Wage

discrimination
in STEM
251
International Journal of Sociology
and Social Policy
Vol. 30 Nos. 5/6, 2010
pp. 251-266
#Emerald Group Publishing Limited
0144-333X
DOI 10.1108/01443331011054226
Race, human capital, and wage
discrimination in STEM
professions in the United States
Philip Broyles
Department of Sociology/Anthropology, Shippensburg University of
Pennsylvania, Shippensburg, Pennsylvania, USA, and
Weston Fenner
Department of Sociology, Lehigh University, Brodheadsville,
Pennsylvania, USA
Abstract
Purpose The purpose of this paper is to examine how human capital affects the racial wage gap of
science, technology, engineering, and mathematics (STEM) professionals, controlling for labor market
characteristics and argue that human capital of minority STEM professionals is valued less than
their White counterparts, even when minorities have similar levels of human capital.
Design/methodology/approach Data for this study were obtained from the American Chemical
Society (ACS) 2005 census of its membership and consisted of 13,855 male chemists working full-time
in industry there were too few minority women to make comparisons. The racial wage gap was
decomposed by modeling earnings as an exponential function of race, education, marital status,
children, experience, employment disruption, work specialty, work function, industry, size of
employer, and region of work.
Findings This research shows that there is racial discrimination in STEM professions. Although
there is variation among racial groups, minority chemists receive lower wages than White chemists.
For Asian and Black chemists, the wage differential is largely due to discrimination. The case may be
different for Hispanic chemists. Most of the difference in wages between Hispanics and Whites was
explained by the lower educational attainment and experience of Hispanic chemists.
Practical implications Because the racial wage gap is largely due to racial differences in the
return on human capital, public and private efforts to increase human capital of potential minority
scientists have a limited impact on the racial wage gap. Eliminating the differential returns to human
capital would drastically reduce the racial wage gap except for Hispanics. Achieving racial pay
equity is one important step towards eliminating racial discrimination in the STEM workforce.
Originality/value This paper shows the role of human capital in explaining the racial wage gap in
STEM professions.
Keywords Chemistry, Race, Discrimination, Earnings, United States of America
Paper type Research paper
Introduction
Nearly a decade ago, Building Engineering and Science Talent (BEST), a product of the
now defunct Commission on the Advancement of Women and Minorities in Science,
Engineering, and Technology, warned that the USA was falling short in producing
scientific talent, especially among women and under-represented minorities. In their
report, The Quiet Crisis: Falling Short in Producing American Scientific and Technical
Talent, they documented racial inequality in the scientific community and recommended
a variety of ways to improve the recruitment, retention, and representation of women and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0144-333X.htm
The authors are indebted to the American Chemical Society for supplying the data for this
research. The opinions expressed in this paper are those of the authors and not of the American
Chemical Society.
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under-represented minorities in science, technology, engineering, and mathematics
(STEM) professions (BEST, 2001). Despite efforts to improve diversity and eliminate
inequities in the STEM workforce during the past decade, a more recent report from the
Commission on Professionals in Science and Technology suggests that racial
discrimination persists in STEMprofessions today (Ellis, 2005).
This research examines discrimination in one STEM profession, chemistry. Using a
sample of 13,855 men chemists working full-time in 2005, we examine how human
capital influences racial disparities in wages.
Employment discrimination
Labor market discrimination is defined as unequal treatment of equally qualified
workers (Becker, 1971). Despite the gains in the labor force status of racial minorities in
recent years, significant disparities remain. African-Americans and Hispanics are more
likely than Whites to be unemployed and lag behind Whites in salaries (Prager and
Shepard, 2008).
A long line of research has examined the degree to which discrimination shapes
disparities in the labor market. Audit studies that examine hiring decisions have
consistently found evidence of racial discrimination. For example, in a recent study of
employment in Boston and Chicago, researchers mailed equivalent resumes with
racially identifiable names to employers. White names received a callback rate that was
50 percent higher than that of the equally qualified applicants with African-American
names (Bertrand and Mullainathan, 2004). Other studies suggest that estimates for
White preference range from 50 to 240 percent (Prager, 2007; Bertrand and
Mullainathan, 2004; Fix and Struyk, 1993; Turner et al., 1991).
Research on employment outcomes likewise reveal large racial disparities
unaccounted for by observed characteristics. Tomaskovic-Devey et al. (2005) show that
African-American men spend more time searching for employment, acquire less work
experience, and have less stable employment than do their White counterparts. Similarly,
Wilson et al. (1995) shows that Black male high school graduates are 70 percent more
likely to experience involuntary unemployment than similar Whites, controlling for other
relevant characteristics. This disparity increases among those with higher levels of
education. Research also shows the persistence of occupation segregation, with racial
minorities concentrated in lower level jobs, which provide less stability, authority, and
opportunity for advancement (Smith, 2002; Parcel and Mueller, 1983).
