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Cost of living factor in busines school salaries?

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Cost of living factor in busines school salaries? [#permalink] New post 12 Dec 2013, 09:38
Hey guys,

I have a question around rankings and their methodologies.

Do any of them account for regional cost of living differences in their graduates salaries? I feel like this could be a factor for keeping the ranking lower for schools that are located in lower cost of living locations, and as such, place people in that same location which require a lower salary to be competitive.

Example:
Columbia Business School (NYC) starting salary: $116,153 (No stats about post employment location I could find, but I Assume a large majority of students stay in NYC after graduation)
Rice Jones School of Management (Houston, TX) starting salary: $101,229 (91% of graduates work in the "Southwest", which tends to have a lower cost of living)
Salary data source: 2013 Business week ranking

And based on the NY Times cost of living calculator using a NYC base salary of $116,153:
"The cost of living in Houston, TX is 53.2% lower than in New York, NY . Therefore, you would have to earn a salary of $54,382 to maintain your current standard of living."
http://nytimes.salary.com/CostOfLivingW ... esult.aspx

You have almost double the standard of living upon graduation from Rice and working in Houston, than graduating from Columbia and living in NYC. Even over the course of a career, I feel the net improvement of your standard is a much more important factor than pure $$$. Granted starting salary is just one component of a ranking and the overall B-school experience, and some may define standard of living differently, but salary seems to be a major factor for many applicants and its something I wanted to see others thoughts on.

DISCLAIMER: I applied to both Rice and Columbia which is why I used them as an example. While I don't have to use this in my decision process, I thought some discussion on this point could help others that may face a similar decision.

Edit: I added the link to the NY Times COL calc.
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Re: Cost of living factor in busines school salaries? [#permalink] New post 23 Dec 2013, 20:08
gddunton wrote:
Hey guys,

I have a question around rankings and their methodologies.

Do any of them account for regional cost of living differences in their graduates salaries? I feel like this could be a factor for keeping the ranking lower for schools that are located in lower cost of living locations, and as such, place people in that same location which require a lower salary to be competitive.

Example:
Columbia Business School (NYC) starting salary: $116,153 (No stats about post employment location I could find, but I Assume a large majority of students stay in NYC after graduation)
Rice Jones School of Management (Houston, TX) starting salary: $101,229 (91% of graduates work in the "Southwest", which tends to have a lower cost of living)
Salary data source: 2013 Business week ranking

And based on the NY Times cost of living calculator using a NYC base salary of $116,153:
"The cost of living in Houston, TX is 53.2% lower than in New York, NY . Therefore, you would have to earn a salary of $54,382 to maintain your current standard of living."
http://nytimes.salary.com/CostOfLivingW ... esult.aspx

You have almost double the standard of living upon graduation from Rice and working in Houston, than graduating from Columbia and living in NYC. Even over the course of a career, I feel the net improvement of your standard is a much more important factor than pure $$$. Granted starting salary is just one component of a ranking and the overall B-school experience, and some may define standard of living differently, but salary seems to be a major factor for many applicants and its something I wanted to see others thoughts on.

DISCLAIMER: I applied to both Rice and Columbia which is why I used them as an example. While I don't have to use this in my decision process, I thought some discussion on this point could help others that may face a similar decision.

Edit: I added the link to the NY Times COL calc.


For Columbia salary tats aren't segmented into region but you can see on page 2 which region students end up by percentage
http://www7.gsb.columbia.edu/recruiters ... mentreport

For most other schools I have seen the salary stats are divided up by region, like MIT sloan page 3 you can see exactly how much students made across each region
http://mitsloan.mit.edu/pdf/Class_of_20 ... report.pdf

You can see that the pay does not vary too much by region so your theory does not really hold up (That rice grads make lower salary because they are mostly in Texas which could be holding down their ranking is what I assume your theory is). MIT kids going to Houston make ~110-130k just like if they went to Mexico or Boston or Shanghai ect ect..

