The Ivy League's Gender Pay-Gap Problem

Across the United States, 34-year-old women, on average, make between 10 and 18 percent less than 34-year-old men. That gap isn’t surprising—it’s actually been slowly improving in recent years. What’s striking is that, when you only consider Ivy League graduates, the gap is significantly wider. This wage disparity came to light in a study by The Equal Opportunity Project, recently featured in The New York Times, that focused primarily on socioeconomic inequality. The study showed that female Ivy League alumni make 30 percent less than their male peers.

In their early 20s, Ivy League women keep up with men. They graduate with higher GPAs and start at similar salaries. But somewhere between age 26 and 34, their male classmates advance professionally at a pace they don’t match.

According to Claudia Goldin, a Harvard economics professor who specializes in the gender wage gap, this happens because of the kinds of high-paying careers Ivy League students overwhelmingly choose to pursue. The industries with the highest salaries—like finance, management consulting, and law—are also the ones with the largest gender wage gaps. Two major factors within these industries contribute to the disparity: Some attract more men than women, and all allow for relatively little flexibility. Ivy League women also tend to have partners who work in the same high-paying industries that they do. When they have children, these partners make it financially feasible for women to forgo promotions and raises, or stay at home.

While the gender wage gap is particularly large for graduates of Ivy League schools, this trend extends beyond them. The more education you have—the more money you make—the wider the wage gap.

Let’s take two of the industries with the widest gender wage gaps as examples: finance and management consulting. These sectors, taken together, employ the largest group of Ivy League graduates: 46 percent of University of Pennsylvania students, 38 percent of Columbia students, 39 percent of Cornell students, and between 23 and 34 percent of students at Princeton, Harvard, Yale, and Brown. Every fall, swarms of representatives from top investment banks and consulting firms come to Ivy League campuses to recruit seniors, ultimately selecting a new “class” of employees that hails almost exclusively from Ivies and other elite schools. By and large, these students make more money than anyone else in their graduating class, earning between $60,000 and $110,000 in their first year.

A survey of Harvard graduates in the Class of 2014 shows that, while approximately the same number of women and men work in consulting (14 percent), substantially more men work in finance. Twenty-four percent of Harvard men, and only 10 percent of Harvard women, chose to pursue finance careers after graduation.

“We know there is a gender imbalance in employment at some of the occupations at the very top of the income distribution,” said John Friedman, a Professor of Economics at Brown and one of the co-authors of the Equality of Opportunity study. “Most colleges—non-selective four year schools, and even most selective four-year schools—aren’t putting too many people into the Goldman Sachs of the world.”

Finance is a field with a particularly low number of women; many of the other highest-paying industries don’t have that same gender imbalance. So why aren’t those women financially benefitting from jobs in high-paying fields as much as their male classmates?

Goldin and Lawrence Katz, an economics professor at Harvard, offered a helpful, if somewhat limited, explanation in their study on MBA graduates from the University of Chicago Booth School of Business, almost all of whom graduated into corporate or financial sectors. They found that, nine years after graduation, Booth School women made 37.5 percent less than Booth School men.

By the time these women were 34—the age used in the Equality of Opportunity study—two things had happened. First, Goldin said in an interview, many women had attached themselves to a romantic partner. As careers developed, the woman was usually the one expected to be flexible, and move to accommodate her partner’s career. Even more importantly, people had started to have kids. And, again, more often than not, the woman was the one forced to adjust.

“These are jobs where you can’t really reduce your hours,” Goldin said. “When clients say they want you at 2 in the morning, you have to be there. So when a woman has a kid, rather than reducing her hours, she leaves, or moves somewhere else—to an NGO or a smaller firm.”

When a high-powered female executive at an investment bank has a kid, knowing that part-time work isn’t an option, she feels like she has to downshift her career. Women with jobs that require a fixed number of hours and little attention outside of the office, on the other hand, don’t have that same degree of pressure. They’re much more able to stay on their chosen professional track after they have kids.

These demanding, high-paying jobs disproportionately benefit male employees for other reasons, too. Promotion practices are generally more standardized at the lower end of the wage spectrum for any given field. As you advance within the workplace, you have to become more of an advocate for yourself—something women struggle with more than men.

“Negotiation is more important at the upper reaches. Women are less likely to negotiate, and also less likely to get good results when they do. There is this idea that, if you negotiate and push yourself forward, that’s not appropriate female behavior,” said Francine Blau, a professor of economics and labor relations at Cornell.

It’s also certainly worth noting that Ivy League grads, in addition to making a lot of money themselves, tend to be surrounded by wealthy people. Ivy League students come from families with median family incomes that range from $150,900 to $204,200. Many also marry wealthy partners—students from their own university or others like it. When women have children, they’re more able to leave the workplace—or take a lower-paying part-time job—if they have alternate sources of financial support.

When a woman has both a high-demand, low-flexibility job, and a wealthy spouse—a position many Ivy League women find themselves in—she is far more likely to take a significant step down in the workplace, or step out altogether. Goldin and Katz’s study of Booth School graduates found that, five years after the birth of their first child, women with wealthy husbands earn an average of $200,000 less than they would if they didn’t have a high-earning spouse. Goldin and Katz’s study did not consider women with same-sex partners.

“Those with lower-income husbands do not decrease their participation and have a far lower “hit” to their income; although they do work fewer hours,” Gordon and Katz write in their study. “Women who marry high-earning spouses and who do not have children work more, not less, than those who marry the lower-earning spouses. The interaction of kids and high-earning husbands is what matters.”

Generally, society assumes that students will be better off financially if they graduate from college—and even better off if they graduate from an elite college. Overall, that’s true. But it’s far truer for men.