Women are heading to business school in larger numbers than ever before, and at younger ages to boot. But how much are women gaining from the degree?
By Elizabeth G. Olson, contributor
FORTUNE -- More women than ever are earning graduate business degrees, and at younger ages than ever before. But it's unclear whether these women are gaining much from the degree, with persistent wage gaps between men and women who have the same business credentials and work experience.
Last year, almost 106,000 women -- the highest number ever -- took the GMAT, the standard admissions test for entry to MBA programs and other business graduate programs, according to the latest figures from the Graduate Management Admissions Council (GMAC), which owns the test. And the majority of test-takers between June 2009 and 2010 were 30 years old or younger.
In addition to MBAs, more women are pursuing graduate business degrees in disciplines like finance and accounting, GMAC found in its 2011 report.
Many of the younger female students are pursuing degrees full-time, such as Jessica Dillon, 29, who worked for seven years after college, at Fannie Mae and Capital One Bank (COF). She will graduate from Georgetown University's McDonough School of Business next year.
"You have to think about your return on investment," she says of her decision to earn an MBA. "Business school is expensive and you want to see that return at an earlier point in your career.
Arielle Deane, who is graduating in June from Northwestern University's Kellogg School of Management, says opting for an MBA was a way to expand her skills and also to avoid pigeonholing her career. She had worked for more than five years as an analyst at defense industry giant Lockheed Martin, and wanted to explore other career possibilities.
"This is an opportunity to change the trajectory of my career," says Deane, 30, who is planning to start a job at a marketing and branding consultancy after graduation.
Women have largely flocked to medical and law schools in greater numbers over the past few years, but they are now turning to business school as well in part because business schools are mindful of the shortage of women students and are recruiting them more aggressively than they have before. Women now make up more than one-third of all MBA recipients, according to federal data -- up substantially in the past decade.
High costs and less than stellar payoff
Concerns about the steep cost of a degree -- which can run $100,000 or more for a top business school -- and going into debt have been top factors in women's reluctance to enroll in an MBA program. In contrast, the main concern for men is the outcome, or job prospects, following a degree, according to GMAC. Other business degrees such as finance or accounting are a more affordable option, and nearly two-thirds of these degrees are awarded to women.
Despite their growing numbers, all is not rosy for female business graduates entering the working world. Last year, women MBA graduates received half the job offers -- one versus two, on average -- of their male counterparts, despite sending out 20% more applications, according to GMAC.
And the payoff from the degree is not always stellar. While 2010 female MBA graduates told GMAC's researchers that they earned, on average, 51% more than their pre-degree salary, men experienced a 54% increase. That translates into a median salary for women of $74,000 for their first post-business degree job versus men who earned $77,500, according to the council's findings.
A report last year by Catalyst, an organization that studies female advancement in business, found that a woman in her first post-MBA job made $4,600 less than a man in the same type of job.
More significantly, Catalyst found that unequal pay starts with the first job, and widens over time, even after accounting for job level, industry, child bearing and career aspirations, according to the results of the study by authors Nancy M. Carter and Christine Silva.
Even among chief executive officers, women make just over 72% of what male counterparts earn in weekly salary, according to data recently released by The Institute for Women's Policy Research to coincide with Equal Pay Day (April 12). The wage differences exist across 107 of 111 occupations, regardless of education, according to the institute, which based its conclusions on an analysis of median weekly wage data from the Bureau of Labor Statistics.
Different genders, different goals?
Women often seek to acquire different skills than men when they decide to go to grad school for business, says Gregg Schoenfeld, GMAC's director of management education, who oversaw the council's survey of 40,000 prospective business school students.
"Gender plays a key role in determining people's priorities and the sets of skills they want to gain most from their education," he says.
GMAC's prospective students report found that men wanted to become more adept at handling technical and operational challenges while women were more likely to say they wanted to develop their management skills.
Deane, for example, says she choose the Kellogg program because it emphasized teamwork, so "there's a different team for every class and I have to think about how I can collaborate with each group."
Having the professional credential was critical to 51% of women MBA candidates surveyed by GMAC. But even more women -- 58% -- said they also were seeking the achievement and personal satisfaction that came from such a degree. And 50% of women listed remaining marketable and competitive as the prime reason for seeking a graduate business degree.
"Confidence was a big piece of it for me," says Dillon, who set her sights on a graduate business degree during a Capital One earnings call where she did not understand all the financial details. "And I wanted to have those three initials behind my name."
Attending business school earlier will help women to bolster their place in the workforce, says Catherine Tinsley, a professor at Georgetown's business school. "It will increase the number of women who stay in the business world because they will be able to take off time for child bearing, and they are more likely to return because work is a stronger part of their identity."
For women like Jessica Dillon, plans to raise a family played a part in her decision to start working on an MBA when she did.