Unlike research on hiring and employment outcomes, studies on wage disparities
come to more mixed conclusions. An audit study by Bendick et al. found that among
testers receiving job offers, Whites were offered higher wages than their Black
counterparts. However, audit studies generally offer limited insight on racial disparities
in wages because they seldom progress to the wage settings stage. Most research on
wage disparities examines statistical evidence for a racial wage gap. Many of these
studies come to similar conclusions. Racial minorities earn significantly less than their
White counterparts, although there is some variation among minorities (Black et al.,
2006; Bratsburg and Terrell, 1998; Trejo, 1997; Grogger, 1996). Some researchers
dispute these findings. For example, Farkas and Vicknair (1996) show that the addition
of a control for cognitive ability can eliminate the racial wage gap.
One of the central issues to statistical studies of wage disparities is the relative
importance human capital and labor market theories in explaining the racial wage gap.
Many sociological explanations of the racial wage gap focus on the structure of labor
markets (Wolaver and White, 2006; Huffman and Cohen, 2004; Grodsky and Pager, 2001;
Wage
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253
McCall, 2001). Labor market theories emphasize regional variations, unionization,
occupation segregation, migration, and other labor market characteristics in explaining
racial wage disparities. For example, Wolaver and White (2006) argue that constraints on
occupational choice leave many Blacks at the bottom of the occupational ladder and
dampen their ability to improve wages relative to Whites.
Human capital theory emphasizes racial differences in education, training, and
experience in explaining wage disparities. Human capital theory suggests that White
workers have higher educational attainment and more work experience than minority
workers and therefore receive higher wages (ONeill, 1990; Paglin and Rufolo, 1990). A
few studies on human capital attribute a large potion of the racial wage gap to employer
discrimination (Shulman, 1992; Cotton, 1988; Neumark, 1988). These researchers suggest
that racial wage gap can be explained largely by racial differences in returns to human
capital, rather than racial differences in human capital endowments.
In this research, we examine how human capital affects the racial wage gap of
STEMprofessionals, controlling for labor market characteristics. We argue that human
capital of minority STEM professionals is valued less than their White counterparts,
even when minorities have similar levels of human capital.
Data and methodology
Data for this study were obtained from the American Chemical Society (ACS) 2005
census of its membership. Every five years, ACS conducts a census of its membership,
which includes thousands of chemists working in industry and academia. With over a
70 percent response rate, this census accurately captures the educational and
occupational characteristics of chemists across a broad spectrumof the profession.
Examining a single STEM profession helps control for some of the unmeasured
qualitative aspects of human capital (specialized education and job training) that affect
the wage gap but varies by profession. In our sample, all respondents have been
educated in the same field (chemistry) measuring education attainment without
distinguishing between fields of study often obscures qualitative difference in
education. Other qualitative aspects of education are not measured for example, the
data does not distinguish between chemists with a bachelor degree from a state
university and chemists with a bachelor degree from an Ivy League university.
Although there are limitations to making general inferences about STEM professionals
from research on one science profession, the findings for chemists should reflect those
for STEMprofessions more generally.
Our sample consisted of 13,855 male chemists working full-time in industry. We
excluded women from the sample because there were too few minority women to make
comparisons. Eighty-four percent of the sample was White, 12 percent was Asian, two
percent was Hispanic, and two percent was African-American.
Following the conventional econometric models of wages, we use the log of salary as
the measure of wages (dependent variable). In 2005, the mean salary for White chemists
with an undergraduate degree working full-time was $92,719 (log salary 11.437329).
Asian chemists averaged $92,493 (log salary 11.434984), Hispanic averaged $84,279
(log salary 11.341890), and Blacks averaged $79, 389 (log salary 11.28212). Black
chemists averaged 15.5 percent less income than their White counterparts. For
Hispanics, it was 9.5 percent less and for Asians it was only 0.2 percent less.
We used two dimensions of human capital in this study: education and experience.
Education was measured by the highest degree obtained by the respondent. As
mentioned previously, some of the unmeasured qualitative variation in this type of
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educational measure is eliminated by the fact that all respondents have degrees in
chemistry or chemical engineering. Many other studies of racial wage disparities do no
distinguish between fields of study that is, for example, they do not distinguish
respondents with bachelor degree in social work from those with a bachelor degree in
engineering. And the market value of a social work degree is significantly less than
that of an engineering degree.
Experience was measured by the number of years since the award of a bachelors
degree, and by years squared. The years-squared adjustment has the effect of slowly
reducing the size of each years increase, so that results resemble the smoothed
maturity curves long used by compensation analysts who examine pay scales for
technical professionals. Pay rises most rapidly in the early years and gradually begins
to plateau for mature workers (for whom the effect of another year of experience is
somewhat less significant).
Although education and experience are the most common dimensions of human
capital used in studies of human capital, there are other dimensions of human capital
such as skill, talent, and effort. These qualities are difficult to measure, and, therefore,
are not included in this study there are few studies that include such measures.
Moreover, we believe that if these qualities were measured objectively they would not
significantly vary by race.
We control for the structure of the labor market by a set of dichotomous indicator
(dummy) variables that were coded to reflect the presence or absence of certain labor
market characteristics:
.
