For most people, going to business school leads to bigger and bigger paychecks. But you are likely to get the most out of the degree if you are a white or Asian man, Bloomberg data show.
Black, Hispanic, and American Indian MBAs who got their degree six to eight years ago earned exactly as much as their white and Asian peers right after leaving school, a according to a Bloomberg survey of 12,700 alumni at more than 100 business schools. In the survey, conducted as part of our annual ranking of full-time MBA programs, both groups said they made a median $105,000 when they graduated.
But by 2015, MBAs who were underrepresented minorities—meaning black, Hispanic, or American Indian—earned $150,000, while white and Asian MBAs made $172,000. Whites and Asians accounted for about 89 percent of alumni in the survey. Underrepresented groups made up 11 percent.
Female MBAs made less money than the men they graduated business school with, but women of color were at a particularly stark disadvantage. Six to eight years after leaving business school, black, Hispanic, and American India women earned a median $132,250. White and Asian men earned $181,000—a pay gap of nearly $49,000. Men from underrepresented minorities earned $163,500—less than white and Asian men but more than white women, who took home $150,000.
At some of the most elite business schools, the divergence in pay by race is stark. The race pay gap is particularly wide at Harvard Business School, where black, Hispanic, and American Indian MBAs started out earning just $5,000 less than their white and Asian classmates. Six to eight years after graduating, that gap widened to $97,800. HBS spokesman Jim Aisner called the sample "limited" and said, "We have no statistical data or other information to support this finding."
Similar gaps exist at other top programs. At Columbia Business School, underrepresented minorities ended up earning $80,400 less than whites and Asians. At the University of Pennsylvania's Wharton School, they earned $65,000 less. Columbia and Wharton declined to comment for this story.
Part of the reason graduates of HBS, Columbia, and Wharton vary so much in pay by race may be that these schools send the largest chunk of their graduates into the industry where our data show pay is least equitable: finance. MBAs of color who worked in finance made a median of $48,500 less than their white and Asian co-workers. In consulting, black and Hispanic MBAs earned $41,000 less. In three industries—real estate, manufacturing, and government—people of color earned more than whites and Asians. But MBAs aren’t choosing the industries where the pay is better for underrepresented minorities. About 8 percent of MBAs in the class of 2015 went into real estate, manufacturing, and government, while 44 percent went into finance and consulting.
These data suggest that a racial pay gap exists even among MBAs who share an elite degree and all went into the same high- paying industry.