Welcome to the Profit of Education website. Continuing the conversation begun in the book Profit of Education, we discuss the latest economic evidence on education reform.

Why is minority representation lagging among STEM faculty? It could be the money.

My most recent post on the BROWN CENTER CHALKBOARD at the Brookings Institution.

Recent events in the national press have prompted new discussions of race and privilege in the institutions around us. One of these places is in universities, where minority representation among faculty lags far behind student minority representation. Today, I examine the underrepresentation of minorities among STEM faculty, with an eye toward a partial explanation based on straightforward economics: It’s the money. I’m sure money is not the only issue in play, but money differences look to be large enough to matter.

The first thing an economist looks for in this kind of situation is earnings differences. I’ll concentrate on black and Hispanic faculty while leaving gender for another day. The simple point: When compared to nonminority faculty, STEM-trained minority Ph.D.s have a greater financial incentive to seek employment in industry rather than in the academy than do non-STEM minority faculty.First, have you read Cory Koedel’s Chalkboard piece, “Examining faculty diversity at America’s top public universities”? If not, you should. Koedel carefully documents that, in top public universities, “the underrepresentation of disadvantaged minority and female professors among faculty overall is driven predominantly by a lack of diversity in STEM fields.”

I’ve taken data from the American Community Survey from 2009 through 2015 and have pulled out the observations for the 130,000 Ph.D. recipients who are observed to be working, and who are over 25 and under 66 years old. Ph.D. recipients are defined as having a STEM background if their bachelor’s degree was in STEM—that being what the data reports.[1] Finally, I’ve defined “minority” as black or Hispanic. That’s not quite right, but should be pretty close in the context of looking at underrepresented minorities in higher education.

Tracking all three pieces of the puzzle takes a bit of work, as we care about whether someone with a Ph.D. is working in higher education or not; whether they are working in a STEM field or not; and whether they are black or Hispanic, or not. Underlying the “income penalty” calculation is a regression, controlling for age, gender, and state, as well as the variables of interest. But rather than leap to a bottom-line answer, I’ll deconstruct the regression used to calculate the relative financial disincentive for minority Ph.D. recipients in STEM areas to work in universities. (For those who can’t wait, the answer is minority Ph.D. recipients would be penalized about $13,000 a year for taking a career in the academy.[2])

We want to compare how different factors affect income for minority Ph.D. recipients versus everyone else. I’ll begin with a “base” which gives an average salary (rounded to the thousands) for a male, 30 year-old Ph.D. recipient working in California with neither a STEM background nor working in higher education. (Note in passing that California is a high-income state.) You will be unsurprised to learn that minority Ph.D. recipients earn less. I was surprised at how large the difference is; after all these are all people with doctorates.

  Black or Hispanic Neither Black nor Hispanic Difference
“Base” income $91,000 $120,000 -$29,000

How does this change for Ph.D. recipients with STEM backgrounds? As expected, STEM pays noticeably better than non-STEM. The difference is large, and the difference is somewhat larger for black and Hispanic Ph.D. recipients than it is for Ph.D. recipients from other groups—although only a fraction of the “base” minority/nonminority gap is offset.

  Black or Hispanic Neither Black nor Hispanic Difference
Additional effect of STEM $41,000 $36,000 $5,000

What’s the effect of working in higher education rather than industry, ignoring whether one is in a STEM area or not? Higher education pays worse, just as you expected. However, the income differential between higher education and industry is less if you are black or Hispanic, closing a good part of the “base” pay gap.

  Black or Hispanic Neither Black nor Hispanic Difference
Additional effect of being in higher ed -$7,000 -$28,000 $21,000

Koedel’s research, which prompted this Chalkboard post, showed that there is greater underrepresentation of minority faculty in STEM fields than in non-STEM fields. Going into higher education cuts your salary whether you are a minority Ph.D. recipient or not. Being in STEM raises your income either way. To see why the difference in the financial disincentive to go into academia between STEM and non-STEM majors is greater for minorities than nonminorities, look at this final table, which combines STEM majors with a career in higher education separately by minority status.

  Black or Hispanic Neither Black nor Hispanic Difference
Additional effect of being in higher ed, STEM -$48,000 -$56,000 $8,000
Additional effect of being in higher ed, non-STEM -$7,000 -$28,000 $21,000
Relative higher ed advantage, STEM vs non-STEM -$41,000 -$28,000 -$13,000

That -$13,000 in the bottom right corner—that’s the difference in the STEM income penalty for a minority Ph.D. recipient to move in to the university relative to a nonminority Ph.D. recipient. (The $13,000 estimate is significant at the 1-percent level, for those—like me—who are into that sort of thing.) Let me be clear that this is not suggesting that universities are discriminating against minority STEM Ph.D. recipients. Rather, university pay penalizes everyone, but penalizes minority non-STEM Ph.D. recipients less. Basically, universities come closer to matching outside pay in non-STEM areas than it does in STEM areas and does so especially for minority Ph.D. recipients.

While being in a university costs everyone money, there are compensating nonpecuniary differentials. (That’s econ-speak for being around students is fun.) But for black and Hispanic Ph.D. recipients in STEM fields, the dollar cost is relatively great—and the number of black and Hispanic STEM faculty (as Koedel showed us) is relatively low.

Are pecuniary considerations the only thing holding down the number of minority college faculty in STEM?[3] Almost certainly not. But is $13,000 enough to be an important piece of the explanation? Almost certainly.

UCSB undergraduate and Gretler Fellow Isabel Steffens provided research assistance for this post. Data is from IPUMS-USA, University of Minnesota


Footnotes

[1] We only know whether each Ph.D. recipient did a STEM major as an undergraduate, but that should be a pretty good indicator of whether they did a STEM doctorate as relatively few students make massive switches in field. (One can argue about what should count as a STEM field. I’ve included majors in environment and natural resources, computer science, engineering, biology and life sciences, math and statistics, physical sciences, and nuclear, industrial radiology and biological technologies.) We also know whether a given Ph.D. recipient is working in higher education, a definition which includes both faculty and nonfaculty positions.

[2] I am using a measure of income rather than salaries alone, as STEM workers in industry may receive substantial compensation in the form of stock rather than directly in the form of a paycheck. Using salary data alone gives slightly smaller results, 5.2 percent of compensation rather than 8.7 percent, and the results show a less tight statistical estimate.

[3] None of this tells us exactly why there’s a financial difference. One possibility is that a STEM Ph.D. recipient’s career is such a tough haul for minorities that the group who perseveres is different in many ways from minorities Ph.D. recipients in non-STEM fields. This is something we just don’t have quantitative evidence about.

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