Is there Glut of MBA Graduates?

We here at 7L Associates are fans of Freakonomics.  Great book and a fascinating podcast/blog.  They use economics to tackle all sorts of interesting questions.  The May 1 episode entitled “It’s Crowded at the Top” http://www.freakonomics.com/2013/05/01/its-crowded-at-the-top-a-new-marketplace-podcast/  is very relevant to the decision to apply for an MBA.  The episode suggests a couple of very interesting things.  The good news: the more educated you are, the better off you are, education still has a good return on investment.  The bad news: economist Paul Beaudry from the University of British Columbia noted the demand for “knowledge workers” (including MBAs) stopped growing in 2000.  However, an increasing amount of people being educated.  (For MBAs we know business schools are generally expanding: the full time programs are growing and many are expanding their executive offerings or adding secondary campuses.  UNC was the first top tier program to offer an online MBA, but others will follow.)  The result of growing supply against stagnant demand is a cascade effect; pushing highly educated people down into jobs they were overqualified for. 

What does this mean for aspiring business school applicants?  The plum post-MBA jobs are going to be increasingly competitive to land, and it will take more than a moderately growing economy to reverse this trend.  More and more grads will be forced into jobs that make justifying the MBA investment difficult.