The MBA degree is well-known for its salary-boosting potential, with the financial benefits being a draw for many who choose to earn the degree. But can women expect to close the pay gap by earning an MBA?
What Is the Gender Pay Gap?
The gender pay gap is the difference in salaries that men and women are paid. In The State of the Gender Pay Gap 2019 report, PayScale notes the distinction between an uncontrolled gender pay gap and a controlled one.
The uncontrolled gender pay gap pertains to the ratio of the median income of all women to that of all men. The controlled pay gap is based on men and women with matching job titles and years of experience, with the only difference being their gender. Here are the findings from the report.
- Uncontrolled gender pay gap – Women earn 79¢ for every $1 men earn.
- Controlled gender pay gap – Women earn 98¢ for every $1 men earn.
Yes, the pay gap has shrunk a bit. Since 2015, the uncontrolled gender pay gap decreased by $0.05 and the controlled pay gap by $0.008.
What Are the Reasons for the Gender Pay Gap?
Many factors contribute to the gender pay gap. A series of fact sheets from the Institute for Women's Policy Research (IWPR) shows that there is no progress in the gender integration of jobs. Thus, jobs predominantly done by women pay less on average than ones typically held by men. The segregation in certain occupations contributes to the wage gap.
The PayScale report also found evidence of gender discrimination in the workplace. This leads to women being undervalued for their work and held in lower-paying jobs without a chance for promotion. Employers may also disregard a woman's education as opposed to a man's when determining pay.
Moreover, women may be penalized for taking family leave or exiting the workforce to raise children. Both actions can make it less likely for women to continue an upward path in their career and earn a higher salary.
Does an MBA Close the Gender Pay Gap?
Not always. While it's typical for MBA graduates to see a pay boost, male grads make 10% more than female grads in their first job post-MBA, notes Fortune magazine. Considering that the pay gap is 3% pre-MBA, the widening to 10% is cause for concern.
The Forté Foundation discovered that women receive on average a 63% boost in pay after graduating with an MBA. Nevertheless, men continue to make more money even though both genders might hold the same qualifications and meet all of the requirements for a position.
The Paycheck Fairness Act is awaiting approval from Congress. If the legislation passes it will address the loopholes in the Equal Pay Act of 1963 and give women a chance to combat pay discrimination. It will also prohibit employers from using salary history and protect employees from retaliation for sharing information about salaries. Most importantly, employers can take steps to close the gap for women by paying them an equitable salary.
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