NORTHWEST ASIAN WEEKLY
A new report from the think tank Center for American Progress (CAP) suggests that for Asian Americans, wealth inequality is more pronounced than whites — and the report highlights the problem with lumping Asian Americans together.
Census figures show that Indian American households, for example, earn nearly twice the national average, while Bangladeshi and Cambodian Americans have lower-than-average household incomes.
Asian Americans earn more than whites on average, but they also have higher rates of poverty.
Wealth inequality has widened
There are many ways to measure inequality — in this case, economists Christian Weller and Jeffrey Thompson compared different wealth thresholds.
According to the data, white families in the top 10 percent each had more than $1.26 million in 2010-2013, while white families in the bottom 20 percent each had less than $10,468. In other words, a typical rich white family was about 120 times wealthier than a typical poor white family.
Among Asian Americans, the cutoff to make it into the top 10 percent was actually higher — about $1.44 million. And the families at the bottom end seemed to be worse off — the poorest 20 percent of families were each worth less than $9,319. So a rich Asian household was about 168 times richer than a poor Asian household.
“The problem is that ‘Asian American’ doesn’t hold together as a category,” said Philip Cohen, a sociology professor at the University of Maryland. “The group is too diverse. It doesn’t really make sense to compare recent Chinese, Korean, or Pakistani immigrants who are working in tech and engineering jobs to people who came as refugees in the 1980s and their working-class descendants.”
While Asian American homeownership rate (about 60 percent) is lower than the white homeownership rate (about 74 percent), Asian Americans tend to live in high-priced housing markets on the East Coast and West Coast.
In the early 2000s, the Asian Americans who were fortunate enough to own homes had their net worth skyrocket, increasing wealth inequality between Asian American homeowners and Asian American renters, as well as helping Asian Americans catch up to white Americans.
Being deeper in mortgage debt can increase the chance of foreclosure. It is therefore not surprising that some Asian American groups, specifically Indian, Korean, and Vietnamese Americans in Orlando and Phoenix — areas where the financial crisis hit especially hard — had foreclosure rates in 2010 that were much higher than those of non-Latino whites.
Student and car loans
Although far smaller than mortgage debt, the share of installment loans — mainly student debt and car loans — among Asian Americans deserves attention. Such loans tend to be more expensive than mortgages, disproportionately burdening those with such debt.
The median amounts that Asian Americans owe on their installment loans were comparable with those that whites owed — $15,258 for Asian Americans compared to $15,021 for whites — in 2010–2013.
And median installment debt levels are also roughly similar for low-income Asian Americans and whites. Although the debt owed on installment loans is largely comparable among white and Asian American populations, the data shows that installment loans have risen substantially faster among Asian Americans than among whites.
The chance of having installment debt was 37.7 percent among Asian Americans in the bottom half of the income distribution in 2010–2013 — up from 34.3 percent in 1992–1998. Put differently, lower-income Asian Americans are getting deeper into costly debt.
In 2010–2013, 58.1 percent of Asian Americans had a retirement savings account with a median balance of $67,025.
Asian American households in the lower half of the income distribution are less likely to be homeowners, to have a pension, and to have money in retirement savings accounts.
Moreover, Asian American households are heavily concentrated in urban areas with larger renting populations, a factor which also likely contributes to their lower homeownership rates.
To see the full report, go to americanprogress.org/issues/race/reports/2016/12/20/295359/wealth-inequality-among-asian-americans-greater-than-among-whites.
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