The $400K Gender Pay Gap For Biz Masters

Getting an MBA may help women advance faster in Corporate America, but it had little impact on the persistent gap in women’s earnings and their lack of participation in top leadership roles.

In fact, a new study out today (March 31) found that women earn $400,000 less than men with graduate management degrees in the 20-year period after getting a business school diploma. And male alums with graduate business degrees currently outnumber women alumni in the C-suite by a ratio of four to one. Only 20 of the 500 CEOs of S&P companies are women.

In a newly published white paper by the Graduate Management Admission Council, two researchers conclude that the gender earnings gap and paucity of women in leadership positions in businesses indicates that further progress is needed to address the barriers and obstacles that make it harder for women to advance in business careers and accrue the same financial rewards as men.

WOMEN EARNING MBAS: FAR FROM PARITY

Though women earn 57% of all undergraduate degrees and 60% of all master’s degrees in the U.S., the percentage of women earning an MBA in 2012-2013 total about 36%. In contrast, women have reached near parity with men in law and medical programs, earning 47% of JD degrees and 48% of MD degrees in 2010-2011.

The $400K earnings gap and the lack of women in leadership obviously reflects this pipeline. But there is reason for greater optimism moving forward. For one thing, the numbers are much better for all graduate degrees in business because more women are earning specialized master’s in such fields as accounting, management and marketing.  Since 1971, the report found, the number of women earning a master’s degree in business rose from only 1,000 to 88,000 in 2014, comprising 47% of the U.S. total.

“Many of the current female leaders in business went to school in the late 1970s and early 1980s,” says Alex Chisholm, senior director of research services at GMAC. “Back then only 4% of grad management degrees were granted to women. It was almost nothing. It’s closer to 50% today. Our hope is that as these recent grads with business training work through their careers, they will chip away at the glass ceiling.”

HIGHEST FEMALE-TO-MALE RATIO FOR GMAT TEST TAKING LAST YEAR

Another sign of a turn is the shrinking gap between men and women who take the GMAT. Of the 247,432 GMAT exams taken worldwide in the testing year 2015 (ending June 30, 2014), women accounted for 109,892, or 44.4% of the total. That is the highest female-to-male ratio in GMAT history. In the ten years between 2006 and 2015, the number of women taking the test  has grown 38%, more than the triple the growth rate of men taking the exam, according to the white paper.

Most of the growth has occurred in east and southeast Asia where 62% of the GMAT exams taken in testing year 2015 were women. In every other region of the world, men still outnumber women when it comes to taking the test. In the United States, for example, women accounted for only 38% of test takers, while in Western Europe, the total was only 34%. The lowest percentage of women in any region was in central and south Asia where the GMAT was taken by only 29% of women.

Still, business schools have become far more aggressive in recent years about recruiting women and now at least nine highly prominent U.S. schools are at 40% or above in MBA female enrollment, including the business schools at Harvard, Stanford, Wharton, Northwestern, Chicago, MIT, and UC-Berkeley. “When you have a deeper applicant pool, it’s easier to reach a 40% mark,” says Chisholm. “Inititally it looked like the four-minute mile that couldn’t be broken, but increasingly that is happening. While only a few MBA programs are at that 40% or higher mark today, the vast majority of schools say they are devoting more resources to getting women to apply and enroll.”