"I knew I already had a diversity of work experience," says Dillon, who is engaged to be married this summer. "And I wanted a family one day, and I knew that it isn't possible forever. I wanted to get my MBA out of the way."
The graduate business degree, she says, will give her future career some flexibility.
"If I want to step out of the traditional workforce," she says, "I have an arsenal of experts -- my fellow students, professors and alums -- that I can call on if I want to, for example, start a new business."
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I agree with the other posters. Look at it from the prospective of the company. MBA case study, look at Jessica Dillon in this story. You think companies are stupid, an employer always needs to look at the bottom line so women shouldn't complain about less pay. When Jessica is interviewing at a company, the employer already knows that Jessica is planning a side business that WILL conflict with the employer's interest. Jessica plans to become a mother, which is the most important job in the world that anyone can have. Employers need to be smart and take that into consideration when making an offer. Also, I know know any company that is thrilled about hiring an employee who statistically will take more sick days than the average employee. Companies hire because they want you to work, that's it.
Instead of thinking women get paid less, have you ever thought that men get paid more because companies think men will need to support the family financially as a father and they want to support the family? Maybe it's a weak argument but don't be so narrow minded to think that companies are trying to penalize an employee just because of their gender, it's really about the numbers.
I applaud the researchers for trying to control for various factors that tend to exagerate the wage differences between men and women, but there is one very significant factor that makes the entire comparison invalid. They are relying upon self reported salaries from MBA graduates who received offers. My intuition tells me that men are more likely to inflate their salaries, my experiece as a compensation analyst confirms it, and I think there are reams of actual data to support it. If the study was based upon verifiable data rather than what people say they make (as if their ego has no impact on this data point), I would trust the results more.
Having a staff of about 50 people, women applicants always ask for less. As business owner, I am not supposed to see race, sex, disablity, etc. So, lets change it up a little. If I could but a car from Dealer A for $10k, or get the same car from Dealer B for $8k. Who would you buy from? FMLA, healthcare costs are minor items when it comes to long term cost of hiring an employee.
"...Catalyst found that unequal pay starts with the first job, and widens over time, even after accounting for job level, industry, child bearing and career aspirations, according to the results of the study by authors Nancy M. Carter and Christine Silva."
The article does take in to account time off taken for child bearing which is included in the Family Medical Leave (FMLA) Act. FMLA allows anyone, male or female to take time off to care for themselves or family for any covered reason which even includes adoption. Due to women's traditional role as the family care takers I think yes it is more common for women to sacrifice time at work to care for family members.
Re: "Last year, women MBA graduates received half the job offers...of their male counterparts...."
It has been predicted for years that employers will grow increasingly reluctant to hire a woman for fear that at some point she will sue, legitimately or not, for unequal pay, often forcing the employer to make a huge settlement merely to prevent rep damage.
But why do women make the job choices that help create the gender wage gap that gives rise to many lawsuits?
Despite the 40-year-old demand for women's equal pay, millions of wives still choose to have no pay at all. In fact, according to Dr. Scott Haltzman, author of "The Secrets of Happily Married Women," stay-at-home wives, including the childless who represent an estimated 10 percent, constitute a growing niche. "In the past few years," he says in a CNN report at http://tinyurl.com/6reowj, "many women who are well educated and trained for career tracks have decided instead to stay at home." ("Census Bureau data show that 5.6 million mothers stayed home with their children in 2005, about 1.2 million more than did so a decade earlier...." at http://tinyurl.com/qqkaka. If more women are staying at home, perhaps it's because feminists and the media have told women for years that female workers are paid less than men in the same jobs — so why bother working if they're going to be penalized and humiliated for being a woman.)
As full-time mothers or homemakers, stay-at-home wives earn zero. How can they afford to do this while in many cases living in luxury? Because they're supported by their husband.
Both feminists and the media miss ignore what this obviously implies: If millions of wives are able to accept no wages and live as well as their husbands, millions of other wives are able to accept low wages, refuse overtime and promotions, work part-time instead of full-time ("According to a 2009 UK study by Cristina Odone for the Centre for Policy Studies, only 12 per cent of the 4,690 women surveyed wanted to work full time." http://bit.ly/ihc0tl), take more unpaid days off, avoid uncomfortable wage-bargaining (http://tinyurl.com/45ecy7p) — all of which lower women's average pay. They are able to do this because they are supported by a husband who must earn more than if he'd chosen never to marry. (Still, even many men who shun marriage, unlike women, feel their self worth is tied to their net worth.) This is how MEN help create the wage gap. If the roles were reversed so that men raised the children and women raised the income, men would average lower pay than women.
See "A Response to the Ledbetter Fair Pay Act" at http://tinyurl.com/pvbrcu
These studies never take FMLA in to account or the proven fact that women take more sick days.
Just sayin
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