The Asian American ‘Advantage’ that is Actually an Illusion

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Asian Americans seem to offer proof that minorities can prosper — and even leapfrog whites — if they work hard and jump through the right hoops. {snip}

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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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. This chart shows median household incomes before and after adjusting for local costs of living.

What stands out is that the median Asian American income declines by more than 9 percent. The entire gap between Asian American and white households is erased by the cost-of-living calculation. So while Asian American households seem richer on paper, many of them don’t really feel richer because they live in places where the rent is high and the groceries are more expensive.

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Even if there isn’t anything we can immediately do about the racial disparities in purchasing power, it’s important to recognize how this complicates the stereotype of Asian American success. There’s a long history of politicians wielding statistics about Asians against other minorities. The fact that Asian Americans outearn white Americans on average has often been used to deny claims that whites enjoy special advantages in America.

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. If Asian Americans seem prosperous — and many aren’t, by the way — that’s only because a much greater fraction of Asian Americans have advanced degrees.

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