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For Women, Doubts About The MBA As Economic Mobility Engine

The pay gap is a persistent reality for women post-MBA. In fact, according to a new report by the Forte Foundation, the gap is widening.

The MBA has always been styled as a ticket to a better income, and, by extension, a better life. New data released today (January 17) by a non-profit consortium of leading corporations and business schools strongly suggest that that pathway currently exists for men to a much greater degree than for women.

The Forte Foundation’s report, Outcomes and Perspectives of MBA Graduates, shows that the pay gap that women and men take into their MBA experience follows them when they re-enter the workplace — when it actually becomes worse than before. Yes: the pay gap widens from pre-MBA to first post-MBA job to current role, as women on average earned 97% of what their male counterparts earned pre-MBA, but just 90% in their first post-MBA job — and a shocking 72% in current compensation, adjusted for years of experience.

Moreover, the study found, women with an MBA don’t advance to the same level as men, have fewer direct reports, and have less job satisfaction. The report also looked at minority MBA graduates, finding that even as the degree helps them narrow the pay gap with non-minorities, overall they have lower career satisfaction than non-minorities in both salary and career progression.

“It’s encouraging to see that an MBA provides greater economic mobility for women and minorities and narrows the pay gap for minorities in their first job post-MBA, but the whopping gender pay gap and income disparity for women and minorities needs to be addressed, and soon,” says Elissa Sangster, Forte Foundation CEO.

THE GOOD AND THE NOT-SO-GOOD

Elissa Sangster. File photo

The Forte Foundation’s online survey of 900 male and female MBA alumni who graduated between 2005 and 2017 is the first part of a new research series, and the results are decidedly mixed. On the one hand is the persistent and widening pay gap between the genders post-MBA, most strikingly seen in the areas of finance and operations; on the other is the undeniable financial benefit all MBA holders derive from having earned the degree, in the form of a massive income boost. 

While 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, adjusted for years of experience. And while women do, indeed, get a positive ROI from the MBA, seeing a 63% salary bump from their last pre-MBA job to the first post-MBA role — that is dwarfed by the 76% increase for men in the same circumstances.

Forte looked at the minority experience as well, and there the results were … also mixed. On the one hand is a narrowing pay gap for minorities versus non-minorities overall in their first post-MBA job — but on the other is the fact that in their present position, minority women still make 52% less than non-minority men, a difference of $76,589. Overall, minority MBA graduates had lower career satisfaction than non-minorities in two areas: their current salary and their career progression since obtaining an MBA.

“We’ve been working on that minority problem a bit longer, even though women in the workforce have been the focus on gender imbalance the last 10, 15 years,” Sangster tells Poets&Quants. “So many minority issues were beginning in the ‘60s and ‘70s in terms of equity in the workplace — so it’s good that that’s playing out in some of these numbers. But obviously, on the gender side, there’s still a ways to go.”

‘WORK TO BE DONE UP FRONT’

The Forte survey was conducted between March and April 2018, and the research was led by Michelle Wieser, interim dean of the St. Catherine University School of Business & Professional Studies in St. Paul, Minnesota. It was distributed through the Consortium for Graduate Study in Management, Forté Foundation sponsors schools (which include most of the elite U.S. and international B-schools), and the Forté Foundation database of alumni. Participants were asked to provide their current job function, to allow researchers to take a deeper dive into what might be driving the gender pay gap with current compensation. 

They found that the job functions shown to contribute the most to the gender pay gap are finance (60% gap) and operations (48% gap), while marketing is the only function where women were shown to earn more than men (2%). Around 40% of respondents — primarily women — say they’ve experienced a gender pay gap. 

Overall 55% of respondents believe that a gender pay gap “probably or definitely” exists — but it’s a view that only one in three men share with two in three women (men 34%, women 65%). A greater percentage of minorities believes that a gender pay gap “probably” or “definitely” exists (women: 68% minority, 63% non-minority; men: 44% minority, 33% non-minority). Survey respondents also under-estimate the gap, guessing it to be around 24%, with men earning 24% more than women — but the actual gender pay gap reported in the Forte study was 28% (adjusted for years of experience), representing over $58,994 in annual compensation.

“I think that there’s still room for improvement and work to be done up front,” Sangster says. “I think from a corporate perspective, they need to really pay attention to the inequities that are out there in the workforces, especially in this really important leadership pipeline that we know MBAs are for these companies, to make sure that they’re giving women the opportunities that they need to advance in their careers — and not to marginalize those opportunities even after they’ve invested in this MBA path to leadership.”