20 work specialties, including several common non-chemical specialties for
chemists;
.
33 employer industry sectors;
.
seven employer sizes;
.
15 types of job functions (such as analytical services or R&D management);
.
23 metropolitan areas plus nine geographic regions for persons not in any of the
specified metro locations; and
.
Employment disruption: chemist had a hiatus in his/her career.
The model also included dummy control variables for relevant family characteristics,
including marital status and children. Some research suggests that married women
earn less than single women, and that having children is negatively related to salary
(Sasser, 2005). Sasser (2005) argues this is largely due to womens greater family
responsibilities. We might expect men, on the other hand, to benefit frombeing married
because they have wives to take care of family and domestic responsibilities.
Categories for marital status were: single (included widowed and divorced), married to
a chemist, married to a scientist, and married to a non-chemist. The variety of married
categories was largely exploratory to see if various spousal arrangements affected
salary. We also measured whether the respondent had dependent children.
The wage model
In our model, annual salary is specified as an exponential function of ones work
experience (years and years squared), education, race, geographic region, labor market
characteristics, and family characteristics. Dummy variables for Black, Asian and
Hispanic chemists were used in the model specification. The final model is developed in
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255
two stages. In the first stage all variables are entered into the model. In the second
stage, independent variables were entered into the model in a stepwise manner (0.05
level entrance criteria), from the most to the least influential. In order for a variable to
be included in the final model, it had to make a statistically significant (0.05 level)
contribution to explaining differences in salary beyond what was already explained by
the other variables in the model.
The second-stage model was compared to the first-stage model to make sure
significant variables were not eliminated from the final model. Essentially, the second-
stage model eliminates statistically insignificant predictors of salary. For example,
Chicago is the baseline city for the region variable. However, there was no statistically
significant difference between salaries of chemists in Chicago and in Baltimore, so
Baltimore was dropped fromthe specification of the final model chemists fromChicago
and chemists from Baltimore were treated as one group in the final model. It should be
noted that no theoretically important variables were left out of the final model.
The final model specification has experience, experience squared, education, race,
marital status, children, employment disruption, 11 industries, nine work specialties,
eight work functions, seven employer sizes, and 18 regions. The baseline categories are:
.
education: bachelor degree;
.
race: White;
.
marital status: never married;
.
children: yes;
.
employment disruption: yes;
.
industry: manufacturing;
.
work specialty: analytical chemistry;
.
work function: other function;
.
employees: 25,000 or more; and
.
region: Chicago.
Findings
Table I presents descriptive statistics for the final model specification. White chemists
earn significantly more than Black and Hispanic chemists, but only slightly more than
Asian chemists. White chemists earned $92,712, on average, while Blacks earned
$79,389, Hispanics earned $84,279 and Asians earned $92,493. There were significant
differences in the human capital of chemists. White chemists averaged 25 years of
work experience, Asians and Blacks averaged 23 years, and Hispanics only averaged
21 years of experience. Asians had the highest level of educational attainment. Eighty-
one percent of Asian chemists had a doctorate compared to only 55 percent for Whites,
and 47 percent for Blacks and Hispanics. It is important to note that Asian chemists
had a significantly higher level of education than White chemists even though they
earned less than White chemists, on average.
There was also some significant variation in the labor market characteristics of
chemists. Asians were more likely to be employed in some of the more lucrative fields
in chemistry such as pharmaceuticals (0.371) and biotech (0.084). Black and Hispanic
chemists were more often found in the less lucrative fields of chemistry such as
analytical services (0.038) and paper (0.011, and 0.009, respectively). Similarly, there
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Table I.
Descriptive statistics
White Black Asian Hispanic
Salary (dollars)
a
92,719 79,389 92,493 84,279
Experience (years)
a
24.9 22.7 22.2 20.9
Education
BS
a
0.255 0.313 0.054 0.355
MS
a
0.195 0.214 0.128 0.167
PhD
a
0.550 0.473 0.818 0.478
Marital status
Previously married
a
0.047 0.070 0.020 0.041
Married to chemist
a
0.095 0.054 0.185 0.115
Married to scientist
a
0.139 0.124 0.203 0.104
Married to non-scientist
a
0.623 0.570 0.518 0.533
Children
a
0.524 0.541 0.692 0.533
Employment disruption
a
0.155 0.172 0.108 0.163
Industry
Aerospace
b
0.025 0.016 0.012 0.003
Coatings/paints 0.046 0.048 0.029 0.033
Instruments 0.028 0.022 0.022 0.018
Metals 0.014 0.005 0.007 0.006
Paper 0.007 0.011 0.004 0.009
Personal care 0.011 0.022 0.015 0.021
Petroleum 0.032 0.059 0.030 0.033
Pharmaceuticals
a
0.234 0.258 0.371 0.308
Analytical service lab
b
0.003 0.038 0.011 0.038
Biotechnology
a
0.029 0.016 0.084 0.033
Work specialty
Chemical engineering 0.052 0.032 0.055 0.077
Biotechnology 0.042 0.043 0.054 0.053
Materials science 0.055 0.054 0.068 0.041
Medical/pharmaceutical
a
0.131 0.091 0.223 0.151
Polymer chemistry 0.101 0.124 0.069 0.665
Business admin.
