'Model Minority' Myth Hides the Economic Realities of Many Asian Americans

| Posted: May 10th, 2012

May is Asian/Pacific American Heritage Month, so it is a good time to get rid of the “model minority” stereotype and explore the diversity within this group. The median education level of Asian Americans is higher than that of non-Asian Americans and their unemployment rates are lower, on average, as well, contributing to the “model minority” label. But these general statistics mask large differences in the economic situation of Asians in the United States.

Labor market positions vary greatly among different Asian subgroups, as detailed in a recent Monthly Labor Review article, which uses data from 2008 through 2010. For example, three-quarters of Asian Indians have at least a bachelor’s degree and over two-thirds are in management or professional jobs. But Vietnamese are less well positioned. One-fifth of them have less than a high school diploma and similar numbers are in low-paying personal care and service jobs.  And while unemployment rates for all Asian groups are lower than rates for non-Asians, once they lose their jobs, Chinese and Filipino Americans are about 25 percent more likely to be unemployed for at least six months than other Asian and non-Asian groups.

Employed People by Occupation, Asian Indians and Vietnamese, averages for the combined years 2008-2010

Source: Monthly Labor Review, November 2011

Even the most successful Asian Americans face barriers to upward mobility in corporate America.  A Leadership Education for Asian Pacifics (LEAP) study finds that Asians are far less likely to work their way up to CEO and board positions in private corporations. Although they are 6 percent of the population and 6.5 percent of the labor force, Asians hold only 2.4 percent of the total number of board seats in Fortune 500 companies and only 18 Asian Pacific Americans hold the title of Chairman, President, CEO or Vice Chair.

The economic position of Asian children also varies substantially across the country. The Asian child poverty rate varies among states with a sizeable Asian population—rising above the national Asian child poverty rate of 10.5 percent in Minnesota and New York, for example, while falling below the national rate in Illinois and Virginia, according to the Urban Institute’s Children of Immigrants Data Tool.  Some of these differences are related to the different concentrations of Asian subgroups, primarily more recent immigrants. In other cases, the differences are related to economic opportunity.

So while Asian Americans on average fare well on measures of education and employment, a closer look reveals great diversity by ethnicity, immigration status, and state—as well as barriers to economic success. The “model minority” stereotype papers over these differences and often hides the challenges many Asians still face.

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The Unemployment Picture: Reading Between The Lines

| Posted: April 10th, 2012

The unemployment figures for March, released last Friday, were higher than expected by those basing their predictions on declining unemployment insurance claims. The number of employed workers went up by only 120,000, about half what was expected, leaving the unemployment rate steady at 8.2 percent, according to the Bureau of Labor Statistics. This contrasted with predictions of job growth in the vicinity of 200,000, which many based on the previous day’s news that initial unemployment insurance claims for the last week in March had gone down. Is there a contradiction here? Not really.

While unemployment insurance (UI) claims tend to move in the same direction as the unemployment rate, they don’t necessarily move in lock step. First of all, not everyone who loses or leaves a job is eligible for unemployment compensation. Eligibility varies according to the individual worker’s prior work experience, the nature of the job separation, and the industry he or she worked in. Some of this difference can be seen in how the overall unemployment rate differs from the unemployment rate for the insured employed—those who are in jobs covered by UI. The insured unemployment rate for the third week in March was 2.6 percent, compared with the overall rate of 8.2 percent. And the relationship between the two rates can vary by state. For example, of the nine states that had the highest insured unemployment rates in mid-March, ranging from 4 to 6 percent, only three of them (California, New Jersey, and Puerto Rico) had overall unemployment rates of 9 percent or more.

Another factor accounting for the seeming paradox is the composition of the unemployed. A large portion of the unemployed are people who were not looking for work previously. Some are workers who, for various reasons, had left the labor force and are now returning. Others are people who had never worked before and are now looking for jobs. Together, they made up nearly 37 percent of the unemployed in March. In addition, over 8 percent of the unemployed are people who voluntarily left their jobs and are looking for new ones. This last group has grown over the past year. Most of the job seekers in these three groups would not be eligible for UI.

The economy is growing enough to generate some new jobs, but not fast enough to cover everyone looking for work. Some of the unemployed have been looking for work for a long time, others are returning to or just entering the job market, while still others are confident enough to voluntarily leave an old job behind and look for another one. They aren’t all eligible for unemployment insurance, so we should not be content to look at UI claims and think the hard work of job generation is behind us.

