Here's the Real Impact an MBA Will Have On Your Paycheck, According to New Research

While it has been closing (albeit slowly), the wage gap is still rife. 

In 2017, women earned 82 percent of what men earned, which means it would take an extra 47 days of work for women to earn an equal amount. By comparison, the Census Bureau found that full-time, year-round working women earned 80 percent of what their male counterparts earned in 2016.

Many women beg the question: Will earning an MBA help them to close the wage gap? But the results new research from the Forté Foundation, a non-profit focused on women’s advancement, suggests a nuanced answer.

Michelle Wieser, interim dean of the School of Business at St. Catherine University, led the online survey of 900 male and female MBA alumni who graduated between 2005 and 2017. 

The research found that women earn less than men in their last pre-MBA job — and the pay gap does not improve post-MBA. In fact, the gender pay gap widened between women and men post-MBA. On average, women earn three percent less than their male counterparts pre-MBA, and the gap widens to 10 percent for first post-MBA position and to 28 percent for later compensation, adjusted for years of experience. 

Women with an MBA don’t advance to the same level as men, have fewer direct reports and experience less job satisfaction. On average, men have received 2.3 promotions since completing their MBA program, while women have only received 1.8. This means that men have achieved, on average, the equivalent of the director level within their organizations, while women trail behind one rung on the career ladder with an average level of senior manager.  

While the pay gap does narrow for minority women and men in their first post-MBA job and beyond, compared with their non-minority peers, they still earn less than non-minorities from pre-MBA to their present position. Overall, minority MBA graduates (defined as Black or African American, Hispanic or Latin American, or Native American) also had lower career satisfaction than non-minorities in two areas: their current salary and career progression since obtaining an MBA.

Where the answer becomes multifaceted is that, despite the gender pay gap, the data does suggest a positive return on investment from the MBA with an over 63 percent salary bump or higher for both minority and non-minority women and men. 

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

40 percent of respondents, primarily women, told Wieser that they’ve experienced a gender pay gap, but added that they "have not taken action and do not intend to." Rather, they've just left their companies.

While some salary disparity can be explained by the job functions women choose, Sangster adds that there is likely unconscious bias and other factors at play. So while women with MBAs are helping to close the gender pay gap in some regards, the issue is systematic.

"This is a wake-up call — companies need to take proactive steps to lessen the pay gap, or risk losing highly-skilled women employees," she says.

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