b
0.033 0.022 0.015 030
Law 0.012 0.016 0.004 0.006
Other
a
0.057 0.032 0.026 0.053
Employer size
Less than 50 0.112 0.065 0.105 0.093
50-99 0.052 0.043 0.074 0.063
100-499 0.122 0.124 0.129 0.137
500-2499 0.121 0.162 0.124 0.116
2500-9999 0.158 0.173 0.154 0.179
10-25k 0.116 0.103 0.091 0.093
Work function
Analytical services
a
0.119 0.135 0.077 0.092
Consulting
b
0.021 0.011 0.006 0.021
General management
a
0.067 0.043 0.015 0.077
Marketing/sales
a
0.066 0.038 0.024 0.057
Patents 0.013 0.005 0.005 0.012
Production/quality control
a
0.103 0.173 0.079 0.173
R&D management
a
0.138 0.092 0.083 0.131
Region
Boston
a
0.050 0.032 0.079 0.033
(continued)
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was also some significant variation among races in work function occupational
position. White chemists were more likely than other chemists to be in more lucrative
positions, such as marketing and sales (0.066) or research and development
management (0.138). Black and Hispanics were more likely to be in production and
quality control (0.173), work that pays significantly less than other work positions.
Generally, Black and Asian chemists were less likely than Whites to be in management.
This may reflect a glass-ceiling effect for racial minorities, especially for Asian chemists
who have higher educational attainment than White chemists. Interestingly, Hispanics are
not under-represented in management, despite having less experience and education than
White chemists. However, this is not true for all STEM professions. Recent data from the
Commission on Professionals in Science and Technology show that generally Hispanics
lag behind African-Americans in managerial positions.
There was also variation in family status. Black and Hispanic chemists were more
likely to be single, 18 and 16 percent, respectively. Asians chemists were more likely to
be married to a chemist or other scientist, 37 percent. Whites were more likely to be
married to a non-scientist, 62 percent. Asian chemists were more likely to have
dependent children. Sixty-nine percent of Asians had dependent children compared to
only 53 percent for Whites, Blacks, and Hispanics.
The regression estimates for the wage equation with dummy variables for race is
presented in Table II. An examination of the coefficients for race shows that each race
earned less than their White counterparts after controlling for human capital, labor
market structure, and family characteristics. Blacks and Asian chemists earned eight
percent less than White chemists, while Hispanic chemist earned two percent less.
However, the difference between Hispanics and Whites was not statistically
significant. This analysis shows that the White/Black raw wage differential of 15.5
percent decreases to eight percent after controlling for human capital and the other
variables. The White/Hispanic raw wage differential of 9.5 percent decreases to two
Table I.
White Black Asian Hispanic
NYC
a
0.102 0.129 0.175 0.083
Philadelphia 0.065 0.070 0.059 0.050
Washington, DC 0.014 0.032 0.011 0.003
Cincinnati 0.020 0.022 0.011 0.009
Detroit 0.021 0.011 0.018 0.018
Minneapolis 0.023 0.016 0.013 0.012
Kansas City 0.003 0.006 0.005 0.004
New Orleans 0.006 0.005 0.002 0.006
Houston 0.029 0.032 0.024 0.056
Denver 0.016 0.022 0.015 0.012
LA
a
0.045 0.038 0.108 0.080
San Francisco
a
047 0.027 0.095 0.053
Northeast 0.026 0.022 0.024 0.015
Northwest
b
0.023 0.005 0.008 0.012
Pacific 0.034 0.038 0.030 0.036
Southeast
b
0.023 0.049 0.015 0.012
Sample Size 323 11697 182 1657
Notes: All numbers are proportions, unless noted otherwise;
a
Statistical difference between racial
groups at 0.01 level.;
b
Statistical difference between racial groups at 0.05 level
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Table II.
