Underrepresented Minorities Earning Less After Business School

moneyWhile many top business schools have made a major push to improve the opportunities for underrepresented minorities in their programs, the impacts have not been seen when it comes to salary after business school. A recent study by Bloomberg of nearly 13 thousand business school alumni from more than 100 schools concluded that white, Asian, and male MBAs are seeing far more rewards from business school than the rest of their peers.

In this survey, Bloomberg asked participants what they were earning immediately after business school and then what their salary was eight years later. Black, Hispanic and American Indian MBAs were making around the same as their white and Asian peers right after school – about $105,000 – but eight years later, the same black, Hispanic and American Indian MBAs were making around $150,000, while their white and Asian colleagues were making $172,000. Female MBA grads are in an even worse place: black, Hispanic and American Indian women were earning $132,000 eight years after school, but white and Asian men were making $181,000.

Perhaps most surprising is that the problem is even bigger when looking at the most elite business schools. At Harvard Business School, black, Hispanic and American Indian students started out earning $5,000 less than their counterparts after graduation. Eight years after school, that gap rose to almost $100,000. At Columbia Business School the eight-year gap is $80,000; at Wharton, it’s $65,000.

Obviously, companies should be ensuring that they are paying equal salaries for equal work. While schools can’t force companies to do this, there are some things business schools could do to help the situation. One step would be to create strong alumni programs for underrepresented minorities. Part of the reason for salaries dropping after a few years of employment is because people become comfortable in their job and stop looking to move to a new company, a new company that might pay a higher salary to attract talent. Strengthening alumni programs for minorities that create networking opportunities, highlight potential new jobs, and keep skills fresh can make it easier for them to switch jobs, thereby raising the average salary.

Schools could also encourage companies recruiting on campus to make sure their pay packages are the same no matter the student’s sex or race. While it would be impossible for schools to force companies to comply, they could provide education to companies on the importance of equal pay and potentially punish offenders by not allowing them to recruit on campus in the future.

An even greater step would be asking companies that want to recruit on campus for a diversity report that shows what the companies are doing to make up the salary difference. MBA programs could publish this information to students, who could then use that information in their future recruiting process to figure out what companies they want to target.

While there are no quick fixes to this problem, and it is probably an issue that is far bigger than just business school, business schools should be taking some steps to do what they can to erase the salary difference.

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Success Story Part 4: "Like sands through the hourglass, so are the essays of our lives…"

(This is the fourth in a series of blog posts in which Julie DeLoyd, a Veritas Prep GMAT alumna-turned-instructor, will tell the story of her experience through the MBA admissions process. Julie will begin her MBA program at Chicago Booth this fall. You can also read Part 1, Part 2, and Part 3 to learn Julie’s whole story.)

Since the time this business school idea first occurred to me on that Texas highway, the GMAT had been my main concern and the only real hurdle I had anticipated. Now with that hurdle behind me, I realized there was a whole new challenge ahead. Choosing schools, and writing essays upon essays upon essays

GMAC Works to Attract More Black MBA Students

Late last week the Graduate Management Admission Council (GMAC) announced a new partnership with the nation’s Historically Black College and University (HBCU) business schools to attract more African Americans to MBA programs nationwide. The partnership will include more recruiting efforts by schools, more marketing of the value of an MBA to black students, and fee or significantly discounted GMAT preparation services for those students.

GMAC President David A. Wilson, in his keynote address at the annual HBCU Deans Roundtable Summit, noted significant increases in African American students taking the GMAT exam. According to GMAC, the number of African American test takers has doubled in the past decade, with a 26 percent increase in just the past four years.

As part of this partnership, GMAC will offer GMAT fee waivers (currently it costs $250 to take the GMAT) for each of the HBCU business schools to use at its discretion to make sure that no student is denied access to the exam for financial reasons. In addition, GMAC will provide each school packages of test preparation materials, including copies of the new 12th edition Official GMAT Guide and GMAC’s own GMAT Prep software on CD.

Building on this outreach effort, Wilson also announced a cross-country tour of the GMAT Mobile Testing Center to HBCUs and Hispanic-Serving Institutions from October 2009 to May 2010. The 32-school bus tour will reach all U.S. based four-year HBCU and HSI members that are at least 40 miles from the nearest GMAT test center, thus further enhancing student accessibility to the exam.

If you are just starting to prepare for the GMAT, take a look at the GMAT prep options that Veritas Prep offers, and try a free practice GMAT exam.