Salary trends for Post-MBA Professionals: How is the Gender Pay Gap widening?

The MBA degree is well-known for its salary-boosting potential, with the financial rewards enticing many students to pursue the degree. However, women continue to earn less pay in comparison to men even after having completed an MBA. Thus, the question of if an MBA can bring a close to the persisting gender gap or not is vital.

Female MBA grads earn about $11,000 less than their male classmates, a disparity that grows to more than $60,000 annually less than a decade later. Recent findings from the Forté Foundation, a non-profit organization focused on women’s advancement and gender equity in business and business schools, suggest that less than 10% of S&P 500 chief executive officers are women. According to the study, in the US on an average, women hold just 40% seats at 84 schools.

Is an MBA effective in closing the Gender Pay Gap?

No, not always. While it is common for MBA graduates to receive a wage increase, men grads earn 10% more than female grads in their first post-MBA job. As per research by the Forte Foundation, a female employee with a post-MBA experience of up to 2 years gets a 9% less compensation in comparison to a male MBA grad at the same level. The gap widens with the experience increase, with a maximum gap being 35% after 9 years of work experience.

Image Credits: Forte Foundation

According to the Forté Foundation, women enjoy a 63 percent wage increase after earning an MBA. Even if both genders have the same qualifications and satisfy all of the prerequisites for employment, men continue to earn higher money.

Gender Disparity in Career Success

Level of Organization: On an average, Men have achieved one organizational level higher than women. For example, during a particular span of time, if a Male MBA student became the Director, then a female MBA student became the senior manager during that span of time.
Number of Post-MBA Promotions: Men averaged 1.7 promotions, while women averaged 1.2.
Number of Direct Reports: Men averaged 2.6 direct reports as compared to women with an average of 1.4 direct reports.

Gender Pay Gap (2016- 2020)

Though the gap in total annual compensation between women and men narrowed from 39% in 2016 to 20% in 2020, the margin remains to be significantly affecting the pay scale.

Quoting Forte Foundation study, women outpace men in the initial categories of Director, VP, and Senior Manager (Women 63%, Men 54%). At higher levels, men outpace women in the senior levels of C Level executive and president/CEO - with 22% of men aiming for these levels vs. only 12% of women. Relatively equal numbers (8%) want to be an owner of a business.

What are the reasons for this Gender Pay Gap?

According to Elissa Sangster, CEO of the Forté Foundation, the differences may be attributable, in part, to males entering MBA schools having more years of experience on average, putting them up for various career trajectories and possibilities. However, she also relates some of the disparity to the well-documented prejudice women encounter after they begin working.

“I think sometimes women become disenchanted,”

“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.”

Overall, we can claim that the pay difference between male and female post-MBA graduates is closing. However, with growing experience, the deeping of disparity is a point of concern that needs to be addressed at the earliest.