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MBA graduates hit with shocking gender pay gap

MBA graduates are being hit with an immediate gender pay gap and it’s got a lot to do with gender bias, new research has
October 26, 2021

The gender pay gap is alive and well amongst MBA graduates, a new study has found.

Research by Laura Kray and Margaret Lee of the University of California, Berkeley, found that when it comes to MBA graduates, men were almost immediately given larger teams to supervise and that this meant they were awarded higher salaries than women of the same qualifications.

The study, of nearly 2000 businesses, found that the gender pay gap also widened as MBA graduates progressed in their careers, the Wall Street Journal reported. This is also likely to have been exacerbated by other common gender pay gap factors such as women being more likely to have taken time out of the workforce to care for children.

“The damage has already been done silently and early, and it didn’t even look like discrimination,” Kray and Lee wrote in an essay in the Wall Street Journal.

The study found that women on average earned 71% of what men earned in director roles and 55% of what men earned in Vice President roles.

“This is the latest in a stream of research demonstrating that women are systematically disadvantaged in the organizational resources they are allocated across their careers,” said UniSA Centre for Workplace Excellence Professor Carol Kulik.

“The size of the team you supervise is important because it is a signal about the value you deliver to the organization. Organizations make pay allocations based on these signals – so pay decisions that are ostensibly based on “merit” reflect (and perpetuate) the gender biases that are built into earlier opportunities and resources,” she said.

As it stands the average gender pay gap in Australia is 14.2% as of August, which is slightly higher than where it was at the start of this year.

The gender pay gap is worse in management positions and women can earn at least $100,000 less than men, according to the government’s own Workplace Gender Equality Agency (WGEA)

Common explanations for the gender pay gap across occupations and sectors include: gender bias in the workplace and in hiring, discrimination, women and men working in different industries and different jobs, with female-dominated industries and jobs attracting lower wages, and the number of women in part-time employment compared to men.

“There is no single answer to solving the gender pay gap,” says Professor Kulik.

“Organizations and employees, need to recognize that gender inequality can appear in many different indicators.

“We’ve been encouraging organizations to conduct pay audits, but organizations should be auditing other indicators of gender inequality as well – including access to training, number of direct reports, budget size, and other resources that contribute to career success.

“Men and women should evaluate their employment packages across a wide range of dimensions. Starting salary is not the only, or even the most important, influence on long-term career success,” she said.

Organisations – public and private – are under increased pressure to show that they are on the front foot when it comes to closing the gender pay gap or risk brand damage by being called into the spotlight.

Investors are becoming more proactive about looking at how organisations perform on gender dynamics. Many even see gender as being part of the “G-factor” when considering performance factors such as ESG, which stands for Environment, Social and Governance.

In a very significant global move, the White House this week released its National Strategy on Gender Equity and Equality  which aims to close the gender wage gap in the United States by strengthen laws prohibiting wage discrimination on the basis of gender, race, and other characteristics. The strategy also includes a focus on greater pay transparency, through increased analysis of pay gaps.


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October 26, 2021
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