It’s all about the skills, not the credentials.

You know the labor market times are changing when Harvard MBAs start showing up in the unemployment stories. According to a recent Wall Street Journal article, 23 percent of recent Harvard Business School grads were still looking for work three months after graduation. In 2022, that figure was only 10 percent. Other top-rated programs report similar trends. What’s going on?  

Share of Job-Seeking MBA Graduates Without Jobs Three Months After Graduation

As usual, the answer seems to be multi-factorial. Firm-level decisions are a big part of the story. For example, McKinsey cut its MBA hires from the University of Chicago’s Booth School from 71 percent to 33 percent in just the last year. Similar decisions have been made in some big-tech firms like Microsoft. Another part of the answer may be overhiring during the COVID-19 shutdowns. Higher demand for goods and services drove businesses to snap up talent. This was especially true in the tech sector. After the “stimmies” ran their course, people went back to work, the “surge” atmosphere faded and the layoffs started. The US economy continues to simmer, but cost-cutting and efficiency remains a central concern for businesses and the financial markets.

According to a similar Forbes article, businesses also appear to be shifting away from pricey credentials toward actual, you know, skills tailored to specific business needs. In other words, middle management and executive roles remain under pressure. Flatter corporate hierarchies mean fewer chairs for people with general business knowledge. 

Fundamentally, a rapid evolution is occurring in the labor market. Initially triggered by the COVID-19 pandemic, the economy has been shifting toward automation, remote work, and gig-based employment models. Contrary to what an MBA program might offer, companies are evaluating their organization structures and placing a greater emphasis on relevant job experience and specific skill sets—such as data analysis, digital marketing, AI literacy, and big data—over general business knowledge. Moreover, as employers increasingly recognize the value of non-traditional credentials (e.g., specialized certifications, coding bootcamps, etc.), while eliminating lots of management roles, the playing field is now more level, calling into question the value of the vaunted MBA. 

This prompts a needed discussion about how these shifts in the labor market should inform what skills job-seekers should value most, aligning the needs of employers with the value of candidates. Regardless of degree pathway, a strong focus should be placed on transferable skills and noncognitive abilities, including adaptability, emotional intelligence, and problem solving. These skills can sometimes outweigh technical expertise, as employers place an increasing emphasis on leadership and strategic vision. Finally, as AI increasingly disrupts the labor market, those committed to lifelong learning of technology will prosper ahead of those that do not. 

For these prescriptions, Harvard is already on the case: HBS is testing an AI tool that can compare job seekers’ CVs with their preferred roles. It is also recommending online classes to bridge skills gaps, including an intensive class that focuses on soft skills like networking and pitching. For prestigious business schools, one pitch remains to be made: that the degree is still relevant in today’s job market.