Women's Career Choices Don't Explain the Gender Pay Gap

High-achieving women are paid less than men even when they have similar levels of experience and are in the same fields, according to new Bloomberg Businessweek data. Women graduating business school this year reported an average of $14,548 less in expected annual pay than men, graduating MBAs said in a survey of 9,965 students at 112 schools, conducted as part of our recently published biennial ranking of MBA programs.

Part of the reason women overall earned less is that they were more likely to go into fields with below-average salaries, like consumer products and advertising. But even within the same fields, women were paid less than men. Indeed, 17 of 22 industries that hired MBAs last year offered women less money. Women entering finance earned, on average, close to $22,000 less than men, the largest pay differential among companies that drive MBA hiring. Women were offered $12,300 less by tech companies, and $11,500 less by consulting firms than their male peers.

The analysis continues a debate that pits those who cite discrimination as the reason American women earn 77 cents to a man’s dollar against others who argue women make less because they opt for lower-paying jobs than men, work fewer hours, and interrupt their careers to have children. When you account for those factors, they say, the pay gap all but disappears.

It may be true that over the course of their lives, women make choices that cost them at work. So it’s useful to analyze the pay difference at a career moment when they’re both highly qualified and available to work. Women graduating from top MBA programs are usually in their late twenties or early thirties and have just sunk over $100,000 into a degree, presumably to raise their value to employers—just like their male counterparts. We limited this analysis to people who had full-time jobs lined up; so there was no gender difference in their commitment to working a full day. Even with those things being equal, the pattern held.

Without looking at the individual circumstances of the women in the survey, it’s hard to know whether there’s something about them besides their gender that could knock their pay after graduation, like how many years of work experience they had before their MBA. One data point in our survey, however, helps get at the question of experience: whether they graduated into the same industry as the one they were in when they started their MBA.

Career-switchers should, in theory, be on a level playing field. A man entering a new industry straight out of an MBA program has the same amount of experience in that industry (none) and the same level of education as a woman in the same situation. Yet women who were switching into tech, finance, or consulting—the three industries that hire the most MBAs—made an average of $12,800 less than men who were also newbies. Men who were in one of these jobs before business school, and stayed the course after graduating, made $13,300 more than women on the same path.

The postgraduation gap also wasn’t explained by the fact that women, on average, were making less than the men to start with. When we controlled for people’s compensation before getting to campus, the gap narrowed, but didn’t disappear. Women made about $8,500 less than men upon graduating regardless of what they were pulling in beforehand.

Our data suggest that employers pay certain people less not because of their reproductive choices or penchant for low-paying gigs, but because they are women.