Asian American Households Had More College Grads, Higher Incomes in 2022

This is the first post in a two-part series on Asian Americans’ income and wealth based on new data from the Federal Reserve’s Survey of Consumer Finances.

Asian Americans are one of the fastest-growing populations among racial and ethnic groups in the U.S. As such, it’s important to understand how Asian Americans interact with the economy and their financial outcomes: What is their purchasing power, and what influences it? Using data from the Federal Reserve’s 2022 Survey of Consumer Finances (SCF), we found that the typical, or median, Asian householdThroughout this post, we will refer to this household group as “Asian.” The 2022 survey wave of the SCF incorporated an oversample of minority families. This additional sample size facilitated the breakout of responses for those survey respondents (and their spouse or partner, where applicable) who identify as “Asian.” The SCF does not count Native Hawaiians or Pacific Islanders among the Asian group; rather, those respondents are included in a catch-all “Other” racial group. In this post, racial groups are non-Hispanic and single (not multi) race. While “Hispanic” or “Latino” is an ethnicity and not typically treated as a race, a legacy variable within the SCF allows respondents to identify “Hispanic/Latino” as their race. In addition, the SCF has a question on Hispanic or Latino ethnicity. Thus, the Hispanic group in our post includes all respondents who selected Hispanic or Latino on the race question or the separate ethnicity question. had about $120,000 in income. This was roughly 50% more than the typical white household.

The Asian group is made up of diverse subgroups (the five largest are Chinese, except Taiwanese; Asian Indian; Filipino; Vietnamese; and Korean), each with unique economic outcomes. For example, Pew researchers found that Burmese American adults had lower educational attainment and income levels than many other Asian subgroups as of 2019, while Indian Americans ranked at the top of the distribution. Despite considerable variability within the Asian group, the majority of Asian subgroups had higher educational attainment and income levels than the general U.S. population.

What is influencing the relatively strong incomes among Asian households? In our analysis of the 2022 SCF data, we found educational attainment to be an important factor.Given we only see a snapshot of households’ financial lives (and we don’t follow them over time), we are restricted to looking at the correlation (rather than causation) between income and factors such as education. Note that the SCF has limited information on ancestry or ethnic origin, so we cannot meaningfully disaggregate our results further.

Educational Attainment Sets Asian Households Apart

The level of educational attainment among Asian households in the 2022 SCF was significant: 72% of households included someone with at least a four-year college degree.We are using the level of educational attainment reported by survey respondent. Survey data are limited and do not include detailed questions on the type of college education or attitudes toward investing in higher education. This was well above the 48%, 34% and 24% attainment rates for white, Black and Hispanic households, respectively. Importantly, the median or “typical” Asian household included a college graduate, whereas the other groups’ median households did not. This means that median statistics related to all Asian households pertain to a college-educated household.

Looking more closely at the data, we examined the college degree attainment for two groups: those households where the survey respondent reported having at least one parent with a college degree, and those where the respondent reported having no parent with a degree. The result was surprising: There was only a slight connection among Asian households to the educational attainment of the parents. (See the figure below.) This is different from what we have seen for other racial and ethnic groups. As shown below, Black and Hispanic households were 2.5 and 3 times more likely, respectively, to have a college graduate if at least one parent had a four-year college degree. In contrast, the increase for Asian households was only 13% more likely and statistically insignificant—that is, we can’t say with certainty that parental education has an effect for Asian households.

Share of College-Educated Households among Households with Different Levels of Parental Education

SOURCES: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

NOTES: Bands indicate 90% confidence intervals. College-educated households are those with a survey respondent who has at least a four-year college degree. A household’s level of parental education is based on the educational attainment of the survey respondent’s parents.

Asian Group’s Higher Incomes Largely Related to College Degrees, Dual Earners

Asian households’ median income of about $120,000 per the 2022 SCF was significantly higher than that of the other racial and ethnic groups. Because the majority of Asian households were college graduates, this suggests that the overall group’s higher financial outcomes were influenced by education. Distilling the data further in the next figure shows that a college degree can be a powerful credential and facilitate significantly higher incomes.Occupation growth in the U.S. has been more pronounced in high-skilled (and higher-paying) occupations over the past few decades. (See page 191, Figure 3, of a 2006 article by David Autor and others.) A college degree is often a requirement for such occupations. The typical college graduate household earned more than their nongraduate peers, regardless of race.

Median Income for Households by College Degree Status

SOURCES: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

NOTES: Bands indicate 90% confidence intervals. College-educated households are those with a survey respondent who has at least a four-year college degree.

Comparing households with similar credentials reveals that Asian and white college graduates earned significantly more than their Black or Hispanic peers. In contrast, among households without a four-year college graduate, Asian households’ median income wasn’t statistically different from that of their peers, again pointing to the importance of educational attainment. This underscores the fact that while Asian households overall have typically strong financial and educational outcomes, this isn’t the story for all members of this group.

