Study: An MBA Boosts Pay But Doesn’t Necessarily Close the Pay Gap

A new report from the Forté Foundation suggests that while getting an MBA boosts economic mobility for everyone, it doesn’t necessarily close the pay gap – especially the gender pay gap.

The study surveyed 900 MBA graduates, asking them about their current job, their last job before getting an MBA, and their first job out of business school. 

The results revealed significant pay gaps along the lines of both gender and ethnicity. Women reported earning 28 percent less in their current roles, and minorities (defined as people of Black/African-American, Hispanic/Latino or Native American heritage) 12 percent less. 

All groups experienced a significant rise in earnings from pre-MBA to post-MBA, but for women and minorities that rise wasn’t enough to overcome the pre-MBA pay gap. 

In fact, for women, the pay gap only continued to increase over time. While the gender pay gap was 3 percent immediately pre-MBA, it was 10 percent for the first post-MBA job, rising to 28 percent at the time of the survey.

For minorities, an MBA did narrow the pay gap somewhat. The pay gap between minorities and non-minorities was 24 percent pre-MBA, 16 percent post-MBA and 12 percent at the time of the survey.

The gap was most extreme when comparing non-minority men and minority women. Along the lines of both gender and ethnicity, the pay gap widened to 52 percent, representing $76,589. 

The result of these numbers is a real difference in how people experience their careers. Both women and minorities reported lower career satisfaction. Women tended to have received fewer promotions and to have fewer people reporting to them. 

When asked whether they’d personally experienced a gender pay gap, about 40 percent of the participants said they had. Most commonly, they said their reaction was either to do nothing or to leave the company.

Elissa Sangster, CEO of the Forté Foundation, said that “While some salary disparity can be explained by the job functions women choose, there is likely unconscious bias and other factors at play.”

She said the finding that women experiencing a pay gap are more likely to leave a company than raise the issue internally is “a wake-up call” that “companies need to take proactive steps to lessen the pay gap, or risk losing highly skilled women employees.” 

Although the factors behind the pay gap are apparently more complex than an MBA by itself can solve, the study did confirm that getting an MBA increases economic mobility for everyone.

Women got a 63 percent post-MBA pay bump. For minorities that number was 84 percent, higher than for non-minorities.

For MBA applicants, it’s important to think about how an MBA fits in with your long-term career plans, and to bring that into your application. If you’d like feedback on how your application will come across to adcoms at top MBA programs, feel free to contact us for a free MBA assessment!