lot of work in the US, but one of the suggestions I got was that this is the right opportunity to go and explore," said Anand Mohanrangan, 26, an MIT Sloan student also originally from India. "I am trying to see what are the opportunities I could have to go back to India."
Like I said, at least they can do that. We have been crippled by state bars. Furthermore, the ABA has enabled Indian attorneys to practice in this country--but we have not been welcomed to practice in other nations. At some point in my floundering career, I met with an american who broke in the legal market in Dubai to discuss my options should I decide to move there. He told me that I couldn't earn much there because there are so many Indian attorneys working for bargain basement prices--my american JD would scare employers there. Great.
A downside to moving to emerging markets could be lower pay, some students fear.
"People pay a lot of money to get here and the return on investment is higher here than if you go back," said Mahesh Konduru, 34, an Indian student at MIT's Sloan School in Cambridge, Massachusetts.
Most JDs just want a job. Like I said, and Hardknocks wrote earlier, many JDs are willing to work for $30K. They want a job.
FACING BIG DEBTS
The programs are costly. Last year the typical full-time MBA candidate attending a school outside his or her home state paid $32,333 per year for tuition and fees, a number that's risen 25 percent over the past five years, according to the Association to Advance Collegiate Schools of Business. That is what JDs pay too. But MBAs are better off once again--their program is only 2 years long.
That does not take into account books or living expenses, which many full-time students also take out loans to cover.
Compounding those concerns, many have taken on tens of thousands of dollars of debt to finance their educations.
"I am worried about it, more worried than I thought I'd be," said Matt Yosca, 32, in his final year at the MBA program at Babson College in Wellesley, Massachusetts.
Students who are using loans to cover living expenses said they are trying to cut back spending, just to minimize the amount of debt they will face after graduating.
"I'm trying not to spend too much from the loans," said David Spevick, 27, who is from Toronto and is now studying for his MBA at Boston University. He lives alone but will probably seek a roommate to save money.
Educators console students with the thought that the difficult economy will toughen them up and better prepare them for hard times later in their careers.
"There is no doubt that the students who are coming out today will be more wary of credit risks, more careful," said Andrew Lo, a professor at MIT's Sloan school, who spearheaded the school's launch of a finance track this year. "You learn nothing from success. You learn far more from failure." (Reuters)
So, I think the MBAs come out on top. Their degree is more versatile than ours. To an MBA, a recession means letting the dream job go and finding another way to get the dream job on a later date. To a JD, the recession means becoming a barista at Starbucks and having to explain why you did that the rest of your life.