We also found that Asian households were the most likely to have dual earners, which may contribute to the higher incomes of these college graduate households. In fact, when controlling for dual income and other variables,We use a statistical technique called regression analysis to disentangle the variables related to household income. This method allows for a better understanding of how a single factor (e.g., education) impacts household income while holding other factors (e.g., race or ethnicity, age, immigration experience) constant. In this particular model, the independent variables were race and ethnicity, age, education, a proxy for immigration, having dual earners in the household, and having children. it became evident that educational attainment and dual earners were strongly related to household income. Controlling for these variables eliminated the advantage Asian households had over white households.These regression results are available from the authors upon request. This is consistent with our finding that the educational attainment of this group is an important driver of their higher incomes.

Despite a Greater Share Going to College, Asian Households Have Less Student Debt

Student loans are often a draw on the finances of those pursuing a college education. Those that borrow for higher education plan for their investment to pay off in the long run. In the short term, individuals are often required to set aside income to make payments on loans.

How prevalent is student debt among households with college graduates within these four racial and ethnic groups? The next figure shows that student loans are a common tool to help pay for a college education. It also shows that in 2022, the share of college-educated households managing student debt was lowest among the Asian group.

It’s unclear from these data whether the lower prevalence of student loans among Asians is influenced by greater spent savings (by either the graduate or contributing family members), greater financial aid (scholarships, grants, etc.), a smaller need for loans due to attending less expensive institutions, or a combination. Regardless, Asian households are attaining college degrees at higher rates than their peers and generally have less of a headwind to their finances with regard to paying down student loans.

The Share of College-Educated Households That Hold Student Debt

SOURCES: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.

NOTES: Bands indicate 90% confidence intervals. A household’s college-degree status is based on the survey respondent’s educational attainment.

Upward Mobility Takes Shape in the Labor Market

To summarize, Asian households have attained college degrees to a greater extent than other racial and ethnic groups, and many of those college-educated households are reaping financial benefits in terms of higher median household incomes. The college degree attainment of Asian households is unique in that the education of one’s parents doesn’t have a statistically significant relationship with a household having a college graduate; this is not the case for other racial or ethnic groups. Higher education has been shown to have significant financial returns, and many Asian households are well positioned financially, as our findings on income show. In addition, the lower prevalence of student debt balances among college-educated Asian households provides a tail wind for wealth accumulation, as it frees up monthly income that would otherwise go to servicing student debt. Many of these college-educated households have incomes that exceed their expenses, yielding savings that facilitate wealth building.

We will focus on wealth accumulation in the second post in this two-part series. Again, the SCF dataset does not include information on subgroups within the Asian American community, which would add additional nuance to these findings. The educational and financial outcomes we present here are not universal; rather, they are what the data support for the typical or median household in this group. Collectively, the data suggest that the financial well-being of many Asian households appears to be quite strong.

Notes

1. Throughout this post, we will refer to this household group as “Asian.” The 2022 survey wave of the SCF incorporated an oversample of minority families. This additional sample size facilitated the breakout of responses for those survey respondents (and their spouse or partner, where applicable) who identify as “Asian.” The SCF does not count Native Hawaiians or Pacific Islanders among the Asian group; rather, those respondents are included in a catch-all “Other” racial group. In this post, racial groups are non-Hispanic and single (not multi) race. While “Hispanic” or “Latino” is an ethnicity and not typically treated as a race, a legacy variable within the SCF allows respondents to identify “Hispanic/Latino” as their race. In addition, the SCF has a question on Hispanic or Latino ethnicity. Thus, the Hispanic group in our post includes all respondents who selected Hispanic or Latino on the race question or the separate ethnicity question.
2. Given we only see a snapshot of households’ financial lives (and we don’t follow them over time), we are restricted to looking at the correlation (rather than causation) between income and factors such as education.
3. We are using the level of educational attainment reported by survey respondent. Survey data are limited and do not include detailed questions on the type of college education or attitudes toward investing in higher education.
4. Occupation growth in the U.S. has been more pronounced in high-skilled (and higher-paying) occupations over the past few decades. (See page 191, Figure 3, of a 2006 article by David Autor and others.) A college degree is often a requirement for such occupations.
5. We use a statistical technique called regression analysis to disentangle the variables related to household income. This method allows for a better understanding of how a single factor (e.g., education) impacts household income while holding other factors (e.g., race or ethnicity, age, immigration experience) constant. In this particular model, the independent variables were race and ethnicity, age, education, a proxy for immigration, having dual earners in the household, and having children.
6. These regression results are available from the authors upon request.