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New Study Reveals MBA Impact On The Wage Gap For Women And Minorities

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Feb. 5 2019, Published 2:44 a.m. ET

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For many, the biggest benefit of an MBA is the increase in earning potential. Other benefits frequently touted by top MBA programs include having access to a large alumni network, global business experiences, and career coaches.

This brings us to the next question: in a world where women earn 77.9 cents for every dollar earned by men, does the MBA boost earning power and close the wage gap for both women and minorities? According to the Forté Foundation’s most recent study, the results are decidedly mixed.

Key Study Insights

The study, led by Michelle Wieser, Interim Dean of St. Catherine University’s School of Business, surveyed 900 male and female MBA alumni who graduated between 2005 and 2017.

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  • While 65% of women think there’s a gender pay gap, only 34% of men do so.
  • Around 40% of respondents, primarily women, admitted to experiencing the gender pay gap. When asked how they combat this, respondents stated “I have not taken action and do not intend to” or “I left the company.”
  • The job functions shown to contribute the most to the gap are Finance (60% gap) and Operations (48% gap). Marketing is the only function where women were shown to earn more than men (2%).
  • The MBA provides a positive return on investment, with a 63% salary bump for women and 76% for men from the last pre-MBA job to the first post-MBA role.
  • On average, women earned 3% less than their male counterparts pre-MBA. The gap widens to 10% for first post-MBA position and 28% for current compensation (representing $58,994 in annual compensation).
  • Women with an MBA don’t advance to the same level as men, have fewer direct reports, and less job satisfaction.
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  • The ROI of an MBA for minority women is 70%, and for minority men, it’s 84%.
  • For minority men and women, the MBA narrows the pay gap in their first post-MBA job and beyond—going from 24% pre-MBA to 16% post-MBA and 12% in their current role.
  • The pay gap is between non-minority men and minority women in their current position is 52% (or $76,589).
  • Minority MBA graduates have lower career satisfaction when it comes to current salary and career progression.

Forté CEO: Companies Need To Be More Proactive

According to Elissa Sangster, CEO of the Forté Foundation, “this is a wake-up call — companies need to take proactive steps to lessen the pay gap, or risk losing highly-skilled women employees.”

“While some salary disparity can be explained by the job functions women choose, there is likely unconscious bias and other factors at play,” she added.

Unconscious biases might also explain why women significantly outnumber men in Marketing and Human Resources, while men outnumber women in Finance, General Management, Consulting, and IT.

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In fact, Pew Research Center’s Social and Demographic Trends reveals some interesting patterns on societal expectations for men and women: “traits related to strength and ambition are especially valued for men in society and that compassion, kindness and responsibility are particularly valued for women.” Keeping that in mind, it almost makes sense that men outnumber women in job functions where “strong leadership” is highly valued.

This also means that for companies to completely eradicate the wage gap, they will need to adopt unconscious bias training programs. For these kinds of programs to be truly effective, they will need to be in place at the hiring and performance review level.

While it’s encouraging that the MBA does provide a positive return on investment, there’s more work to be done to bridge the pay gap and increase equality in the workplace for women and minorities.

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By: Anulekha Venkatram

Anulekha Venkatram is a Product Manager who enjoys partnering with professionals to build innovative products that solve customer problems. She is passionate about producing engaging content that fosters career-development and personal growth for millennial women. In her free time, she reads voraciously about technology trends and somehow finds time for grad school.

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