Coefficients of wage
equation, 2005
Coefficient Standard error
Experience
Years since BS 0.035438 0.001286
Squared years since BS 0.00047 2.61E05
Education
MS 0.062102 0.008865
PhD 0.245714 0.007714
Race
Black 0.07857 0.024319
Asian 0.08337 0.008913
Hispanic 0.01921 0.018382
Marital status
Previously married 0.047661 0.016529
Married to chemist 0.068087 0.013616
Married to scientist 0.090363 0.012766
Married to non-scientist 0.081427 0.011147
Children 0.017976 0.006627
Employment disruption 0.14202 0.008005
Industry
Aerospace 0.05594 0.019006
Coatings/paints 0.03694 0.014065
Instruments 0.06017 0.017706
Metals 0.06291 0.02495
Paper 0.08067 0.033328
Personal care 0.071608 0.025969
etroleum 0.059017 0.016531
Pharmaceuticals 0.089965 0.008531
Analytical service lab 0.12684 0.018271
Biotechnology 0.125145 0.017071
Work specialty
Chemical engineering 0.122812 0.012878
Biotechnology 0.053644 0.01437
Materials science 0.034601 0.012629
Medical/pharmaceutical 0.028922 0.0098
Polymer chemistry 0.03182 0.010188
Business admin. 0.152577 0.017539
Law 0.169845 0.038373
Other 0.043532 0.012827
Employer size
Less than 50 0.18091 0.010501
50-99 0.12411 0.013448
100-499 0.10193 0.00978
500-2,499 0.07785 0.009706
2,500-9,999 0.04245 0.008872
10-25k 0.03137 0.009841
Work function
Analytical services 0.07254 0.009959
Consulting 0.094096 0.020987
General management 0.215377 0.012759
Marketing/sales 0.051178 0.01259
Patents 0.12392 0.037501
(continued)
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percent after controlling for human capital and other relevant variables. However, the
White/Asian raw wage differential of 0.2 percent increases to eight percent after
controlling for relevant variables. This largely reflects the fact that Asian chemists
receive less return on human capital than White chemists more on this later.
Much of the racial disparity in wages of chemists is explained by human capital.
Generally, human capital variables have expected signs and effects. Having a doctorate
increases earnings by nearly 25 percent, while having a masters degree increases
earnings by six percent. Educational attainment of White chemists accounts for some
of the racial wage gap. It is important to note that Asian chemists had a significantly
higher proportion of doctorates than did White chemists. Because earnings increase 25
percent for a doctorate, we would expect that Asian chemists would earn significantly
more than White chemists, all things else being equal. But this is not the case, they
earn less. This largely reflects the fact that White chemists hold more lucrative work
positions and receive greater returns on their education.
Experience also has a positive effect on income. Every year of experience increases
earnings by 3.5 percent. This also explains some of the salary differential between
White and non-white chemists; White chemists have more experience than Black,
Hispanic, and Asian chemists.
As expected, many labor market conditions also affect earnings. Occupational
segregation explains some of the racial disparity in wages. White chemists have more
lucrative jobs. Chemists employed in the biotechnology industry earned 12 percent more
than other chemists. The most lucrative work specialties were chemical engineering,
business administration, and law; chemists in those specialties earned 12, 15, and 17
percent more, respectively, than chemists with other specialties. Chemists in management
Table II.
Coefficient Standard error
Production/quality control 0.04051 0.009705
R&D management 0.236298 0.008749
Region
Boston 0.127941 0.013112
NYC 0.094123 0.009577
Philadelphia 0.051829 0.01184
Washington, DC 0.105573 0.024056
Cincinnati 0.051467 0.021054
Detroit 0.103076 0.019763
Minneapolis 0.041629 0.019345
Kansas City 0.14561 0.037315
New Orleans 0.105237 0.036927
Houston 0.055135 0.017182
Denver 0.050027 0.022577
LA 0.113155 0.013143
San Francisco 0.177992 0.013275
Northeast 0.069406 0.018008
Northwest 0.08743 0.019711
Pacific 0.045715 0.015683
Southeast 0.04324 0.017681
Constant 10.61751 0.017113
R-squared 0.4382
n 13,855
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also earned significantly more than other chemists. Chemists that had a hiatus in their
career earned 14 percent less than other chemists. Hispanic and Black chemists were more
likely than White chemists to have experienced employment disruption.
Other control variables affected the wage gap. As expected, married chemists
earned more than single chemists. There was also regional variation in salaries.
Chemists working on the east coast or west coast earned more than other chemists, too.
Racial earnings differences
We used a decomposition analysis of wage differentials between White and minority
chemists to determine how much of the racial gap was due to discrimination. To
analyze the earnings differences between White and minority chemists, we used
Oaxacas (1973) decomposition techniques. The Oaxaca decomposition is based on the
assumption that differences in earnings are the result of two effects: differences in
workers endowments (for example, education, experience, place of residence, etc.) and
differences in the wages workers receive per endowment. In other words, Whites will
earn more than minorities if they have more productive characteristics or receive more
compensation per characteristic. If two workers with equal endowments receive
different wages, discrimination may exist.
To measure White-minority earnings differentials, a separate earnings regression is
estimated for each group White compared to a specific racial minority. For Whites
and each minority group (separate comparisons), the following equations were
estimated:
lnY
w
X
w
B
w
u
w
and lnY
m
X
m
B
m
u
m
, where X
w
and X
m
are a matrix of
Whites and minorities explanatory variables, respectively. The mean difference in log
earnings can be expressed as ln Y
w
ln Y
m
X
w
B
w
X
m
B
m
. Moreover, B B
w
B
m
or
B
m
B
w
B, which upon substitution into the above equation yields ln Y
w

ln Y
m
B
w
{X
w
X
m
} X
m
{B
w
B
m
}
This equation states that the differences in log earnings can be decomposed into an
endowment effect (the first term on the right-hand side) and a coefficient effect (the
second term on the right-hand side). The latter measure employer discrimination:
paying Whites more per endowment than minorities. Note an alternative calculation
based on weighting the differences in coefficients by minorities characteristics and
weighting the differences in endowments by Whites coefficients is also possible
(ln Y
w
ln Y
fm
B
m
{X
w
X
m
} X
w
{B
w
B
m
}. The choice is largely arbitrary.
