MBA Gender Pay Gap: Are Female Graduates Still Behind?

Male MBA graduates are still earning more than women and enjoy higher bonuses three years after graduation, new Financial Times data revealed.

These findings shouldn’t come as a surprise, as in 2019 women still earned 79 cents for every dollar earned by men.

MBA data

QS data found that the average salary for new MBA hires in Western countries is between US$70,445 (£54,146) and US$105,656 (£81,210), with an average annual bonus of 16.1 percent.

Unfortunately, female MBA graduates are behind in salary progression.

As of 2019, the gender pay gap three years after graduation was around US$20,000 (£15,363), with male graduates earning just above US$170,000 (£130,591) and female graduates just below US$150,000 (£115,232).

Nevertheless, the overall gap between MBA graduates has slowly narrowed in recent years.

Between 2018 and 2019, it shrunk by 2 percent, a positive figure considering both average salaries have been increasing consistently since 2016.  

Moreover, the extent to which male and female alumni believed they fulfilled their goals by undertaking an MBA evened out in the past year, sitting at 88 percent for both genders.

The Sex and Power Index

While some might consider the gradual decrease of the MBA gender pay gap a step in the right direction, there is still a lot of work to do in terms of what the Fawcett Society defines as the Sex and Power Index.

According to data compiled by the organization, women are still missing at the top of the ranks in business. Figures are particularly striking for women of color in senior positions, with change taking place at a “dismally slow” pace.

When looking at the numbers, just over one in 20 CEOs of FTSE 100 companies are women – and unfortunately (but unsurprisingly) none of the female CEOs in these companies are women of color.

The figure has remained unchanged since the latest report in 2018.

Gender pay gap in business

As of 2019, almost eight in 10 UK companies still paid male employees more, and a quarter of the companies still had substantial pay gaps of more than 20 percent in favor of male colleagues.

MP Rachel Reeves, chair of the business, energy and industrial strategy select committee told The Guardian: “Too few businesses simply file the stats and then carry on as usual, failing to examine why they aren’t attracting female talent, why these gaps exist in their firms, and what they need to do to change it.”

Research also found that finance firms often have larger pay gaps. In a February 2019 report, the three companies with the largest pay gaps were Lloyds Bank, Royal Bank of Scotland and Lloyds Banking Group – all surpassing the 30 percent threshold.

Other businesses in the financial sector with a gap over 20 percent were HSBC Global Services UK, Virgin Atlantic, HSBC Bank and Santander UK.

So what now?

Because progress in retribution equity has been very slow since 2016, it’s hard to tell whether the MBA gender pay gap will continue to reduce in the 2020s, and whether it will at a faster rate than the past decade.  

Nevertheless, we cannot deny that the lack of women in senior positions – particularly in sectors with high numbers of MBA employees – likely has a key impact on the way entry-level and junior female employees are treated and rewarded in the workplace.

As Sam Smethers, Fawcett Chief Executive, said: “Despite much lip service about the importance of having women in top jobs, today’s data shows we are still generations away from achieving anything close to equality. We are wasting women’s talent and skills.

“Male dominance of positions of power remains strong as this 2020 Sex and Power Index shows. If we want change, we have to make it happen. That means quotas, targets and policy interventions to remove the barriers to women’s progression.”