This BusinessWeek article discussses how female MBA make only 93 cents in compensation for every dollar that a male MBA makes. The article then dives into compensation by industry, which is the right way to look at the data. After all, compensation varies widely by industry, and a pay gap could, in theory, be caused by major or slight differences in what careers men and women choose to pursue.
The story seems to be different, industry by industry. Here are some speculative interpretations for some industries.
First, the “big two” for MBAs, consulting and investment banking.
In consulting, women were at 100.0 in 2002, and 99.0 in 2012 (which I’ll take as 100). Consulting firms tend to value diversity, follow best practices ruthlessly, and generally want to run their businesses in a way fit for their clients to emulate. Makes a lot of sense that men and women would be compensated within a point.
In investment banking, women were at 103.2 in 2002, and 102.2 in 2012. Again, playing a little fast and loose with the data, we can say this also makes sense. I banks, like consulting firms, need to staff themselves with diverse, polished groups, and that means balanced gender representation. It could be the case investment banking roles are (very) slightly less attractive to women than men. In such a case, banks might have to pay a slight premium for women, to the tune of 2% to 3%.
Two industries are shining stars. In human resources, women jumped from 89.3 in 2002 to 107.5 in 2012. Wow! The HR industry exemplifies how pay gap is something you have to look at by industry. Very favorable things have happened for women in the last decade in this industry. Non-profit is another category in which women have come from behind to command a premium: from 93.7 in 2002 to 102.1 in 2012. Exactly what has happened is unknown from these data points alone, but women outperform men here.
The “investment banking theory” (paying a premium to maintain equality) doesn’t make as much sense here, since women tend to be well represented in HR and non-profit. Another possibility is that industry factors, such as the prevelance of women in these fields, have helped women gain negotiating power in these fields.
The overall loser is private equity, in which women’s salaries dropped from 93.7 cents on the dollar to 82.5. Yuck.
For both women and men, these datapoints can measure our state in these markets. They can give us as individuals information with which to strategize. But they do not have to predictions for anyone. They key to fair salary for both men and women is two-fold. First, know the facts. Know how much a person of equal experience, equal job function, in equal geography, gets paid. Second, negotiate, armed with thefacts (and don’t start at the average!).