Now cost of living is a huge decision point on deciding where you want to work post MBA given that the pay is quite similiar. I know a Booth friend going into Energy Investment Banking in Houston, like you mentioned, cost of living is quite cheap there, I was on a project in Houston for 1 year and housing is super cheap. He will be able to support a higher standard of living than his classmates whom decided to do Investment Banking in New York by far since both offers for IB in either location were quite similar.
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Re: Cost of living factor in busines school salaries? [#permalink] New post 23 Dec 2013, 20:09
aalba005 wrote:
gddunton wrote:
Hey guys,

I have a question around rankings and their methodologies.

Do any of them account for regional cost of living differences in their graduates salaries? I feel like this could be a factor for keeping the ranking lower for schools that are located in lower cost of living locations, and as such, place people in that same location which require a lower salary to be competitive.

Example:
Columbia Business School (NYC) starting salary: $116,153 (No stats about post employment location I could find, but I Assume a large majority of students stay in NYC after graduation)
Rice Jones School of Management (Houston, TX) starting salary: $101,229 (91% of graduates work in the "Southwest", which tends to have a lower cost of living)
Salary data source: 2013 Business week ranking

And based on the NY Times cost of living calculator using a NYC base salary of $116,153:
"The cost of living in Houston, TX is 53.2% lower than in New York, NY . Therefore, you would have to earn a salary of $54,382 to maintain your current standard of living."
http://nytimes.salary.com/CostOfLivingW ... esult.aspx

You have almost double the standard of living upon graduation from Rice and working in Houston, than graduating from Columbia and living in NYC. Even over the course of a career, I feel the net improvement of your standard is a much more important factor than pure $$$. Granted starting salary is just one component of a ranking and the overall B-school experience, and some may define standard of living differently, but salary seems to be a major factor for many applicants and its something I wanted to see others thoughts on.

DISCLAIMER: I applied to both Rice and Columbia which is why I used them as an example. While I don't have to use this in my decision process, I thought some discussion on this point could help others that may face a similar decision.

Edit: I added the link to the NY Times COL calc.


For Columbia salary tats aren't segmented into region but you can see on page 2 which region students end up by percentage
http://www7.gsb.columbia.edu/recruiters ... mentreport

For most other schools I have seen the salary stats are divided up by region, like MIT sloan page 3 you can see exactly how much students made across each region
http://mitsloan.mit.edu/pdf/Class_of_20 ... report.pdf

You can see that the pay does not vary too much by region so your theory does not really hold up (That rice grads make lower salary because they are mostly in Texas which could be holding down their ranking is what I assume your theory is). MIT kids going to Houston make ~110-130k just like if they went to Mexico or Boston or Shanghai ect ect..

Now cost of living is a huge decision point on deciding where you want to work post MBA given that the pay is quite similiar. I know a Booth friend going into Energy Investment Banking in Houston, like you mentioned, cost of living is quite cheap there, I was on a project in Houston for 1 year and housing is super cheap. He will be able to support a higher standard of living than his classmates whom decided to do Investment Banking in New York by far since both offers for IB in either location were quite similar.


Also the Financial times ranking uses the purchasing power parity metric to adjust payscale for schools so you see Chinese schools and Indian schools in the top 10 of the rankings even though in real terms the salary is closer to 30-40k a year.
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Re: Cost of living factor in busines school salaries? [#permalink] New post 24 Dec 2013, 06:46
Hi aalba005,

Thanks for you input!

That Sloan statistic is one that I think helps answer my question about rankings (even though the small sample size of south region students). I guess weighting for cost of living differences is something people have to take into account on their own.
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Kudos [?]: 54 [0], given: 11

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Re: Cost of living factor in busines school salaries? [#permalink] New post 24 Dec 2013, 06:54
gddunton wrote:
Hi aalba005,

Thanks for you input!

That Sloan statistic is one that I think helps answer my question about rankings (even though the small sample size of south region students). I guess weighting for cost of living differences is something people have to take into account on their own.


Yes I agree! I think cost of living is quite an important post MBA decision point especially if one will be going into something like consulting where you have options to live in almost every major city yet the offers are quite standardized!
Re: Cost of living factor in busines school salaries?   [#permalink] 24 Dec 2013, 06:54
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