Composition of Unemployment by Reason for Unemployment, In Percent

Source:  Bureau of Labor Statistics, table A-11

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Women Have Closed the Gender Gap in Education, But Not Wages

| Posted: March 14th, 2012

March is Women’s History Month, which prompted the U.S. Census Bureau to issue a factsheet about women’s status. One of the notable facts is the number and proportion of women with a bachelor’s degree compared with the number of men. In 2010, 30.7 million women age 25 or older had a bachelor’s degree or higher. This is slightly more than the number of men, but there are more women over age 25. Women are also more likely to be college graduates than men. Just looking at people between the ages of 25 and 34 in 2010, the percentage of women with a bachelor’s degree is higher than the percentage of men. This is true for all racial and ethnic groups, with the percentage of women with a bachelor’s degree (and no more) about 5 percentage points higher than for men in their same race and age group. The only exception is Asians between the ages of 25 and 29, where the percent with degrees is about the same for men and for women (36 percent).  Asian women are also the most likely to have a college degree, while Hispanic women are least likely (about 13 percent).

Median Usual Weekly Earnings of Full-Time Workers, 25 Years and Older, Constant (2010) Dollars

Source: BLS (2010) statistics, table 17

What has prompted the increased educational attainment of women? No doubt there are many factors, but the economic returns are clearly one incentive. According to the Bureau of Labor Statistics, the median weekly earnings for a woman with a bachelor’s degree or higher who works full-time have increased by 33 percent in real terms since 1979. This compares with a 20 percent increase in earnings for men with the same level of educational attainment. The return for additional education is also apparent when comparing women with a college education to those with only a high school diploma. In 2010, college-educated women had weekly earnings that were 80 percent higher than the weekly earnings of high school-educated women.

Still, women have not reached equality with men. College-educated women made 74 percent of the weekly earnings of college-educated men, roughly the same gender ratio as for high school-educated workers. But it’s more than the 67 percent ratio for college-educated women in 1979. The remaining gap could be a combination of differences in occupation or industry, since women are still more likely to have jobs that pay somewhat less and, as professionals, they are more likely to be in nonprofit or public jobs.

Women have come far since 1979, closing the gap—and then some—in educational attainment, but there’s still a long way to go to shrink the gender gap in wages.

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Halftime in America: Will Manufacturing Jobs Make a Comeback?

| Posted: February 10th, 2012

In the Super Bowl halftime ad that ran on February 5, Clint Eastwood compares the current state of the U.S. economy to halftime in a football game. It’s a comparison the ad uses to describe Detroit’s economic comeback: “Motor City,” Eastwood said, “is fighting again.” While it is early in the second half, it might be worth seeing if Detroit and other hard-hit manufacturing centers are making much headway toward the distant goal line.

An examination of job growth in metropolitan areas with large minority and immigrant populations shows that many of these communities suffered from a loss of manufacturing jobs that was not offset by job growth in other sectors between 2000 and 2009. What has happened to the 15 metros that were labeled “high-manufacturing areas”?

Average Job Growth in High Manufacturing Metro Areas, 2009-2011

Source: Urban Institute analysis of BLS Current Employment Statistics (CES) Data

The MetroTrends interactive map on job growth shows that overall job growth in these communities between 2009 and 2011 ranged from -1.5 percent (in Stockton, CA) to 5.3 percent (in Nashville, TN). Job growth in the 15 high-manufacturing areas reflects patterns in other metros, which generally saw private job gains or losses between zero and 4 percent. In the manufacturing sector, some metros did better and some did worse, with job growth ranging from -5.4 percent (in Augusta, GA) to 18.6 percent (in Detroit, MI). Eight of the 15 metros experienced net losses of manufacturing jobs between 2009 and 2011:  Augusta, Los Angeles, Indianapolis, Charlotte, Stockton, Chicago, Oxnard, and Minneapolis.

Of the seven metro areas where manufacturing jobs grew, five had gains above the national average of 1.3 percent: San Jose, Houston, Cleveland, Milwaukee, and Detroit. The Midwest region had some of the highest rates of growth in manufacturing jobs between 2009 and 2011, but also some of the lowest rates. In the South and West, manufacturing jobs shrank or grew minimally between 2009 or 2011, with the exception of Houston and San Jose. But win or lose, these 15 metros were all in the top half of the 100 largest metros in terms of manufacturing job growth.

So it looks like the Motor City and some older industrial centers are gaining yardage early in the second half of the recovery, but the goal of robust employment growth is still a long way away for many of them.

