The hot job market has boosted the appeal of Online MBA programs. Historically, applications to business schools are countercyclical, in that demand for MBAs rises as economic growth slows, and applications to schools tend to fall when the economy expands, as people do not want to miss out on salary increases or promotions.
And while economic growth is currently slowing, the job market remains white-hot. This is already feeding through to some full-time MBA programs, which are reporting a sharp drop in applications after a two-year Covid boom. Online MBA programs, though, are still growing strong, as students do not need to quit their job to study and can therefore maintain or increase their earning power.
“The current hot job market has a unique underpinning of economic uncertainty creating volatility in overall demand. The schools with nimble and customizable delivery, whether it be entirely online or hybrid, are seeing steady demand while those with less flexible programs are trending back towards pre-pandemic levels,” says Shelbi Brookshire, executive director of MBA admissions at the Robert H. Smith School of Business in the US.
In addition, the school’s assistant dean, Neta Moye says there are strong arguments for pursuing an Online MBA now, as recessionary fears rise. “Working professionals are now more adept at navigating hybrid and online meetings and may, in fact, find they prefer an online option,” she says, pointing to the shift in working practices driven by the pandemic.
“They have learned how to connect and build community in a virtual environment, work in teams, and manage deadlines effectively,” adds Moye. “All these skills will translate to an Online MBA program.”
Additional time previously dedicated to commuting
Furthermore, senior professionals that find themselves working from home may also have additional time previously dedicated to commuting, further boosting the appeal of Online MBA programs. “Depending on the commute, this could be a substantial chunk of time that could be invested in earning credentials valuable in a new position or new career,” says Moye, adding that such a move would be well worth the investment.
“The additional credential offered by earning an MBA differentiates employees in industries that rely on strong communication, conceptual thinking, effective team dynamics, and analytical skills. As the job market tightens, these points of differentiation are necessary to ensure the most career options.”
The reason why demand for MBAs usually moves inversely to the economy is because people fear for their jobs and want to position themselves for opportunities in a difficult labor market. But the current looming downturn is different, according to Maurizio Floris, director of the Online MBA programs at AGSM, the Australian Graduate School of Management in Sydney.
He says: “There are currently many opportunities, and few jobs seem to be really at risk. The economic inhibitors include not being able to find employees, inflation, and interest rates going up.”
Difficult financial outlook sharpens focus on costs
That said, he admits that the tightening of monetary policy by many of the world’s central banks could sharpen minds on the costs of an Online MBA, given the difficult financial outlook. “Most of our MBA students are in their mid-thirties, and many will have a significant mortgage,” says Floris. “An increase might raise concerns if they can afford a financial commitment to study in the current climate. Borrowing money to pay for an MBA may be less attractive, too.”
On top of this, Floris sees a risk that, with a recession looming, employers may cut back on funding for these degrees, which can be expensive.
“There is some evidence to suggest that companies are tightening up discretionary spending while trying to figure out how an economic downturn will affect them,” he says. “That may prevent some potential students from being able to get funding.”
And yet, with job vacancies at record highs across much of the developed world, Floris says companies may look at providing greater tuition assistance to help attract and retain top talent. “On the other hand, the shortage of employees may mean that they will have to offer additional incentives – such as funding their Online MBA.”
In any case, Brookshire at the Smith School points out that there are plenty of other ways that students can fund Online MBA courses, including scholarships that the business school offers to admitted candidates and a payment plan that facilitates three or four instalments per semester, to spread out the cost of the degree.
Overall, Floris insists that the underlying trend towards Online MBAs remains strong. “This is driven by an increased level of comfort with working and studying online, and the steadily improving quality that Online MBAs have been building up over many years,” he concludes.