It is important to note that the actual level of discrimination in the labor market may
be lower than this model suggests because the unexplained coefficient may reflect
variables not specified in the model. Although this is a well-specified model with a high
level of explanatory power, some relevant characteristics may have been omitted such
as talent, effort, and other skills because they are difficult to measure. Including
additional explanatory variables would reduce the unexplained portion of the equation,
thus reducing the discrimination effect.
The results of the decomposition are presented in Table III. Table III presents the
decomposition in the traditional manner: an endowment effect due to difference in
endowments of characteristics, a discrimination effect due to differences in returns to
these characteristics (discrimination), and a total effect the sum of endowment and
discrimination effects. A positive number indicates advantage to Whites, and a
negative number indicates advantage to the minority group. As mentioned previously,
the log wage differentials between White chemists and Black, Asian, and Hispanic
chemists were 0.155, 0.002, and 0.095, respectively.
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261
Table III.
Wage decompositions
White/Black White/Asian White/hispanic
E endowment
effect,
D discrimination
effect, T total
effect
E endowment
effect,
D discrimination
effect, T total
effect
E endowment
effect,
D discrimination
effect, T total effect
E D T E D T E D T
Years since BS 7.8 75.1 82.9 6.2 6.0 12.2 15.0 13.2 28.2
Squared years since BS 5.1 41.8 46.9 5.3 4.9 10.1 9.0 9.8 18.9
MS 0.1 0.1 0.1 0.4 1.6 2.1 0.2 08 0.6
PhD 1.9 2.5 0.6 6.6 7.5 0.9 1.8 4.8 3.0
Previously married 0.1 0.9 1.0 0.1 0.2 0.3 0 0.7 0.8
Married to chemist 0.3 1.1 0.8 0.4 0.1 0.3 0.1 1.1 0.9
Married to scientist 0.1 2.8 2.7 0.6 0.3 0.3 0.3 1.0 1.4
Married to non-scientist 0.5 2.9 2.4 0.7 2.0 3.5 0.4 1.5 2.0
Children 0 0.3 0.3 0.3 1.3 1.0 0 0.7 0.7
Employment disruption 0.3 5.3 5.0 0.7 1.3 2.0 0.1 0.5 0.4
Aerospace 0 0.3 0.2 0.1 0 0.1 0.1 0.2 0.
Coatings/paints 0 0.3 0.3 0 0.2 0.2 0 0.1 0.2
Instruments 0 0.3 0.4 0 0.1 0.1 0.1 0.4 0.3
Metals 0 0.3 0.2 0 0 0 0 0.1 0
Paper 0 0 0 0 0 0 0 0 0
Personal care 0.1 0.9 0.8 0 0.1 0.1 0.1 0.1 0
Petroleum 0.2 1.8 1.9 0 0.1 0.1 0 0.7 0.7
Pharmaceuticals 0.2 2.1 1.8 0.1 0.6 0.7 0.6 2.3 1.7
Analytical service lab 0.1 0.1 0.2 0.2 0.1 0.2 0.1 0.4 0.3
Biotechnology 0.2 0.7 0.5 0.6 0.2 0.5 0.1 0.4 0.3
Chemical engineering 0.2 0.8 0.5 0.1 0.3 0.2 0.3 0.1 0.1
Biotechnology 0 0.2 0.2 0.1 0.2 0.3 0 0.4 0.3
Materials science 0 0.5 0.5 0 0.4 0.4 0 0.2 0.1
Medical/pharmaceutical 0.1 0.2 0.3 0.2 0.3 0 0.1 0.2 0.2
Polymer chemistry 0.1 1.2 1.2 0 0 0 0.1 0 0.1
Business admin. 0.2 0.1 0.1 0.3 0.1 0.3 0 0.1 0.1
Law 0.1 0.4 0.5 0.1 0.1 0 0.1 0.2 0.1
Other 0.1 1.1 1.2 0.1 0.2 0 0 0.2 0.2
Less than 50 0.8 0 0.8 0 0.5 0.5 0.4 0.6 1.0
50-99 0.1 2.0 1.9 0.3 0.3 0 0.2 0.2 0.4
100-499 0 0.4 0.5 0.1 0.4 0.5 0.2 1.1 1.3
500-2,499 0.3 0.8 0.5 0 0 0.1 0.1 0.5 0.5
2,500-9,999 0 0.3 0.3 0 0.5 0.4 0.1 0.7 0.6
10-25k 0.1 0.6 0.6 0.1 0.1 0 0.1 0.4 0.5
Analytical services 0.1 2.3 2.1 0.3 0.1 0.5 0.2 0.5 0.7
Consulting 0.1 0 0.1 0.1 0.2 0.1 0 0 0
General management 0.5 0.8 0.3 1.0 0.2 0.9 0.3 0.6 0.3
Marketing/sales 0.1 0.4 0.5 0.2 0 0.1 0 0 0.1
Patents 0.1 0.2 0.3 0.1 0 0 0 0.4 0.4
Production/quality control 0.3 0.5 0.2 0 0.1 0.1 0.3 1.6 1.3
R&D management 1.0 0.3 1.3 0.9 0 0.9 0.3 0.4 0.6
Boston 0.2 0. 0.2 0.3 0.2 0.4 0.2 0.1 0.3
NYC 0.3 0. 0.6 0.7 0.6 0.1 0.2 0.2 0.1
Philadelphia 0 0.6 0.6 0 0.3 0.3 0.1 0.8 0.7
Washington, DC 0.3 0.7 0.4 0.1 0.4 0.5 0.2 0 0.2
Cincinnati 0 0.6 0.6 0 0 0 0 0.2 0.2
(continued)
