Underrepresented Minorities Earning Less After Business Scho

While many top business schools have made a major push to improve the opportunities for underrepresented minorities in school, 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 whites, Asians and males are seeing far more rewards from business school than the rest of their peers. 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 thousand. But, eight years later, the black, Hispanic and American Indian students were making around $150 thousand, while their white and Asian colleagues were making $172 thousand. Female MBA grads are in an even worse place. Black, Hispanic and American Indian women were earning $132 thousand eight years after school, but white and Asian men are making $181 thousand.
Perhaps surprisingly, 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 thousand less than their counterparts. Eight years after school, that gap rose to almost $100 thousand. At Columbia Business school the gap is $80 thousand. At Wharton the gap is $65 thousand.
Obviously, companies should be ensuring that they are paying equal salaries for equal work. While schools can’t force companies to do that, 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. So 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.
Next, schools could encourage companies recruiting on campus to make sure their pay packages are the same no matter the student’s GMAT 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. Schools could publish this information to students and students could then use that information in the 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.