The voices of Urban Institute's researchers and staff
May 10, 2018

What’s behind the wealth gap in Asian American and Pacific Islander communities?

May 10, 2018

The highly anticipated trailer for Crazy Rich Asians, a film based on Kevin Kwan’s bestselling novel, came out in late April, just a week before the start of Asian Pacific American Heritage Month. The story follows a Chinese American professor, Rachel Chu, and her experiences meeting her partner’s wealthy family in Singapore for the first time.

Even though Crazy Rich Asians revolves around the lives of the Chinese-Singaporean elite, and not Asian Americans or Pacific Islanders (AAPIs), it stirred up conversations on social media about intraracial disparities in financial well-being among AAPIs. Research shows the size and nuances of that wealth gap, as well as ways to help AAPI communities build wealth.

Income represents how families might cover current expenses, but wealth is a more complete measure of financial security.

The words “crazy rich” suggest high incomes, wealth, or both. But income and wealth measure different things.

Income is the flow of money into a family. According to 2016 American Community Survey estimates, the median annual income of households headed by Native Hawaiians and Pacific Islanders was $54,900, compared with those headed by Asian Americans at $76,600 and $55,300 among all US households.

median household income, by race

Wealth represents a family’s net assets. It is a shield against financial emergencies and facilitates upward economic mobility.

Urban Institute research shows that although average wealth has increased over the past 50 years in the United States, it has not grown equally for all groups. Median white family wealth in 2016 was almost 10 times greater than median black family wealth and 8 times greater than median Hispanic family wealth. But where do AAPIs stand on this spectrum?

A report by the Center for American Progress found that, in 2013, the wealthiest (top 10 percent) AAPIs held 168 times the wealth of the least wealthy AAPIs (bottom 20 percent)—a gap larger than the one among whites in the same percentiles and that has grown over time. The report illustrates the overall variation in financial security among AAPIs, but the data behind the report do not allow for disaggregation by subpopulation, which is critical to understanding AAPI communities.

A 2016 study using the National Asset Scorecard for Communities of Color survey explored the intraracial wealth gaps among select Asian American communities in Los Angeles. The authors found that Chinese, Indian, and Japanese households had higher median net worth than white households. On the other hand, Filipino, Korean, and Vietnamese respondents had lower median net worth than white households.

median net worth among asian americans in los angeles

Different sociopolitical histories and contemporary policies, as well as smaller sample sizes, complicate the narrative of and research on AAPI intraracial wealth disparities.

The catchall category “AAPI” is popular among both researchers and race equity advocates, but it can conflate the identities and issues of several communities. Pacific Islanders’ distinct histories with dispossession and settler colonialism factor into the amount or lack of wealth families can pass on to subsequent generations.

This July will mark 120 years since Hawaii was formally annexed by the United States, a reminder of the ongoing struggle for Native Hawaiian sovereignty. Native Hawaiians suffered a sharp decline in their population upon Western contact in the late 18th century. By some estimates, their numbers had fallen 84 percent by 1840, only 62 years after James Cook’s arrival.

Native Hawaiians also experienced a significant loss of resources after a Western model of private landowning (which “disproportionately benefited white settlers and multinational corporations”) replaced the traditional Hawaiian model of communal land stewardship in 1848.

In 1921, the Hawaiian Homes Commission Act was established to ostensibly restore approximately 200,000 acres of stolen ancestral land back to Native Hawaiians. But these plots of land are small, segregated, and sometimes disconnected from electricity, running water, or jobs. They also often have long waiting lists.

Today, Hawaii has one the highest costs of living in the United States, and Native Hawaiians have the lowest median family income of all ethnic groups in the state.

Researchers, practitioners, and policymakers must account for AAPI communities’ unique historical contexts, local asset markets, and structural barriers to those markets.

Recent research contends that conventional ideas to reduce the racial wealth gap, such as increasing educational attainment and changing individuals’ financial habits, are insufficient to close the divide. These so-called solutions focus on removing perceived deficiencies in certain groups instead of addressing social power and access to opportunity. 

A recent case study on Hawaii Community Asset’s Kahua Waiwai financial capability program highlights how culturally relevant pedagogy can empower communities to build wealth in a way that affirms their values and identities and moves toward “equitable, shared power and wealth structures.”

The program is multigenerational—a common characteristic for AAPI households—and encourages intergenerational learning. It recenters Native knowledge and perspective on resource sharing and stewardship and does not focus solely on knowledge of western bank and credit systems.

The study offers the following recommendations for researchers interested in wealth-building practices that honor the histories and futures of underserved communities:

  • Measure indicators of individual and collective empowerment (not just asset accumulation)
  • Use disaggregated data by racial and ethnic groups to perform nuanced analyses
  • Apply a local, place-based lens to policies, processes, and programming
  • Conduct case studies that illustrate how innovative programs work in underrepresented communities

This Asian Pacific American Heritage Month, researchers should reflect on not just how to elevate the issues affecting distinct AAPI communities, but also the historical legacies and present-day structures that perpetuate inter- and intragroup disparities.

Photo by JGI/Tom Gril/Getty Images.
 

SHARE THIS PAGE

As an organization, the Urban Institute does not take positions on issues. Experts are independent and empowered to share their evidence-based views and recommendations shaped by research.