White males earn more than all other ethnic groups, right? Wrong. According to the latest government data, Asian men earn, on average, 30% more than white men. Asian women earn 20% more than white women. To complete the picture, those four groups earn more, on average, than do black men and women, who, in turn, earn more than Hispanic men and women.
What are we to make of the economic success of Asian Americans?
First, note that government data include quite diverse populations in those four ethnic categories. It’s common to lump all white people together, but white Appalachian coal miners have little in common with white Manhattan investment bankers. The families of some Hispanics have been in the United States for generations, while others are newly arrived from Central America. Some black families are recent immigrants from Africa or the Caribbean; others are the descendants of slaves brought to the American colonies in the 17th and 18th centuries.
The Asian category in government data includes Chinese Americans whose families have lived in the U.S. since the 19th century as well as recent arrivals from India, Vietnam, Korea, and elsewhere.
Attempts to discuss income differences among such broad categories inevitably involve generalizations. But generalizing, rather than trying to explain every last case, is how a social science such as economics works. Economists believe the market value of the resources you own determines how much you earn. You own your own labor. If you can sell your labor to the Philadelphia Phillies to play center field, you’ll earn a lot more than if you sell your labor to Lehigh University to teach economics courses. If you own a stock mutual fund, you own a tiny slice of each company in the fund, and you’ll earn something from ownership of that capital. Own an apartment, and you’ll earn rent. And so on.
The earnings I referred to at the beginning include only wages and salaries, so the question becomes: Why is the labor of Asian Americans more valuable than the labor of white, black, and Hispanic people? Of course, some people have high labor earnings because they possess a rare talent. How many people can hit a baseball like the Los Angeles Angels’ Mike Trout? For the rest of us, what counts is how productive we are, which depends on our human capital: the accumulated knowledge and skills we acquire from education and training or from our life experiences.
Asian Americans are clearly at the front of the pack with respect to education. In 2019, 58% of Asian Americans had a bachelor’s degree or better, as compared to 36% of white people, 26% of black people, and 19% of Hispanic people.
Asian American teenagers do the things that help them succeed in school and avoid the things that don’t. The most recent data from the Department of Education show that Asian high school students spend 50% more time doing homework than do white, black, or Hispanic children. Asian teenagers are much less likely to consume alcohol than are white or Hispanic teenagers and, to a lesser extent, black teenagers. Asians make up about 6% of the juvenile population of the U.S. but account for only 1% of juvenile arrests. In 2017, the most recent year with available data, only about 3% of Asian Americans age 15 to 19 gave birth, as opposed to 29% of Hispanic people, 28% of black people, and 13% of white people.
Asian immigrants have succeeded in taking advantage of the educational and entrepreneurial opportunities the U.S. offers to raise their incomes. A recent, pathbreaking study on income mobility by Harvard economist Raj Chetty and colleagues noted that “Asian immigrants have much higher levels of upward mobility than all other groups.” They concluded that “Asians appear likely to remain at income levels comparable to or above white Americans in the long run.”
A fair inference is that the economic success of Asian Americans results from their educational achievements. Unfortunately, these achievements have triggered a backlash. A lawsuit filed against Harvard alleges that the university keeps the fraction of Asian students admitted to about 20% by giving Asian applicants low scores on subjective criteria such as personality traits.
Academic high schools in San Francisco, New York, and Boston with Asian student majorities are eliminating test scores as the main criterion for admission. Asian American parents have brought lawsuits alleging that these changes are aimed at reducing the number of their children admitted.
President Joe Biden said he wants to move from equality of opportunity to “equity” or equal outcomes. Asian Americans may well ponder what equity in school admissions and elsewhere will mean for their prospects.
Anthony O’Brien is an emeritus professor of economics at Lehigh University.
