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The Truth Behind Asian Americans Being The “Model Minority”

  • Sunny Pu
  • Jun 14
  • 4 min read

Updated: Jun 22

The median annual household income for different Asian American ethnic groups in 2019.


Asian Americans are often perceived through the lens of the “model minority” stereotype, as they are depicted as universally successful, highly educated, and financially secure individuals. This view not only oversimplifies a deeply diverse population of more than 24 million in America, but it also leads others and even people in the Asian American community to ignore its complicated issues, particularly financially. The Asian American community has many underlying financial issues, and it's time we explore them. 


A Diverse Economic Picture


Because Asian Americans are listed as one of the fastest-growing racial or ethnic sectors in America, it has exposed the widening gap in income inequality within the community. According to Pew Research Center, Asian Americans have the widest economic gap out of any other racial or ethnic group in America. While some subgroups, such as Indian and Chinese Americans, make the highest median income compared to other ethnic groups, other Asian ethnicities such as Hmong, Cambodian, Burmese, and Laotian Americans are often ignored in discourse surrounding economic issues in Asian American communities. Despite experiencing poverty at rates sometimes even twice as high than the national average, these other ethnicities are simply just seen as Asian and thus assumed to be well off.


For example, the median household income for Indian Americans in 2022 was over $135,000, thus ranking them as the wealthiest ethnic subgroup in America, whereas for Burmese Americans it was under $50,000. This means that the households of Burmese Americans, on average, earn a little bit more than a third of the average Indian American household. Therefore, the Asian American community needs a bit more discussion regarding the financial issues within their community, and rather than simply generalizing, we must first acknowledge the diversity and different struggles each Asian sub-group faces. 


Language Barriers to Financial Access


A key issue that Asian Americans face, particularly first-generation immigrants, is accessing financial services and resources. Because many first-generation immigrants lack the English proficiency to understand loan terms or other banking services, 16% of Asian households were either unbanked or underbanked, meaning they lack access or don’t use mainstream financial services. As a result, this forces many of them to rely on unreliable financial networks instead of traditional banks. These alternative financial services could range from Prepaid Debit cards—cards that can be loaded with money but don’t require a bank account—or Payday loans, which often come with high fees and interest rates. Furthermore, these AFS (alternative financial services) don’t build any form of credit for an individual, which could prevent access to loans, renting/buying a house, and job opportunities. 


An unbanked or underbanked Asian American individual could cause generational issues. Elon University found that having good credit leads to significantly greater chances of avoiding generational poverty, as good credit enables individuals to access financial resources like loans and credit with favorable terms and interest rates. This means when buying homes or cars, the interest rate is much better, leading to lower costs and more financial freedom. 


Student Debt Burden


Furthermore, the model minority myth often overlooks the toll student debts take on the Asian American community. While Asian Americans historically have had higher rates of college attendance, many families stretch themselves financially to afford tuition, especially if they don’t qualify for federal aid due to immigration status. 


According to the National Center for Education Statistics, Asian American students borrowed on average of $13,376 for associate’s degrees and $49,100 for bachelor’s degrees. Many of these Asian American students are first-generation and low-income, meaning that their burdens are made significantly worse, which could delay homeownership, entrepreneurship, and retirement planning. 


COVID-19 and Financial Setbacks


During 2020, COVID-19 exposed the many financial vulnerabilities of the Asian American community, as they were disproportionately impacted by the COVID-19 Pandemic. Asian American workers, specifically in industries like food, hospitality, and retail, were significantly impacted by the Pandemic. They experienced a dramatic rise in unemployment rates during the pandemic, increasing from 2.8% in 2019 to 15% in May 2020. 


Not only was it devastating for Asian American workers, but also the Asian American small business community. Over half of Asian-American small businesses faced a loss of revenue of over 75% in the initial months of the pandemic-related economic shutdown. This was due to many reasons, such as many residents being unable to access the services that these Asian American small businesses provided, or unwilling to due to sinophobic reasons. 


Furthermore, many of these Asian American small businesses faced discrimination and attacks due to the pandemic, as they were unrightly blamed for ‘spreading’ COVID-19 - these attacks were mostly directed towards Chinese Americans.


So, next time when someone tells you that all Asian Americans are thriving financially, just smile, pull out a graph (or this article), and say, “It’s a little more complicated than that.” From massive income gaps to student loan struggles, language barriers, and the economic aftershocks of COVID-19, the financial realities of Asian Americans are anything but homogenous.

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