While 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.
Applying to business school? Call us at 1-800-925-7737 and speak with an MBA admissions expert today, or take our free MBA Admissions Profile Evaluation for personalized advice for your unique application situation! As always, be sure to find us on Facebook, YouTube, Google+ and Twitter.