The $400K Gender Pay Gap For Biz Masters

PARITY IS ANOTHER 10 TO 15 YEARS AWAY

How long will it take to reach parity in MBA enrollment? Chisholm says that is going to take quite a few years. “More flexible programs will attract a greater share of women right away. That’s especially true for specialized masters degrees which at many schools have become the flagship programs. But for the MBA degree, it could be another 10 to 15 years away. As the average age of getting married and having children increases, you are starting to give some breathing room to the MBA age of 27 and 28.”

The most shocking statistic in the report? According to Paula Bruggemann, research publications manager at GMAC and co-author of the report with Hilary Chan, it’s the fact that there are only 20 female CEOs in the S&P 500. “In an ideal world,” she says, “we would have 250 CEOs. That is very telling when you can cite the women them by name. I don’t know the names of the 480 male CEOs so that alone is a very telling statistic in terms of where we need to go in corporate leadership.”

One thing not unique to business when it comes to careers for women is the disparity in pay levels. Bruggeman says that the pay gap persists i”across most professions and not just MBAs. There is an earnings gap because of women who take time out to raise families but even women with no children are not advancing as fast as you would expect based on their educational credentials,” she says.

Indeed, the GMAC report shows that men earn more than women at all job levels (see table below).  At entry-level jobs, women’s pay is the closest it gets to parity at 85% of men’s earnings, but that gap widens as women advance higher up the corporate ladder.

MEN EARN MORE THAN WOMEN AT ALL JOB LEVELS

GMAC report on women earnings

CUMULATIVE BASE SALARY WIDENS TO ABOUT $400K 20 YEARS AFTER GRADUATION

The white paper found that gender pay gap and diversity gap in the workplace seen in GMAC’s alumni findings mirror larger societal and global trends. In selected OECD countries, the gender wage gap ranges from less than seven percent in New Zealand, Belgium, Luxembourg, and Greece to highs of 36 percent in Korea, 32 percent in Estonia, and 27 percent in Japan.19 Across the entire U.S. labor force, women earned an average of 78 percent of what men earned in 2013. Their earnings reach 82.5 percent of men’s salaries when looking at median weekly earnings for full-time workers.

Typically, earnings for both male and female full-time workers tend to increase with age, level off at age 45, and drop after age 65, according to the GMAC report.  The gender wage gap also grows with age—U.S. data show younger women are paid about 90 percent of what men earn until about age 35, at which point median earnings for women start to slow down as their careers progress, further widening the gender pay gap.2

Findings from the recent GMAC alumni survey bear out the widening of the earnings gap between men and women as they progress through their careers. In fact, the gap in their cumulative annual base salary widens to about $400,000 over 20 years after graduation (see chart below). This occurs even though male and female alumni overall recoup the investment in their degrees in an average of three-and-a-half years after graduation and have annual salary growth rates that exceed their expected salary gains had they not earned their degrees.

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