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Almost 50 percent (7.6/15.6) of the Black/White wage differential was due to differences
in endowments, while 51 percent (7.9/15.6) was attributed to differences in returns on
those endowments (discrimination). There was a similar pattern for Asians. The
negative endowment coefficient (8.4) implies that Asian chemists had greater
endowments (human capital, labor market characteristics, and family characteristics)
than White chemists. Therefore, the entire White/Asian wage gap was explained by
discrimination; White chemists received a greater return on their endowments than
Asians. This is reflected in the regression analysis with pooled data. The raw White/
Asian gap was 0.002, but the regression coefficient for Asian was 0.08, which
suggests that Asian chemist earned eight percent less than White chemists after
controlling for human capital, labor market characteristics. The White/Asian wage gap
increased because the endowments of Asian chemists were greater than the
endowments of White chemists.
The pattern for Hispanic chemists was different. Unlike the Black/White and Asian/
White comparisons, the wage gap between Hispanic and White chemists were largely
due to differences in endowments. Eighty percent of the wage gap was due to
endowments (7.6/9.5); only 20 percent of the Hispanic/White wage differential was due
to returns to endowments discrimination (1.9/9.5). For Black and Asian Chemists,
most of the wage gap was due to difference in returns on endowments (discrimination).
However, for Hispanics, most of the gap was due to differences of endowments. We will
examine this more later
To investigate the relative importance of human capital in explaining the wage gap
between White and minority chemists, we examined the human capital effects of the
wage decompositions. Table IV shows the decomposition effects for human capital.
Most of the White/Black wage gap was explained by differences in human capital.
Eighty-seven percent of the effect of human capital was due to discrimination. Black
chemists received less return on human capital than did White chemists. Most of the
Table III.
White/Black White/Asian White/hispanic
E endowment
effect,
D discrimination
effect, T total
effect
E endowment
effect,
D discrimination
effect, T total
effect
E endowment
effect,
D discrimination
effect, T total effect
E D T E D T E D T
Detroit 0.1 0 0.2 0 0.1 0.1 0.1 0.1 0.2
Minneapolis 0 0.4 0.4 0 0 0 0 0.1 0.1
Kansas City 0 0.5 0.5 0 0.1 0.1 0 0.1 0
New Orleans 0 0.2 0.2 0 0 0 0 0.1 0.1
Houston 0 2.4 2.4 0 0 0 0.2 0.3 0.4
Denver 0 0 0 0 0 0 0 0.1 0.1
LA 0.1 0.7 0.8 0.6 0.1 0.5 0.4 0.8 1.2
San Francisco 0.4 0.5 0.8 0.7 0.3 0.3 0.1 0.2 0.03
Northeast 0 0.1 0.1 0 0.2 0.2 0.1 0.1 0.1
Northwest 0.1 0.3 0.1 0.1 0.1 0.2 0.1 0.3 0.2
Pacific 0 0.2 0.2 0 0.2 0.2 0 0.2 0.2
Southeast 0.1 0.7 0.8 0.1 0 0.1 0.1 0.2 0.1
Constant 14.2 14.2 5.2 5.2 1.0 1.0
Total 7.6 7.9 15.6 8.4 8.7 0.2 7.6 1.9 9.5
Wage
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in STEM
263
White/Asian wage gap was explained by differences in human capital. Similar to
Blacks, Asians also earn lower returns on human capital, but the pattern was different.
The endowment coefficient (1,700) indicates that White chemists had less human
capital than Asian chemists and the discrimination coefficient (3,400) indicates that
Whites received greater return on their human capital. Asian chemists had more
human capital than White chemists, but earned less because they received less return
on their human capital. The White/Asian wage gap was small because of the higher
educational attainment of Asian chemists relative to White chemists.
