Closing The Gap

Women with MBAs earn 74 cents for every dollar that their male peers make

Timothy A. Clary | AFP | GettyImages

According to PayScale's recently released State of the Gender Pay Gap in 2019 report, women on average earn 79 cents for every dollar earned by men in 2019.

This uncontrolled pay gap measures the median salary for all men and women regardless of variables like race, job type, location and industry. When controlled for factors such job title and seniority, the gap narrows, with some experts calculating a disparity as small as 98 percent.

But significantly larger pay gaps become apparent when considering factors like education. According to PayScale, highly-educated women experience among the largest pay gaps: Women with MBAs take home 74 cents for every dollar earned by men with MBAs.

When the U.S. Census first started collecting data on Americans' educational attainment in 1967, about 12 percent of women and 17 percent of men between the ages of 25 and 29 held bachelor's degrees. Today, women outnumber men at all levels of education. Business school remains one of the few areas where men are still a majority.

Men and women of all races tend to see a salary bump of 63 percent or more after earning an MBA. But experts say that differences in how often men and women are promoted after graduating from business school are a key driver of the gender pay gap among MBAs.

"A lot of [the gap] has to do with industry and with promotion velocity," Lydia Frank, PayScale Vice President of Content Strategy, tells CNBC Make It. "If women aren't making it to the executive team and the C-Level with as great frequency as their male peers, then of course there's this big disparity in the MBA numbers, right? Because many CEOs and other C-level execs do have MBAs, and most of them are men."

"The promotion piece," she says, "is a part of this uncontrolled pay gap story. If you look at all men working in our economy versus all women working, men are over-represented in leadership positions, whether that's C-level, VP and even the senior director level."

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Women also tend to enter lower-paying fields, even when they have similar educational backgrounds to men. Women with MBAs are more likely to pursue careers in marketing and advertising compared to men, while men are more likely to pursue careers in higher-paying industries like financial services.

"I would say sometimes it's a choice and sometimes it's not," says Frank. "Sometimes that's just where they're getting hired, even if they have been attempting to be hired elsewhere."

According to Nicole Smith, Research Professor and Chief Economist at the Georgetown University Center on Education and the Workforce (CEW), the lower-paying fields that women pursue do account for some of the pay gap, but not all of it.

"We still have women making personal decisions to pursue degrees that pay less," Smith tells CNBC Make It, listing fields such as teaching and nursing as examples of low-paying occupations that women pursue disproportionately. "We still have occupational segregation, which yes, it is a personal decision, but it's also driven by socioeconomic challenges and it is also driven by expectations about what roles women should play in society."

"Occupational segregation" is just one factor that contributes to the current pay gap, says Smith. When the CEW looked at salaries among individuals in the same industries with the same jobs and the exact same level of education, men still earned more. When controlled for factors such as these, Smith and her team found that women still earn about 92 cents for every dollar a man makes.

Anthony P. Carnevale, lead author of Georgetown's report, says that ultimately, the reason highly-educated women experience significant wage gaps is discrimination.

"Women's earnings still lag their exceptional educational progress," he says in a statement. "At the heart of the gender wage gap is discrimination in pay for the same sets of qualifications and experience."

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