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Why Are Stanford MBA Men Making More Money Than Women?

December 21, 2012 5:16 pm0 commentsViews: 243
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The gender pay gap at the Stanford Graduate School of Business shows that women who graduate are earning .79 of what men do. This is the largest discrepancy in earnings between men and women graduates at any business school in the top 30, according to research from Bloomberg Businessweek.

This disparity might sound large, but it really does not surprise many of the women who graduated from Stanford this year. The gap is largely caused by the different career choices that they make.

For example, one recent female graduate worked as a consultant at McKinsey before she went to business school. Now she is working as the top manager for business development at Cookpad, which is the largest recipe sharing site in Japan. She took a cut in pay to take this job, but she found the job to be more challenging and interesting. Also, it helped that Cookpad encourages families to both cook and to spend time with each other.

It seems that many female Stanford graduates make career choices that are more focused on life balance issues, rather than earning as much money as possible.

According to the career management director at Stanford, most of the pay gap that is seen is due to choice of industry. Men and women at Stanford who enter consulting or Internet technology have about the same starting salaries. Graduates from Stanford who went into consulting earned a mean base salary of $131,000. Those who entered the technology field earned $118,000.

The large gap in wages is largely due to the fact that not as many women are going into the more well-paying finance fields. For instance, about 16% of men found jobs in private equity firms, while only 5% of women did. The top industries that female Stanford graduates went into were IT, management consulting, consumer products and venture capital.

It seems that many women are making career choices that are not just based upon salary, according to the career management office at Stanford.

However, this does not mean that women from Stanford are not driving a hard bargain at the negotiating table. For example, one graduate who is now working for Google, negotiated her salary for her financial operations job.

Also, it should be noted that many people who graduate from Stanford’s business school often go the start up route. Many of these professionals are women. For example, a female former investment banker decided to start up a website called Shopbelvel.com, after she graduated last summer. According to this student, some women come out of business school having already proven themselves in the business world in finance or investment banking. But now, they want to have a job that is more fun, more family friendly and more personally rewarding. This does not always include having the highest salary, at least in the short run.

The wage gap also can be seen between men and women at Harvard University’s Business School. Overall, women are being paid about 89% as much as the men. Also, Businessweek has found that the pay gap has stayed, overall, to women earning about 94% of men, according to their surveys.

However, again, the reasons seem to be not so much discrimination as career choice and previous work experience. Overall, women seem to have about a year less work experience than men do when they start an MBA program. And, other surveys show that women do indeed often choose industries that do not pay as well.

For example, a Universum survey of recent MBAs found that Goldman Sachs was the #18 most popular employer for female MBA grads. It was #3 for males. This company tends to be one of the higher paying to recent MBA graduates, so it makes sense that men are going to overall earn higher salaries.

So, if you are interested in earning a higher salary, you should consider entering finance or private equity. Other fields, such as IT, are strong as well, but do not pay as much. The latter is getting quite easy to enter, because MBA schools both online and on campus are proliferating in the IT sector.