Wednesday, December 21, 2016

Gap between rich and poor Asian Americans widening

By Louis Chan

INCOME INEQUALITY became a volatile issue during the 2016 presidential election, propelling the candidacies of both Bernie Sanders and eventual President-elect Donald Trump.

A report by the Center for American Progress found that the wealth gap among rich and poor Asian/Americans exceeds that of Whites. This may in part explain why early in the primary season, a Gallup Poll found support for Sanders higher than any other presidential candidate.

Researchers with CAP found that Asian/Americans in the 90th percentile of income had 168 times the wealth than those in the bottom 20 percent. By contrast, the ratio among Whites is 121.3

“An unequal wealth distribution means that many people face economic uncertainties on a day-to-day basis because they cannot cover an emergency such as a layoff,” said Christian Weller, a professor of public policy at the University of Massachusetts Boston, and Jeffrey Thompson, principal economist at the Board of Governors of the Federal Reserve System, said in their report. “It also means that many people cannot, for example, send their kids to the college of their choice, start and grow a business, or move to a new job and/or career.”

The gap between those Asian/Americans at the top of the economic ladder and those at the bottom has widened. The researchers found middle-class Asian/Americans had 6.6 times the wealth than those in the 20th percentile between 1992 and 1998. That increased to 11.8 between 2010 and 2013. During those same years income of wealthy Asian/Americans grew by 120 percent versus 36.4 percent for the median and 10.1 percent at the 20th percentile.

Although Asian/Americans have a reputation for putting high value in home ownership, they are less likely to own a home than Whites -- 73.9 versus 59.6 percent. However, the concentration of Asian/Americans on the East and West coasts where housing prices are higher has an impact.

“Asian/Americans tend to spend a disproportionate amount of their income on housing. The concomitant heavy mortgage indebtedness leaves many Asian Americans more vulnerable to potential house price declines than is the case for whites,” says the report.

Mortgage debt is much higher for Asian/Americans, which especially leaves those at the bottom rungs of the economic ladder more vulnerable to the highs and lows of the housing market. Student debt and car loan debt are also rising faster among Asian Americans than Whites.

Other highlights of the CAP report include:

  • Asian American average and median wealth has become comparable to white wealth.
  • Asian Americans at the bottom of the income distribution have less wealth than whites at the bottom of the income distribution.
  • Wealthy Asian Americans have more wealth than wealthy whites.
  • Wealth inequality among Asian Americans is greater than among whites.
  • Wealth inequality among Asian Americans has widened over time.
  • Asian Americans have fewer retirement benefits than whites.
  • Asian Americans have lower homeownership rates than whites.
  • Asian Americans owe more debt than whites.

“The analysis of the data available for this report suggest that a large share of Asian/Americans are in need of effective wealth-building policies,” said Weller, a co-author of the report. 

“That could come, for example, in the shape of more efficient policy interventions to boost savings, or more access to retirement savings for workers whose employers do not offer retirement benefits. Whatever it is, we will continue to need more systematic and targeted data collection on Asian/Americans, Pacific Islanders, and all the communities represented therein.” (Views From the Edge contributed to this report.)