MBA Gender Pay Gap Narrows But Still Plenty To Do

gender pay gap

The pay gap between male and female MBA graduates continues to narrow but still paints a grim picture despite the efforts of business schools around the world to improve equality.

A new survey by the Forté Foundation showed female business school graduates make around $US11,000 less than men with the same degree in the first couple of years after graduation.

READ MORE: Gender Pay Gap ‘Sabotaging’ Diversity and Firm Profit

Forté found in its latest research that in 2020 post-MBA men earn $US177,112 on average, against $US147,412 for women, a 20% gender pay gap or $US29,700. Comparing current compensation for MBA’s in 2020 versus previous Forté data, the gender pay gap overall narrowed from 39% in 2016 and 2018 to 20% in 2020.

SOURCE: Forte Foundation

Forté’s findings are consistent with recent Pew Research Center data that revealed the gender pay gap has been shrinking, with the greatest closure among women in high managerial skill jobs.

However, the latest Forté data shows the gender pay gap in 2020 widens from 9% for those with zero to two years of work experience post MBA, to 35% for those with nine or more years of work experience.

The online survey was conducted in the fall of 2020 by Forté, a non-profit focused on women’s advancement and gender equity in business and business school. Forté polled 3,133 MBA students, prospective students, and alumni at nearly 60 elite MBA programs including its member schools in the U.S., Europe and Canada, such as The University of Pennsylvania’s Wharton School, London Business School, and the University of Toronto’s Rotman School of Management.

When examining the 2020 data by post-MBA work
experience, the compensation gap increases from 9% to
35% as MBA graduates progress in their careers

Other highlights of the survey include:

  • The majority of MBAs have a favorable view of equity and inclusiveness in the application process overall, but men are more likely to say so than women.
  • More than one in five students and alumni – and one-third of minority women surveyed – say their MBA program’s diversity, equity and inclusion efforts did not meet expectations.
  • Looking at career outcomes post MBA, women earn less, don’t advance to the same level, and have fewer direct reports than men – this is especially true for minority women in terms of salary.
  • The gender pay gap for MBA alumni has narrowed overall since 2016 but widens as women progress in their careers.
  • When asked about their ideal job level five years from now, women MBA alumni outpace men in striving for “early leadership categories” such as VP, but trail men in aiming for the C-suite.

“When it comes to career outcomes, women are still lagging behind men, and aren’t aspiring high,” Forte Foundation CEO Elissa Sangster said.

“This research tells us that the focus still needs to be on elevating women overall and specifically, women of color when it comes to salary.

“Notably, our research found that in five years women MBA alumni seek to be at a level roughly equal to where men are now. Men may not be aspiring to bigger leaps in their early career than women because they are already further ahead on the career ladder. This might also play a role in why a larger percentage of men are striving for C-suite roles than women.”

Current female MBA students surveyed by Forte also indicated they had less ambitious career aspirations. Men are nearly three times more likely to want a CEO job, for example.

When asked to select their ideal job title/level 5 years from now, exactly 50% of TOTAL alumni respondents selected either Senior Manager (13%), Director (27%), or Vice President (20%).

Women outpace men in the “early leadership” categories of senior manager, director and VP (Women 63%, Men 54%). Then, men outpace women in the senior levels of Clevel exec and president/CEO – with 22% of men aiming for these levels vs. only 12% of women. Relatively equal numbers (8%) want to own a business.

“There’s plenty that women can continue to do to be more aggressive or ambitious about their career path,” Sangster said. “But I think that companies have to make sure that there is fertile ground for these women to move through into these leadership positions.”

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Ben Ready founded MBA News in 2014 and is the Managing Editor. He is a former business and finance journalist with Australian Associated Press (AAP) and Dow Jones Newswires in London. Ben completed his MBA in 2012 and was awarded the QUT GMAA Entrepreneurship Prize. He is also the founder and Managing Director of RGC Media & Mktng (rgcmm.com.au).

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