MBA Interest Surges In Slowing Economy

What are more and more people thinking about as the economy continues to slow? You guessed it, school. The MBA is, of course, at the top of the list for many professionals who are looking to take advantage of the declining opportunities in the marketplace to prepare themselves with a business education - readying themselves for when the rebound come-around.

The MBA Tour, a worldwide tour that brings together between 20 and 25 business schools in one place, at one time, has grown in popularity; attendance was up 30% last year and Peter Von Loesecke, the founder of the Tour and MBA graduate from Cornell's Johnson School, believes that it will continue to grow even more rapidly as the economy worsens. It makes a lot of sense.

A graduate business education, like any other post-grad degree, requires that you take time away from your career and suffer the opportunity cost of that lost income in addition to the, sometimes, staggering tuition costs and related expenses. Clearly, then, the best time at which to take that on is when the opportunity costs are minimized. Whether they realize it yet or not, prospective MBAs are behaving like trained business people already; once they graduate, they'll understand the economics behind their prior motivations.

The Companies MBAs Love

It's not much of a surprise really; you could probably guess many of the companies that made the list, but there's a great little article, here, that outlines the top-25 companies for whom new MBA graduates would love to work. What I would not have guessed, however, was that Google made the top spot - it's the #1 most desirable employer according to Universum, a research firm that publishes the list for Fortune.com.

Of course, I would have listed Google on the list as well, but maybe not as #1 - ranking McKinsey, or another big consulting firm, instead. Maybe this is a sign of things to come - a greater focus on business innovation rather that resume-prestige? On the other hand, maybe it's just a normal reaction to desiring the most talked-about names - Google certainly does qualify for that.

Bonuses & the U-Shaped Recovery - What to Expect

On the bright side, the job losses on wall street are far less than they were following the dot-com bubble burst earlier this decade. While financial institutions shed about 17% of their forces, those same institutions have only cut about 3% during this latest downturn. Unfortunately, there's a downside to this story.

The downside is that many, if not all, are expecting many more cuts to come. You may have heard people referring to a U-shaped recovery; well, were only still on the left-side, the downward side, of that 'U'. It will essentially be a very slow downward slide that will see an increasing number of jobs lost before we hit the trough of this business cycle. Worst yet, it will be an equally slow climb back up. So, who among us are the most at-risk?

You guessed it; the higher your salary and/or bonus, the more likely you are to get a pink slip. It's no secrete that wages are the #1 expense for financial institutions and they're losing money like a leaky rowboat. To hedge those losses, their first act is to cut their expenses proportionally and the story seems to be that there are many more write-downs to come - more paper losses at these firms necessarily mean more job losses for those working there.

The best thing to do is to stay focused on your long-term career goals. Your career is not your job; it's the union of your experience and education. Losing your job does not represent a loss of your career; it provides you with the opportunity to explore areas that you haven't had the time to review in the past. Use every opportunity to enhance your experience and education and your career will continue to excel.

B-School Students Anticipating Hurt After Graduation

With the up-coming graduation season, the pressure is mounting on graduates from business schools around the country (and the world, for that matter) to find the high-paying jobs that will help pay for those hefty school loans. Unfortunately, the economic turmoil of the past few months paints a hazy picture and after reading this article, it looks as though graduates are going to get an introduction to what they can expect as part of their graduation ceremonies.

I remember when I was graduating from business school and it's hard not to have lofty expectations. You've just spent a small fortune on an education that you sought purely for its ability to help boost your earnings expectations; all that, after leaving the workforce and suffering the opportunity cost of that lost income. A MBA is an expensive education, like most post-grad degrees, actually, and it's difficult to blame graduates for desiring the six-figure salaries that they've been trained to seek. The reality, however, may be a shocker and in listening to keynote speakers at their graduation ceremonies, graduates will have a window on what they can actually expect to face when they return to the real world.

The economy is hurting. Wall Street is laying-off thousands. Foreign markets are mounting pressure on almost every domestic sector. While getting a speaker who will motivate and inspire graduates may leave them with a warm and fuzzy feeling, it's unlikely to set proper expectations. Having graduated during the last economic slowdown, I personally feel that getting a realistic picture is far more valuable. These are highly educated and ambitious people; they don't need people to motivate them - they need people who will share their honest insights and it sounds as though that is exactly what they will get.

Unemployment Trending Upward

It's an election year and no one wants to admit it, let alone talk about it, but the reality is that the employment outlook is not pretty. Since early last year unemployment has been steadily rising and shows no signs of slowing down - regardless of what the politicians want us to believe. Oh, and if you think that unemployment can't go much higher than it is already, then look at the included graph as a comparison against what it used to be during this decade's first recession.

Unemployment, for the sake of unemployment, sucks. What makes this picture that much worse, however, are all the other factors that are still mounting an attack on the lowly consumer. Rising fuel costs; rising food costs; falling home prices... maybe worst of all, rising consumer debt. You can't really blame people for drawing on their lines of credit to make it through the tough times, but I'm sure that you too can guess what will happen when the cost of credit begins to rise as it is expected to do in the coming year. All that debt will suddenly become increasingly expensive leaving everyone scrambling with  even fewer options to cover their living expenses.

The picture is gloomy, I know. It doesn't need to be as bad as it is though. The most important thing that people can do is to recognize the true state of the economy and act accordingly. Yes, it's time to cut-back on spending and increase savings for those sure-to-come rainy days. Every business owner knows that to survive the troughs you need to lower expenses along with falling revenues; it's just too bad that not every person has the same business know-how to make similar adjustments in their personal finances.

Everyone believes that they're underpaid...

I'm sure that no one is surprised by the title of this post; we all believe that we're underpaid. More precisely, we believe that others are paid better than we are. The reality, however, is likely far from the truth. This differential between what people earn and what we believe that they earn comes from the fact that no one speaks about their earnings - we infer their earnings from their spending behaviour. With personal debt levels at all-time highs, this is undoubtedly a poor indicator.

For those of you unaware, I'm a Canuck. Up here north of the border, the average salary is about $27,500 for an individual living alone (this excludes students working part time or summer jobs that would otherwise drag-down the average). Shocking, isn't it? With all the talk about six-figure salaries, the reality is that a six figure salary more than four-times the average salary.

Most people spend beyond their means. They spend more than what they earn and incur massive debts in order to live like they believe their neighbors can in-fact afford to live. In trying to keep-up with the Jones', it seems that we're all chasing a lifestyle that very, very few of us can actually afford.

What does this all mean for those currently on the job hunt? Well, for starters, it should give pause in consideration of what sort of salary is actually deserved based on your experience and abilities. Of course, we all believe that we're above average - which, of course, can't be true - so we all demand salaries that are above average. There's no harm in believing in ourselves; it's a positive thing. I suppose that I'm writing this not to suggest that anyone suppress their earnings expectations, but rather than we think twice about what it is that we're actually worth. Think about it from the perspective of your employer or potential employer. What sort of value are you going to generate for them? If you're worth six-figures, then that would imply that you can generate at least that much profit (not revenue) for the company; can you?