The students at Harvard Business School feel rich because they either are rich . . . or they’re about to get rich.
The average graduating salary is $120,000!
To put that in perspective, the average American makes $24,000.
That means a fresh-faced, dewy-eyed twenty-six-year-old with two years of business school under his or her belt makes five times what the average American citizen makes. I know my salary almost tripled after I graduated from Harvard. Yes, Harvard makes you feel rich because it actually makes you rich.
Or does it?
2
“Is everyone nuts?”
I was sad when I graduated, because all my friends were scattering in different directions. After a big road trip, it was suddenly all over and then:
Mark and his wife moved to Houston, and he got a job with a high-end consulting company. About a quarter of Harvard Business School grads go work for consulting firms, and the hours are notoriously tough. Unless they land a local assignment, most consultants fly out Monday mornings and fly home Thursday nights, every single week, every single month, forever.
Chris went to Washington, DC, to be assistant principal at a big charter school. We kept in touch, but he was always at work when I called. We talked about our road trip and I’d ask him, “Are you getting any sleep these days?” He’d say, “Well, I get to work every morning around 7:00 a.m. and get home around 9:00 p.m. I usually go in for a few hours on the weekend, too. So yeah, enough sleep, but not much else.”
Ryan went into private equity in New York. Another quarter of Harvard Business School grads get high-end finance jobs in investment banking, private equity, or hedge funds. They help big companies buy each other, invest in illiquid assets, create complicated investments. But Ryan told me he started work around 10:00 a.m. and worked till 11:00 p.m., seven days a week.
Sonia went to work in Silicon Valley at a big tech company. The tech giants hired nearly another quarter of the graduates from our class and had great reputations for gourmet meals, dry-cleaning, and Ping-Pong tables at the office. When I reached out to Sonia a year after graduation she told me she loved her job and was working about eighty hours a week.
It seemed crazy to me, but all my friends were working eighty to one hundred hours a week.
And a week only has 168 hours in it!
Where was their third bucket?
I remember thinking, Is everyone nuts?
I thought back to Harvard and remembered going out for dinner with a group of McKinsey consultants during a recruiting event. They flew to Boston and wined and dined us at a ritzy joint. We drank expensive wines, ate delicious food, and talked about world issues into the wee hours. My brain was overheating because of the stimulating conversation. These guys were warm, friendly, and killer smart. It was a great night.
But the thing I remember most is that when we were finally finishing up around two in the morning, all the McKinsey consultants were . . . going back to work! They were jumping on conference calls with teams in Shanghai, opening laptops to do emails, or getting together to finalize presentations for the next day. At two in the morning!
Consultants and finance folks make up most of Harvard Business School grads and they work approximately eighty to one hundred hours a week.
So, are they really making $120,000 a year?
3
The single calculation to find out what you really make
Do you remember fractions? I learned them back in fourth grade in a moldy classroom with flickering florescent lights in my elementary school. Pink chalk dust scrawled across blackboards showing us how one-half can be written as ½ or three-quarters can be written as ¾ . . . with 3 being the numerator and 4 being the denominator. As in “I sat on the couch in sweatpants watching TV all Saturday night and ate ¾ of a pepperoni pizza.”
Well, the Harvard salary of $120,000 is a fraction, too.
It means you make:
That sounds great, but there’s one little problem with that fraction. Nobody works every single hour of the year. Therefore, it doesn’t make sense talking about how much money you make over an entire year of work. That makes salaries sound like giant cardboard paychecks handed out on New Year’s Eve with hearty handshakes. “Congrats, Sampson. You blew away your sales numbers for the past twelve months. After a solid year of grinding it out every single day, you have finally earned this—your annual paycheck.”
But it doesn’t work that way.
We don’t earn big fat dollars for years of work.
We earn tiny little dollars for hours of work.
When I had my first babysitting job I worked for $5/hour. Pretty sweet deal for watching Alf with a couple of eight-year-olds while eating unlimited cheese strings. Then I did yardwork for my parents for $10/hour. That was generous of them, since the going rate for raking leaves and shoveling driveways was lower than that. Although I did help them avoid pesky health insurance by getting paid under the table. Some of my friends did construction for $12/hour. Some lifeguarded at pools for $16/hour. Point is: Every single job is paid by the hour. Some are forty hours a week, some are eighty, some are one hundred and twenty. But no matter how much money you’re making, the numerator is how much you get and the denominator is how much you work.
Every single job is paid by the hour.
Harvard Business School grads make double or triple the money a lot of people make, but they often work double or triple the hours, too. When you work that much, it’s harder to find time to shovel the driveway, play with your kids, or plant your garden, so maybe you hire people on the cheap to do those things for you. You will still have fun! Frankly, the money you’re making can afford luxury vacations and expensive restaurants. You may have even more fun. But there’s less time for fun. Your third bucket disappears.
Think about whether it’s important to you to feel the pride of a freshly shoveled driveway, the joy of watching your kids discover a new word, or see the tulips you planted in the fall finally bloom in the spring.
There’s nothing wrong with either life.
But think about the life you want.
4
How does a teacher or retail assistant manager make more than a Harvard MBA?
Time for a scribble.
Here’s how much a Harvard MBA makes compared to two very common jobs: an assistant manager at a retail store and an elementary school teacher.
They all make $28/hour.
Where did I get the numbers from?
Well, teachers are scheduled for seven-hour school days (usually 8:30 a.m. to 3:30 p.m.) with typically an hour off for lunch. Let’s round that up to thirty working hours a week. But we all know how hard teachers work. We know it’s way more than that! My dad is a teacher, my wife Leslie is a teacher, and they bring work home. The average teacher does an hour or two of work every single night! Marking, prepping, coaching a team. So I added ten hours a week for that.
Retail store assistant managers are typically scheduled for forty-hour workweeks, but it’s a tough job. They end up working before or after shifts sometimes. There are questions, issues pop up, people call them at home. So I added ten hours a week for that.
And the eighty-five hours for Harvard MBAs? It’s a ballpark average figure based on my data, research, and personal experience. Working on consulting gigs in a Chicago hotel room or slaving away on an investment banking deal doesn’t exactly give you free evenings or weekends.