Social Sciences & Interdisciplinary Studies

African Americans, Latinos, and native Americans are grossly underrepresented in the science, technology, engineering, and mathematics (STEM) sector. While many analysts point to supply-side factors such as group differences in preferences for working in the science and technology sector, this paper seeks to understand compensation as a demand-side issue in the STEM employment equation. Using data from the 2015 National Survey of College Graduates (NSCG), this paper examines the link between race and earnings in the STEM sector. It provides a multivariate assessment of competing arguments about whether being a member of an underrepresented racial group serves to depress earnings (i.e., acts as a racial tax) or to enhance earnings (i.e., acts as a racial premium). The results show that when human capital characteristics and other productivity factors are taken into account, underrepresented racial minorities in the STEM sector earn significantly less than do Whites. The racial tax is more than $10,000 for African Americans, Latinos, and for Native Americans. The implications of the findings for equity and the nation’s ability to draw on the talents and skills of all Americans—including racial minorities that are under- represented in STEM—are discussed.