Dang the stock market did really well this year. As a result for the first time ever, my net worth increased by more than my total gross income for the year (just barely though). That was a shock.
You don’t have to be particularly skilled at investing when VTI which is Vanguards ETF for the entire stock market, goes up 27.7% (plus 2.12% dividends) with out you doing anything.
Have a Happy New Year, and good luck next year! Who knows what it will bring.
I’ve been getting a lot of advertisements touting the salary increases from getting an MBA or a Masters in something else business related. But with any adverisment, is it really worth it?
I decided to look at this from two angles:
I don’t doubt that a lot of people get a bump from it, but I think that some of the people getting a bump from an MBA are transitioning from being individual contributors like analysts or data scientists to becoming people managers. As a result for people who don’t want to do that, I decided to investigate if it was still worth by using data from the American Communities Survey (2013-2017) and comparing the income distributions for individuals in the same occupation and age group (30-40 years old) by their education either a bachelors degree (any field) or a masters degree (ex MA, MS, MEng, MEd, MSW, MBA).
For analysts of different types, you can see that there are median increases to wages ranging from 10% to 47%. Compare this to the nominal value of this translates to between $7k to $26k per year depending on the occupation.
Compare this to the cost of a MBA’s or other related masters programs which comes to $50k to $150k to complete a full course depending on the quality of the program. Since we’re comparing the median graduates before and after, you’ll have to use your own judgement into your calculations. These increases aren’t huge if the program has a list price of $50k, but you’re going to only expect to bump up $15k in the case of an Operations Research analyst. Some quick math says it will take at least 3.3 years to make back that amount without taking into account any tax implications or opportunity cost. In fact, one important thing to note though is that the 75th percentiles for masters degree holders is much further out than for BS degree holders so your ceiling will probably increase as well.
It’s hard to say if people get MBA’s and become managers or if the people who get MBA’s want to be managers and already have the qualities needed to do that but just need some extra qualifications to make it.
Using the same data table we can see that the portion of managers in these areas who have masters degrees is substantial at 19% compared to 11% for the working population aged 30-40 years old, suggesting that it helps if you get a masters degree but it isn’t a requirement in all management areas.
Most noteworthy, 3 fields stood out with very elevated levels of masters and doctoral degree holders in management and those were:
Therefore if you work in one of those areas, you may find more benefit than the median person.
| Occupation | Education | 25th Percentile | 50th Percentile | 75th Percentile |
| Management Analysts | Bachelors | $ 56,880 | $ 80,000 | $ 113,761 |
| Management Analysts | Masters | $ 68,337 | $ 94,699 | $ 130,853 |
| Budget Analysts | Bachelors | $ 52,950 | $ 72,683 | $ 91,534 |
| Budget Analysts | Masters | $ 62,051 | $ 80,000 | $ 103,541 |
| Credit Analysts | Bachelors | $ 42,292 | $ 56,819 | $ 74,083 |
| Credit Analysts | Masters | $ 56,006 | $ 83,691 | $ 123,720 |
| Financial Analysts | Bachelors | $ 61,020 | $ 80,823 | $ 113,761 |
| Financial Analysts | Masters | $ 73,956 | $ 100,000 | $ 150,000 |
| Operations Research Analysts | Bachelors | $ 57,193 | $ 75,580 | $ 99,282 |
| Operations Research Analysts | Masters | $ 72,479 | $ 91,006 | $ 108,725 |
| Occupation | Master’s degree | Other Advanced Degree | Bachelor’s degree | Less than BS |
| Administrative Services Managers | 13% | 2% | 34% | 51% |
| Agents and Business Managers of Artists, Performers, and Athletes | 8% | 5% | 45% | 42% |
| Architectural and Engineering Managers | 36% | 5% | 48% | 11% |
| Chief executives and legislators/public administration | 22% | 5% | 46% | 26% |
| Computer and Information Systems Managers | 26% | 2% | 50% | 22% |
| Constructions Managers | 6% | 1% | 34% | 59% |
| Farmers, Ranchers, and Other Agricultural Managers | 3% | 0% | 23% | 73% |
| Financial Managers | 22% | 2% | 43% | 33% |
| Food Service and Lodging Managers | 4% | 1% | 23% | 72% |
| Gaming Managers | 9% | 0% | 24% | 66% |
| General and Operations Managers | 12% | 2% | 35% | 51% |
| Human Resources Managers | 22% | 2% | 40% | 36% |
| Industrial Production Managers | 13% | 1% | 37% | 50% |
| Management Analysts | 33% | 5% | 43% | 19% |
| Managers in Marketing, Advertising, and Public Relations | 20% | 2% | 54% | 25% |
| Managers, nec (including Postmasters) | 20% | 3% | 39% | 37% |
| Medical and Health Services Managers | 24% | 6% | 33% | 36% |
| Natural Science Managers | 39% | 17% | 38% | 5% |
| Other Business Operations and Management Specialists | 25% | 3% | 48% | 24% |
| Property, Real Estate, and Community Association Managers | 9% | 2% | 33% | 56% |
| Purchasing Managers | 24% | 4% | 43% | 30% |
| Social and Community Service Managers | 35% | 5% | 41% | 20% |
| Transportation, Storage, and Distribution Managers | 7% | 1% | 25% | 68% |
| Grand Total | 19% | 3% | 39% | 39% |
I pulled the data from the raw American Communities Survey data for 2013-2017 and restricted to individuals between the ages of 30-40. The average MBA student is 28, so I decided to focus on the age range after where most of the people would have graduated. After extracting the data, I ran some summaries to calculate the income percentiles and educational distributions.
