News Reporter: Wonkbook: The Asian American 'advantage' that is actually an illusion

Thursday 29 December 2016

Wonkbook: The Asian American 'advantage' that is actually an illusion

The latest economic and domestic policy from Wonkblog

Pedestrians brave the rain in the Chinatown neighborhood of Washington during September 2016. (Robert Miller/The Washington Post)

By Jeff Guo

For decades, the data on median household incomes have shown the same, persistent racial disparities: Asians beating out whites at the top, while Hispanics and blacks hover near the bottom.

Asian Americans seem to offer proof that minorities can prosper — and even leapfrog whites — if they work hard and jump through the right hoops. For that reason, Asian Americans have often been invoked as a way to excuse the income gaps between whites and blacks or whites and Hispanics.

But why do typical Asian American households outearn typical white households? Like many statistics showing an Asian American advantage, this fact proves illusory upon closer examination. A common explanation is that Asian Americans are better educated. While that's true, there's another factor that can completely account for the income gap between Asians and whites.

It has to do with where people reside.

Prices and rents vary wildly in different parts of the country. The cost of living near Jonesboro, Ark., for instance, is about 18 percent below the national average, while the cost of living near San Francisco is about 21 percent above the national average.

White and African Americans are more likely to live in cheaper locales, while Asian and Hispanic Americans are more likely to live in pricier ones. The contrast between whites and Asians is particularly stark. Nearly 1 in 5 white Americans reside in rural counties, where a dollar goes a lot further. But 97 percent of Asian Americans — live in or near a major city, where the cost of living is higher.

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These histograms provide the full account of how different groups are distributed among the nation's 381 major metro areas, which contain about 85 percent of Americans overall.

From left to right, the bars show the fraction of people who live in low-cost, average, and high-cost parts of the country. The data on price levels come from the Bureau of Economic Analysis, which calculates local indexes based on surveys of rents and household purchases.

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White Americans tend to live near less expensive metro areas, such as St. Louis or Cincinnati for instance — both cities where prices are 10 percent below the national average. About one-third of white Americans live in a metro area with above-average costs; one-half live in metro areas with below-average costs; and the rest live in rural areas, where prices are lower still.

[Why Indian American women make more money than white guys]

Asian Americans, largely for historical reasons, cluster near expensive coastal cities. More than 25 percent of Asian Americans live in one of the four metro areas with the highest costs of living — Honolulu, San Jose, New York, and San Francisco. Overall, about 73 percent live in metro areas with above-average costs; 24 percent live in metro areas with below-average costs; and 3 percent live in rural areas.

When we factor in these geographic patterns, the racial income gaps start to look a little different.

Read the rest on Wonkblog.

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