The Impact of Education on Earnings Power

Based on recent findings, there’s little question that education can have a profound impact on one’s earning power. The phenomenon can be traced across today’s workforce and in supply chain circles, where enhancing an educational portfolio often leads to better career opportunities, higher salaries and improved job satisfaction.

Indeed, experts are telling us that education has become even more critical in today’s competitive job environment, where hundreds or even thousands of qualified individuals are vying for the top jobs. Analysts add that candidates who have real-world job experience combined with a strong educational background are very often the ones that stand out, get the first and second interviews, and are invited to join the company.

"All education is valuable, and looked upon positively by employers because it shows a passion for the business, and for increasing one’s own value," says Rhoda Isaacs, president at Los Angeles-based executive search consultancy, R.I. James Inc.

She sees MBAs as being particularly valuable for supply chain professionals, who are often asked to bring a mix of business, management, financial and supply chain expertise to the table. That expertise not only helps professionals tackle more complex projects while on the job, but it also helps them earn more money.

  That earning power takes hold early, says Isaacs. "MBA candidates from top schools who go into the programs earning $130,000 to $200,000 annually, typically see a significant salary increase—often over 100 percent—by the time they receive their degrees."

Is it Really Worth It?
Supply chain professionals taking the time to earn college degrees, advanced degrees and certificates, boast the highest salaries in their fields. According to the January 2010 Logistics Management Salary Survey, the average salary for a logistics manager right now is $103,003, while the median is $88,000. Forty percent of the salaries fall into the $100,000+ range, with 3 percent coming in above $250,000.

Of the survey respondents, 27 percent are involved in distribution/logistics; 20 percent in traffic/transportation; and 16 percent in supply chain management. Ninety-four percent of respondents attended college, where 73 percent earned at least an undergraduate degree. Nineteen percent hold MBAs, 35 percent have completed formal education in logistics and/or supply chain management and— among the latter group—32 percent have an undergraduate degree in logistics and/or supply chain management.

Informal executive education in the supply chain space is also popular among respondents. Of those managers who attended formal supply chain management training, for example, 44 percent did so at industry conferences, seminars and workshops, 43 percent via job-related training and 35 percent earned professional certifications. Thirty-two percent hold undergraduate degrees in logistics or supply chain management and 17 percent have graduate degrees in the discipline.

David MacEachern, a partner with executive search firm Spencer Stuart, Inc., in Miami, and manager of the firm’s Global Transportation and Logistics Practice, says most companies look for university degrees­—preferably in a logistics discipline—when hiring new supply chain professionals. For senior supply chain roles, says MacEachern, an MBA is often required.

Credit the increasingly complex nature of the global supply chain with driving that demand for higher degrees and logistics expertise.

"Companies are looking for broader business skills in addition to the more specialized knowledge of logistics and the supply chain," says MacEachern. "These types of job positions touch on so many aspects of a company’s operations, and require stronger business and general management skills than ever before."

By the Numbers
Supply chain professionals aren’t alone in feeling the positive effects of higher education. In fact, education equates to higher salaries in nearly every corner of the workforce. The U.S. Census Bureau conducted an in-depth study some years back, examining the relationship between education and earning power. The findings show that the more education an individual has the more money he or she made. Earnings ranged from $12,809 for high school dropouts to $74,560 for those with professional degrees.

According to the U.S. Census, high school dropouts will earn about $600,000 during their lifetime, while high school graduates would take home an additional $200,000. Those attending college (but not earning a degree) would earn $1 million, with another $500,000 tacked on for someone who earned a Bachelor’s degree. Doctorate and professional degree holders would take home $2 million and $3 million respectively.

In supply chain-related fields, MacEachern says top earners typically include professionals who earned non-logistics-related undergraduate degrees (and learned through their employers’ development programs) and those who came into the field already armed with advanced degrees in supply chain management and logistics. He sees the former as a particularly popular track for new entrants into the field.

"Someone could graduate from a university with a business degree, slide right into a job with a PepsiCo or Frito-Lay, and get into the firm’s supply chain and logistics development program," says MacEachern. "In my mind, that would trump just having a degree."

Isaacs sees logistics-specific education as an advantage for supply chain professionals. The recruiter believes that such knowledge—when added to business management and financial expertise—can be a potent combination for someone looking to boost his or her earning power. "Years ago there was no such thing as a supply chain or logistics degree, but that’s changed," says Isaacs. "These days, my clients are always interested in job candidates who have logistics education and/or experience."

One of several universities answering that call from employers is Ohio State University’s Fisher College of Business, where Douglas Lambert holds the Raymond E. Mason Chair in Transportation and Logistics and serves as director of the university’s Global Supply Chain Forum. He says the institution’s undergraduate, masters and PhD programs in supply chain/logistics attract a wide range of professionals from job functions like purchasing, logistics, operations, marketing and sales.

When it comes to measuring the impact of education on those professionals’ earning power, Lambert says "many people get the bulk of their real-world experience [by working] within a business function." Most of that experience is vertical in nature, he remarks. A business school graduate works his way up from tax and audit work to vice president of finance over a 25-year period, for example. Lambert sees opportunity in making that experience more "horizontal," to ensure that professionals "don’t solve one problem, and then wind up creating more."

It’s those horizontal thinkers who will wind up with more compensation than their more narrow-minded counterparts, the educator says. "Executives who want to increase their earning power really need to think about the kind of education and training that gives them the big picture," says Lambert,  "and the kind of cross-functional experience that is desperately needed in both the private and public sectors."

Taking the Plunge
It’s hard to ignore the indicators pointing to undergraduate, specialized and advanced degrees as vital components for a supply chain professional’s portfolio. Add the myriad supply chain certifications and executive education options to the list of choices that can help professionals win new job titles, earn more money and enhance work satisfaction.

Getting there isn’t always easy in today’s society, where seasoned supply chain professionals often have other obligations that prevent them from devoting the necessary time and resources to their educations. "A lot of these folks are at points in their lives where they have a lot going on with work and children and everything else," says MacEachern, "but if they want to get to the point where they can leverage their educations to increase their earning power, they have to just jump in and do it."

There’s no time like the present, says MacEachern, particularly for those current or aspiring supply chain professionals who are lacking the expertise, knowledge and education possessed by recent college graduates. As the latter use internships and other methods of gaining real-world experience, they will present significant competition for anyone who may have ignored the educational component early in his or her career.

"Looking five to 10 years out, we expect more companies looking for MBAs when hiring supply chain executives and managers," says MacEachern. Rhoda Isaacs of R.I. James concurs, noting that the value of MBA and Executive MBA degrees in the supply chain field should increase steadily going forward. As that value is conveyed to employers, expect it to translate into higher salaries and enhanced benefits packages, she says.

"Companies are willing to make the investment in managers who have high potential because they view these people as critical additions to their businesses," says Isaacs. "When they see someone who has increased his or her professional capabilities and education, they notice a person who can effectively plan, work on a team, exchange ideas and innovate."

For the job seeker who is hitting roadblocks in the search for a logistics or supply chain position right now, plumping up that "education" portion of your resume is a step in the right direction. "There are lot of people out there currently who are unemployed, doing consulting work and looking for jobs in the field," says Isaacs. "Anything you can to do stand out—from online courses to executive education to advanced degrees—will go a long way in enhancing your value in the eyes of the employer."

Bridget McCrea is a free-lance writer specializing in logistics and supply chain management. She can be reached at [email protected].

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