Hispanics were the only racial group to earn less primarily because of difference in
human capital endowments. Eighty-four percent of the White/Hispanic wage gap was
explained by the endowment of human capital. Moreover, the discrimination coefficient
(23.16) indicates that Hispanic chemists received greater return on human capital than
their White counterparts. It is somewhat puzzling that Hispanics would receive greater
returns on education than their White counterparts. This may reflect affirmative action
policies. Employers may be recruiting Hispanic employees to promote diversity in the
workplace as mentioned earlier, Hispanic chemists were highly represented in
managerial positions. However, the effects for Hispanics should be treated with caution
because the White/Hispanic wage gap was not statistically significant. The raw wage
differential between White and Hispanic chemists was essentially eliminated when
human capital, labor market characteristics, and family characteristics were controlled.
This in itself is puzzling because it implies that Hispanics did not experience the same
level of employer discrimination as Blacks and Asians.
Discussion
The racial wage gap has often been attributed to racial differences in human capital.
Proponents generally argue that racial minorities have less education and experience
than Whites and therefore receive less pay. This research raises serious questions
about this contention. African-American chemists have similar educational levels and
experience to White chemists, but receive significantly less pay. The wage differential
is largely due to discrimination. Blacks receive less return on their human capital
(education and experience) than White chemists; human capital of Black chemists is
valued less than the human capital of White chemists.
The image of Asian Americans as the model minority often obscures the
discrimination they face. Although they have almost reached parity with White
chemists in salary, they earn significantly less than they should given their education.
Similar to African-Americans, their human capital is devalued. The glass-ceiling
contributes to this wage gap; Blacks and Asians are less likely to hold managerial
Table IV.
Relative importance of
human capital in wage
gaps
White/Black White/Asian White/Hispanic
Human capital
a. Endowments 29.03 1,700 84.21
b. Discrimination 199.35 3,400 23.16
Total effect 228.38 1,700 61.05
Other variables
a. Endowments 20.00 1,100 4.21
b. Discrimination 148.39 500 43.16
Total effect 128.39 1,600 38.95
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positions than are White chemists. But this may only explain a small amount of the
variation. Perhaps, a more significant factor is the low value of foreign education to
employers in the USA. Some research suggests that the education of Asians is
devalued when it is received in Asia or Africa rather than in the USA or Europe place
of education was not collected in the ACS census (Zeng and Xie, 2004). This is a
common manifestation of xenophobia.
The complexities of the role of human capital on earnings can be seen with
Hispanics. Hispanics have made relatively steady progress in the last decade in their
participation in the STEM workforce nearly doubling their proportion of the STEM
workforce in a decade. Unlike the other racial groups, most of the difference in wages
between Hispanics and White chemists is due to the lower educational attainment and
experience of Hispanics. Low educational attainment is a problem that has plagued
some Hispanic groups in the USA. It is largely a consequence of language barriers that
many Hispanics face in schools and communities ill-equipped for bilingual education.
Despite having lower educational attainment than Whites, it appears that Hispanic
chemists receive slightly greater return on their human capital than do White chemists.
Although this is surprising, Gyimah-Brempong and Fichtenbaum (1997) found a
similar pattern for Hispanics in their economy-wide study of the wage gap although
they offer no explanation for it. This partly reflects the scarcity of Hispanic chemists,
and the fact that the pool of Hispanic chemists has less experience and lower
educational attainment than the pool of White chemists. If, in an effort to diversify the
workplace, employers want to hire qualified Hispanic chemists at prevailing wages,
then the pool of Hispanics selected will likely have lower educational attainment and
experience than the comparable pool of White chemists.
Some of the White/Hispanic wage gap is also due to the fact that Hispanics hold
managerial positions in chemistry. This partially reflects the added value of the
bilingualism, which Hispanics bring to an increasingly diverse scientific workforce.
Ironically, the lack of bilingualism in the USA prevents many Hispanics from higher
educational attainment, yet Hispanics may be valued for their bilingualism. The
diversity of the US minority classification called Hispanic may even be a more
compelling reason for the observed patterns. Hispanic Americans are a very diverse
group of people, and if available statistics for detailed occupational groups
distinguished among such components of this minority group as Chicanos and other
Latin Americans, Cubans, or other subgroups such as European Hispanics, it is likely
that further distinctions would be evident.
The relatively high salaries of STEM professions will always provide a significant
incentive for racial minorities to seek STEM professions. But equality in the workplace
will define a good work environment. The racial wage gap is an important indicator of
equality in the workplace.
Many policy recommendations in the USA focus on increasing educational
opportunities for racial minorities in STEM professions. These are undoubtedly noble
efforts worthy of support. However, if the racial wage gap is largely due to racial
differences in the return on human capital, then public and private efforts to increase
human capital of potential minority scientists will have a limited impact on the racial
wage gap. Eliminating the differential returns to human capital would drastically
reduce the racial wage gap. Achieving racial pay equity is one important step toward
eliminating racial discrimination and achieving equality in the STEMworkforce.
Wage
discrimination
in STEM
265
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Corresponding author
Philip Broyles can be contacted at: pabroy@ship.edu
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