Are Undergraduate Business Majors in Bad Shape?

Melissa Korn’s article in The Wall Street Journal on rethinking the value of an undergrad business degree isn’t likely to show up in the press clippings at American business schools. At least not ones looking to increase enrollment in their four-year business programs.

The piece starts with this zinger: “Undergraduate business majors are a dime a dozen on many college campuses. But according to some, they may be worth even less.”

And it goes on from there:

The biggest complaint: The undergraduate degrees focus too much on the nuts and bolts of finance and accounting and don’t develop enough critical thinking and problem-solving skills through long essays, in-class debates and other hallmarks of liberal-arts courses.

Companies say they need flexible thinkers with innovative ideas and a broad knowledge base derived from exposure to multiple disciplines. And while most recruiters don’t outright avoid business majors, companies in consulting, technology and even finance say they’re looking for candidates with a broader academic background.

But, somewhat curiously, Korn didn’t cite data or research on the employment prospects of business majors in general. She mentioned that more than 20% of bachelor’s degrees awarded are in business — the next-closest is social sciences/history at 10.5% — yet what happens to all these business grads?

In short, they appear to be faring better in the job market than grads in architecture or law … but not by a whole lot.

The Georgetown University Center on Education and the Workforce released a report in January on college majors, unemployment, and earnings. The unemployment rate for recent business graduates (aged 22-26) is 7.4%, higher than education or health but much lower than architecture, the arts, or even engineering. And the rate dips to 5.3% for experienced grads (see the below chart from Georgetown).

For graduate degree holders in business, the jobless rate is 4.4% — which seems to indicate students are better served pursuing an MBA after majoring in something other than business. But consider this: Of all the broad degree categories that Georgetown looked at, only graduate degree holders in architecture (7.7%) and the arts (6.2%) had a higher unemployment rate than those who earned postgraduate business degrees.

Georgetown used 2009 and 2010 data from the American Community Survey, so the job outlook for the most recent business grads could be different than what these numbers indicate.

Health Surpasses Business as Top Major

It’s also helpful to analyze more than a one-year snapshot of which degree categories that students are majoring in. When all postsecondary levels are considered — not just bachelor’s degrees, as the WSJ showed — health accounted for just under 20% of all degrees and certificates awarded in 2010, compared to 16.7% in business, management, and marketing.

In 2007 the number of health degrees awarded (see the blue bars in the following chart) surpassed the business category, and they’ve steadily gained a larger share of all degrees in the years since. The proportional increase in health degrees has taken place while the share of business degrees has been stagnant.

Completion data comes from the same source that the WSJ used, the National Center for Education Statistics (and particularly the Integrated Postsecondary Education Data System, or IPEDS).

Nation’s Largest Producers of Business Degrees

So which schools produce the most graduates with business degrees? We again used IPEDS to come up with the following list, which is headlined — at the associate’s, bachelor’s, and master’s level — by the University of Phoenix and other online schools. Northwestern University also is near the top with its MBA program, and Central Florida, Florida International, and Penn State are in the top five in their respective bachelor’s programs.

See the list of completions by award level for all US institutions in this Excel file.

Find out more about EMSI here. You can reach us via Twitter @DesktopEcon or by emailing Josh Wright ([email protected]).

Illustration by Mark Beauchamp.

Read more at Economic Modeling Specialists (EMSI blog)