I have read much lately about whether men and woman are being paid fairly. For example, some of the latest research raises questions about pay fairness between men and women MBAs. What makes this research interesting is that about a decade ago it seemed any wage differential had been erased. Nevertheless, within the past few years, that accomplishment seems to be reversing based on MBA graduates’ experiences, as Alison Damast reports (“She Works Hard For Less Money” Bloomberg Businessweek, 12/24/13–1/6/14, pp. 31–32):
“At about a third of the top 30 U.S. business schools, women earn less than men—sometimes far less. Female MBA graduates from the class of 2012 at the Wharton School of the University of Pennsylvania, for instance, earned 86 percent of male wages, while those at Stanford Graduate School of Business earned 79 percent.” (p. 31)
Many factors have been studied as possible reasons for this apparent pay discrepancy. In reality, these studied factors may render the pay-fairness issue void. Here are several of the variables I came across that seem to give a logical explanation:
Experience Levels. Some female business students enter MBA programs at a younger age than men do. This means by the time they graduate and seek a job, their male counterparts may simply display more real-world job experience, prompting higher salary offers.
Negotiation Skills. Some women have not been as open as men to the negotiation game. This means the women are more willing to accept a first offer compared to men, who usually make counteroffers.
Industry Choice. Many women have been increasingly drawn into nonfinancial industries such as consumer products, technology, entrepreneurship, and consulting. Meanwhile, a higher proportion of men have opted for the financial industry, which tends to be the highest paying sector for MBAs.
Family Decisions. Either gender can choose to become the fulltime domestic engineer (homemaker) while the other spouse brings home the bacon. Although that is a choice, most of the time women choose to opt out of the business career rather than the man. These career interrupts usually translate to lower salaries on future new offers and thereby negatively affect the long-term salary trajectory.
Please understand, these factors are not absolute. You will always find individual exceptions. Nevertheless, studied holistically, I think these factors make sense. Although I want a job candidate—male or female—to be paid completely fairly, I also affirm these independently valid variables will affect pay.