Payscale Crunches MBA Compensation Numbers

I talked today with a REALLY smart guy for an upcoming show on MBA salaries in investment banking, private equity, venture capital and consulting.

Al Lee, whose background is in high-energy physics, is the Director of Quantitative Analysis for PayScale, an online compensation data collection firm. His job is to find out why people get paid what they're paid. Business Week recently commissioned Payscale to look at how the school from which you got your MBA affects your compensation over 5, 10, 15 and 20 years. It's fascinating stuff, and not as predictable as you might think.

For the upcoming show, though, I asked Al Lee how pay for MBA grads in those areas of finance traditionally higher-paid but hard-hit by the economic downturn -- investment banking, private equity, venture capital -- have been affected by the economic downturn. Lee said the data shows that while there are fewer overall jobs to be had, and while perks like starting bonuses have shrunk or disappeared, pay has not actually gone down, or if it has, it's only by a couple percent.

Lee said companies don't want the cheap person; they still want the high-quality person, and they are still going to pay very close to pre-recession salaries for the right person, who's likely to do well for them for 3 years, 5 years, or more. The reality of the recession is that these companies are making far fewer new hires.

Lee said graduating into this down economy might not have much affect on an MBA grad's overall earnings over the course of their career. Their career trajectory may not be as direct, he said -- all but the very best are unlikely to go straight into a job on Wall Street -- but Lee thinks if you manage your career differently, say, by starting at a mid-sized regional bank and proving yourself, then gradually moving toward the Wall Street job, you can still find work in high-finance and get paid almost as much as you would have pre-recession.

You'll hear from Al in our upcoming Salaries in Finance podcast.