The Mommy Penalty Hits MBAs Hard

By Tina Vasquez (Los Angeles)

“The Career Cost of Family,” a study written late last year by Harvard economics professors Claudia Goldin and Lawrence F. Katz, found that women with MBAs suffer the largest percentage “mommy penalty,” while those with medical degrees suffer the lowest proportionate loss. Findings were based on a survey of Harvard College graduates from 1969 to 1992, a study of MBAs from the University of Chicago, and a nationwide survey of various professions.

The study’s most crucial findings revealed that female MBAs who take 18 months off from their career to have children earn 41 percent less than male MBAs. Female Ph.D.’s earn 33 percent less than male Ph.D.s for taking the same amount of time off, while female lawyers earn 29 percent less than male lawyers, and female MDs earn 16 percent less than male doctors.

Finding Flexibility Elsewhere

The mommy penalty is something that highly educated women have had to contend with for a very long time. A 41 percent pay decrease is excessive by many standards, but what’s almost more surprising is the fact that women are now choosing their careers – and opting out of opportunities – based on which may offer the most flexibility.

In their study, Professors Goldin and Katz wrote that “in general, women appear to be moving in the direction of choosing professions and specialties within professions that are consistent with their greater desire for workplace flexibility.” For example, Goldin and Katz found that women have flooded into the veterinary and pharmacology fields, both of which feature more scheduling flexibility and shorter working hours.

“Whereas women were less than 10 percent of all graduating veterinarians in 1970, they are almost 80 percent in the most recent years,” the professors wrote. “Pharmacy graduates are also around 60 percent female now but were 30 percent in the mid-1970s.”

Tonya Olpin, Executive Director of the National Association of Women MBAs (NAWMBA), does not think it’s wise for women to solely base their choice of career on flexibility. “While in school, women should decide what they want to do and what they want to be. It’s a tough decision and if they want a family, the idea of flexibility will obviously come into play,” Olpin said.

Olpin, who was first the National Student Director of NAWMBA, is unsure of how aware the members of her organization are concerning the huge mommy penalty those on traditional MBA tracks will face if they choose to have children.

“I think women in our organization have heard of the ‘mommy penalty,’ but we discuss it in more of a roundabout way,” Olpin said. “For example, one of our panels may include a talk on work/life balance and how women are expected to get everything done. What I’ve found through our organization is that women are incredibly good at multitasking, but they need a support system in place to make it happen.”

Will Millennials Face the Same Fate?

Yasmin Abraham, a 29-year-old MBA student, obtained her undergraduate degree in molecular biology and biochemistry and after graduation she rose through the technology sector’s ranks quickly. Much of her work focused on business development, marketing, and communications, but she had no formal business background to rely on, so she decided to go back to school and obtain her MBA.

“I was at a senior level in the organization, but I was missing the ‘tool belt’ of knowledge that could help me in the boardroom. I believe an MBA will give me that,” Abraham said.

Abraham intends on having a family immediately after she graduates and does not view her plans for motherhood as a hindrance to equal pay or job security. Many millennials don’t want to be on the traditional MBA track and the eighty-hour work weeks that were commonplace for female MBAs of earlier generations are simply not in the cards for them. Instead, young women like Abraham view their MBA as a way to make the kind of money they wouldn’t have otherwise. Essentially, obtaining the degree is like investing in their future. Not only does it boost their job prospects, but it opens up new opportunities and will also lead to substantially higher salaries. On average, those who obtain MBAs can expect to earn 50 percent more than they were earning before.

“I needed to set myself up so that I could afford to work from home and afford not to work 50 hours a week,” Abraham said. “I knew how wonderful it was to have my mum home and I wanted to have the same commitment to my own family. The increased salary was not what attracted me to an MBA It was the option of less work and more time at home that really spoke to me.”

Can MBA Women Have it All?

As uncomfortable a question as it is, it must be asked: Is it fair for women to expect to make as much as their colleagues – both male and female – after taking 18 months off? Olpin says it is, but she also strongly believes that women should do whatever they can in those 18 months to keep their skill set alive.

“A lot of things can change in 18 months, especially in technology,” Olpin said. “While away, women can bolster their resumes by volunteering at other organizations and staying on top of industry news. Women need to take it on their own shoulders to learn more while they’re staying home with their children.”

Mandee Heller Adler has a Harvard MBA and left the intense world of investment banking when her daughter was born. After leaving, she started her own company, International College Counselors, and though she understands the plight of working mothers, she also believes that their priorities shift once they have children and their compensation reflects this shift.

“I believe a lot of the reason why MBA moms earn less is because they want to work less,” Adler said. “I’ve tried to hire MBA moms like myself and their number one priority is flexibility. I think that this model works best in less competitive fields where the pay is simply less and is not ideal for service businesses with high client interaction, which typically hire MBAs.”

Abraham, the 29-year-old student hoping to obtain her MBA and then start a family, may be on to something. According to Adler, the “traditional MBA track” is changing. When she graduated in the 1990s, the thing to do was enter investment banking or management consulting, two notoriously demanding fields. “Things are changing now,” Adler said. “More students are opting for positions with hedge funds or traditional corporations and the balance we’re all after seems more attainable that way.”

Tales from the Battlefield

Jennifer Folsom obtained a finance degree and an MBA from Georgetown University and currently works at a startup called Momentum Resources, a boutique staffing firm specializing in the recruitment of highly-qualified individuals who want challenging part-time, full-time, or flexible work opportunities. She encounters numerous MBA moms and while many have tales to tell about getting mommy tracked or experiencing the mommy penalty, none are as interesting as Folsom’s story.

Folsom was set to give birth to her twin sons after graduation, but her boys were born a month and a half early. An extended hospital stay did not hinder the mom from graduating on time, but as a result of her twins’ premature birth, she was irrevocably off the finance track and never returned to the investment banking world as she’d planned. She considers this her first “salary hit.” Four months later she entered management consulting in the federal sector. The job came with a major salary concession, the second hit on her post MBA compensation level.

“After being mommy-tracked for four years with minimal career progression and minimum compensation increases, I quit without a plan; my third major MBA compensation hit,” Folsom said.

According to Folsom, MBAs are for over-achievers, hard chargers, and men and women who want to lead the business community. For women with these personality types, being relegated to the mommy track can be incredibly frustrating. Folsom, who obviously loves her twin boys, was recently hit with a realization: “Kids are not convenient” and until things change for women on a large scale, having children will drastically change the course of their careers.

“I recently visited my closest friend from business school who now lives overseas,” Folsom said. “He’s spent the last decade climbing the ranks of international management for a Fortune 100 global brand. In the past 10 years I’ve put down roots in the best public school district I could find. At graduation he was single; I was married with two newborn babies. We took very different paths; not better or worse, not right or wrong, just very different routes that have resulted in vastly different compensation levels.”