Education and location confound attempts to compare Asian economic status

Jeff Guo at the Post has written recently questioning one “model minority” story — that the gap in income and wealth between Asian Americans and whites appears to be closing. This apparent progress would seem to contradict the power of centuries of white privilege — but only if one neglects several confounding factors.

The largest confounding factor that Guo points out is education vs. income: “But Asian Americans have to work harder just to keep up with whites. If you compare whites and Asian Americans with the same amount of schooling, Asian Americans actually make less money.” Asian Americans have, on average, more education than other Americans, and the correlation between education and income turns out to be stronger than that between race and income.

Another confounding factor is location (and urbanization) vs. wealth. For historical reasons, Asian Americans are much more likely than other Americans to live in “gateway cities,” i.e., expensive coastal metro areas. This means that Asian American homeowners are on the prosperous side of the wide-and-growing gap between gateway-city property values and property values in the rest of America. But since not all Asian American households are homeowners (especially among more recent arrivals, for whom forbiddingly high housing prices have inhibited wealth building), these benign-looking averages hide tremendous wealth inequality among Asian Americans.


Income by ethnicity and origin in metropolitan Washington; data from the Urban Institute


Wealth by ethnicity and origin in metropolitan Washington; data from the Urban Institute.

Location matters even on a sub-national level. The Urban Institute’s recent report on the racial wealth gap in metro DC, “The Color of Wealth in the Nation’s Capital,” finds that the homeowning Latino and Asian households surveyed have houses that are worth more than the White and Black households surveyed, but lower total net worth. (Note that due to small sample sizes, many correlations lack statistical significance.) The higher housing values may be related to residential segregation; much of the region’s Latino and Asian American households live in the favored western half of the region, where property values are substantially higher. This effect may even be a factor nationwide, since in most metro areas Asian Americans have settled primarily in favored quarters — indeed, Asian Americans are more likely to live in areas with high property values and high-quality local public schools.