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Do Advanced Degrees Help You Get a Higher Salary? The Answer Depends on Your Gender

Topics: Data & Research
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Getting an advanced degree can pose various benefits for your career: it can help you get a promotion, expose you to new career paths, break into a new industry, land you a fulfilling job with the compensation to match, expand your network and grow as a human being.

On the flip side, when you go back to school, you incur the cost of tuition as well as opportunity costs such as the loss of a steady income from leaving the workforce (if you enroll full-time). If you enroll in school part-time, it may become difficult to manage the various parts of your life.

So, there are trade-offs involved: What you decide to do has to make sense for your goals, finances and life circumstances. One of the most important things to consider is this: do employers in your target field value the degree which you plan to pursue? What’s that value in dollar amount? Is the degree deemed essential for the job, or does the employer put greater emphasis on other compensable factors such as years of experience, technical skills, etc.?

PayScale’s 2019 Gender Pay Gap report reveals that sadly, employers do not value advanced degrees equally among men and women. Women with advanced degrees (a master’s degree, MBA, JD) are under-utilized and underpaid relative to their education level.

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Women With Advanced Degrees See Wider Pay Gaps

What does it mean to be underpaid relative to one’s education level?

Our gender pay gap study examines both the uncontrolled and the controlled pay gaps. To understand this point, it’s importance to know the difference between these two figures.

The uncontrolled wage gap looks at median pay for men and women separately, and the difference in the median amount is reported as the uncontrolled gender pay gap. Variables such as education level and years of experience are not controlled for. For 2019, women earn $0.79 for every dollar earned by men. This is a statistic you may have already seen in the media.

The controlled pay gap looks at the amount that a woman earns for every dollar that a comparable man earns. That is, this is the pay difference that exists between the genders after we account for all measured compensable factors, such as years of experience, job level, location and education level. This figure is $0.98 in 2019. In other words, an equivalent woman doing the same job or a substantially similar job as a man makes 2 percent less than the man.

What often gets lost in translation is what the uncontrolled wage gap truly represents — that women are less likely to hold high-level, high-paying jobs than men. There are structural barriers that keep women from advancing in the workplace — this is what we call the opportunity gap.

Highly Educated Women Don’t Get Opportunities to Use Their Skills

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Data shows that employers pay women less than men at every education level. Additionally, the wage gap widens between a bachelor’s degree and several types of higher-level degrees. For example, while the uncontrolled wage gap for women with a bachelor’s degree is $0.79 on the man’s dollar, this gap for women with a master’s degree (non-MBA) is $0.78. Women with a law degree (JD, LLM) earn $0.79 on the man’s dollar. Women with MBAs see the widest gap: they earn $0.74 for every dollar earned by a man with the same education.

In other words, these highly educated women are underutilized and under-compensated to a greater extent compared to women who only have a bachelor’s degree.

On the other hand, women who have PhDs and Health Professional Doctorates (MD, DMD, DVM, etc) experienced smaller wage gaps relative to women who only have a bachelor’s degree. This is likely because these degree-holders work in sectors where their specialized skills are truly needed (e.g. a heart surgeon) or where there simply isn’t much room for negotiation (e.g. such as in publicly-funded universities).

Why Is the Gender Pay Gap So Large for Women With Advanced Degrees?

There are multiple factors. But the main one is that women and men do not work in the same level of positions or fields.

We’ve found that roughly an equal percentage of men and women start their careers as individual contributors, i.e. they do not manage people. At the start their careers (age group 20-29), 74 percent of men and 75 percent of women are in individual contributor roles. However, a much smaller proportion of women reach the manager/supervisor level or higher by the middle of their career.

By mid-career (age range 30-44), 47 percent of men are managers or higher, while only 40 percent of women reach this level. By late career (age 45-plus), 57 percent of men are managers or higher, while only 41 percent of women reach this level.

Few women ever make their way to C-suite. By late career (age 45-plus), eight percent of men have risen to an executive level position, compared to three percent of women.

Based on what we see in the data, it’s clear that some employers are funneling women with advanced degrees into lower-level jobs they are overqualified for. There are plenty of examples in the real world showing this to be common place. For instance, female former employees at Google filed a class action-lawsuit accusing the technology company of denying promotions and career opportunities to qualified women who are “segregated” into lower-paying jobs.

Additionally, women with advanced degrees are under-represented in the most lucrative fields. Data from the Bureau of Labor Statistics shows that men are over-represented in higher paying fields like STEM, finance and management, while women are over-represented in lower paying fields like community/social services, education, healthcare.

Even when we look at the controlled pay gap, women with master’s degrees, MBAs, law degrees and doctorates still make anywhere between two to three percent less than an equivalent man.

We’ve all heard the expression “may the best candidate win.” Employers often list certain educational background as a job requirement. Workers early in their careers may believe that having an advanced degree can help them get a job they otherwise wouldn’t get and increase their earning potential. However, we’ve found that the value employers place on advanced degrees varies significantly by the gender of the degree-holder.

What You Can Do to Make Strides Toward Closing the Gender Pay Gap

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If you’re interviewing for a new role:

This may sound obvious, but I’ll say it anyway. Don’t apply for a role you’re overqualified for (unless you have specific reasons to do so). Check to confirm the level of the role and the scope of the role before you apply. For example — does this job posting list that your advanced degree is required? Does the role require key skills you learned in school? Does it have the scope you desire (e.g. managing people, money and/or production equipment)?

When you interview for a new position, the key is to do your homework and identify the skills the employer deem as essential and relevant for the job. Remember, an employer may not deem your degree essential for the job you want, and if that’s the case, they will not compensate you more for the degree. Do your homework on sites like PayScale, Indeed or LinkedIn to understand what the role is worth in your market.

Ask for a salary range of the role early during the interview process — so that you go into the interviews with eyes wide open. To avoid getting a low offer, do not disclose your salary history (which enable employers to use your previous salary as a benchmark to set the pay for the new position).

Once you have an offer, negotiate. Prepare to ask for more based on your understanding of the market value for the role. If you have an advanced degree, ask questions during your interviews to identify exactly how your education would benefit the employer in the role you’re targeting. So by the time you have an offer, you can clearly state why it would be reasonable for you to command a higher base salary or total compensation.

If you plan to stay with your current organization:

If you have clout at your organization, you might advocate for the adoption of pay transparency practices that may reveal a gender pay gap — and thus gender parity issues. That might mean anything from revealing more about the company’s compensation strategy to being completely transparent about how much every employee is paid, from the CEO to entry-level contributors.

Tell Us What You Think

Do you have ideas on how to combat the wage and opportunity gaps between men and women? Share them with us below or on Twitter.

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