I don’t normally go into politics, but this topic seems to touch a little more closely to FIRE, since there are specific growth rate assumptions that were made.
Buried under the headlines over how much Jeff Bezos would be taxed under Elizabeth Warrens Medicare for All plan was a side note on an additional tax to target the top 1% of households by net worth for a new tax called “mark to market.” This tax basically would restructure capital gains to take place every year regardless if there was a sale. Warren’s plans referenced a study freely available, if you’d like to read it yourself. The researchers used the Survey of Consumer Finances by the Federal Reserve, which is what powers many of the comparison calculators on this website.
To be in the top 1% by using total net worth, you would have to have $10.350 million in net worth to be in the top 1% of households based on the last survey results available using 2016 data. The authors don’t mention if they adjusted out any assets from their projections, so I’m going to assume not. The paper referenced by Elizabeth Warren referenced uses a rather optimistic 8.33% return on investments (page 30 of the PDF).
Vanguard is projecting a average annual returns of only 4-6% for US equities. 86% of the top 1% are over the age of 50 so their asset allocations are most likely more conservative than the overall stock market, and would likely grow much slower than the 8.33%. So with those 2 factors combined, most likely the $2T incremental tax contribution is very over stated especially considering the effects of lower compounding growth.
Using the 8.33% growth over a decade you would end up with 130% cumulative growth, but with 4-6% over the decade the growth would only be 49%-82% so the taxable gains would be 37% to 69% of the budgeted $2T which would cause a short fall in taxes of $0.6T to $1.3T.
Months ago, Warren and others had mentioned only targeting the wealthiest of the wealthy for the incremental taxes to pay for Medicare for All among other plans. The first primaries are still months away and Warren’s tax plans have started to dig further and further down the wealth ranks. Sure, people with $10m+ dollars in net worth are probably going to be fine. But if there are shortfall like the one I mentioned, where is the incremental money going to come from? A tax on $1m+ net worth households (top 10% by net worth) doesn’t look as implausible any more as the standards of who should be taxed keeps falling and falling.
It’s a common refrain that law salaries for new grads are bi-modal, with a large percentage of law graduates going into Big Law. The NALP even publishes data that shows a double humped distribution of salaries every year. But a quick query of freely available American Communities Survey data (collected by the US Government) shows that there is a small hump in the same spot that the NALP survey reports. But NALP shows nearly 21% of graduates with income around $185k / year and it looks like roughly 26%+ are earning at least $160k which looks to be a huge overstatement. This is what I found:
I have read comments questioning some of the data collection methods that NALP uses, and I think that this single slice of data definitely shows that there is an odd deviation from the results I derived from the ACS. If anything my data should skew higher, because I could not separate people with only 1 year of experience out. So there would be associates with in Big Law with multiple years of raises and experience in this data set. An interesting overlap is that the NALP’s adjusted mean is slightly below the mean salary that I have calculated, which is interesting as to how close it is.
I’ve decided to retire the old Shnugi name after 15 years of using this to host my data analysis tools. Although I will continue to use it as my username. I don’t know if I’ve gotten all the links updated, but it seems like everything is working after the migration. Please let me know if you find any broken images, links or pages.
I haven’t really been doing a lot of personal blogging, and I thought it would be more fitting to have a more descriptive name, since most people aren’t here to read about me but to find out things about themselves.
The newest calculator is a housing percentile to compare your housing costs nationally. Make sure to include your utility costs and fixed fees like HOA.