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Who is Benefiting From the Recovery?

| Posted: January 24th, 2012

The employment numbers released in January suggested that 2011 ended on an up note. The unemployment rate had dropped to 8.5 percent, the lowest it had been since February 2009. The year-end number was down a little over one-half of a percent since August. Other indicators were also positive, with the number of part-time workers who would rather be working full time down 371,000 and the number who were not looking for work because they thought nothing was available down a similar amount.

But does this mean we are back to where we were in 2009? That depends on what measure you use. The unemployment rate is just one way of measuring the state of the labor market. Another is the employment-to-population ratio (E/P), which measures the proportion of the adult population that has a job. Unlike the unemployment rate, it isn’t dependent on who is actually looking for work. By this measure, we are not back to early 2009. In February 2009, just over 60 percent of the population had jobs, a slightly larger proportion than the 58.5 percent who held jobs in December 2011.

The picture gets more complicated when you look at things by race and gender. For whites, the unemployment rate is back to where it was in 2009. Among African Americans, the unemployment rate was 15.8 in December 2011, a significant 2 percentage points above the rate in February 2009. And the proportion of the African American population with jobs was just over 52 percent, slightly less than the 54.4 percent with jobs in early 2009.

While we still have a long way to go to dig out of the recession, the declining unemployment rate is not a false signal. Over the last five months of 2011, the economy generated enough new jobs to employ one million additional workers. But who is getting these jobs? Close examination of the data for the last half of 2011 suggests that this is a “man’s” recovery, that is, men are benefiting more from the expansion than women are. That would make sense since unemployment went up more for men than it did for women. But for African Americans, it seems that men are gaining jobs while women are losing them.

Between August and December, the unemployment rate for African American men declined from 18 percent to 15.7 percent, enough for the ratio of black male to white male unemployment to drop from 2.3 to 2.2. This decline in unemployment is not just because fewer people were looking for work. Well over 200,000 African American men had jobs in December who didn’t have them in August. But on the other side, the statistics say that about 60,000 fewer African American women had jobs in December than in August. Their unemployment rate increased from 13.4 percent to 13.9 percent. The situation among whites is not quite as stark, but the trends are similar, with white men gaining and white women more or less standing still.

Seasonally Adjusted Unemployment Rates by Race and Gender, 2009-2011

Source: Bureau of Labor Statistics, Current Population Survey

This gap partly can be explained by differences in the types of jobs men and women hold. The areas of expansion include sectors where men dominate, like warehousing and transportation jobs. On the other hand, government jobs, which are more likely to be women’s jobs, declined somewhat at the end of 2011.

It is not clear whether this trend will continue, though cash-strapped state and local governments are not likely to be adding jobs soon. Most households, whether headed by a married couple or a woman alone, need the woman’s paycheck to make ends meet. So families are not likely to think the recovery is complete until both men and women who want to work have jobs.

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Poverty Hits Home—So Poverty Policy Should Too

| Posted: December 9th, 2011

In some ways, poverty is like the weather.  Everyone is willing to talk about it, but no one has wanted to do anything about it lately.  Now Congresswoman Gwen Moore and several of her colleagues say they are ready to take poverty on, at least for those who are eligible for Temporary Assistance for Needy Families (TANF).  On December 5, Congresswoman Moore introduced the Rewriting to Improve and Secure (RISE) an Exit Out of Poverty Act.  This bill proposes a fairly substantial overhaul to the TANF program.

Some of the bill’s interesting features relate to place.  One fundamental change, for instance, would require the federal government to adjust the state allocations.  All states would get an adjustment for inflation (which TANF has not provided since it morphed from AFDC into TANF in 1997), states with rising numbers of children living in poverty would get additional funds.

With this change, Congress would be acknowledging the substantial differences by state in the growth of the child population. Growth has been greatest in the South and West, with most increases  due primarily to increasing numbers of  Hispanics and other children of color.

Another change:  states would be required to tell the federal government annually their plans for prioritizing areas within their states with higher rates of poverty and unemployment and lower job-to-population ratios.   Here too, the new legislation bows to grim reality—in this case, strong racial and income segregation and concentration.  Making states address the consequences of such segregation in their attempts to reduce child poverty and help parents become more self-sufficient is essential  to  reducing poverty levels.  Without this direction it is always easier to focus on the easiest to serve.

Other place-based issues are worth thinking about too as the federal government redesigns programs to be more effective.  For example, the cost of living varies substantially across the country.  Work by the Urban Institute that uses the supplemental poverty measure to assess the effectiveness of state measures to reduce poverty through income and program supports shows that including state cost of living indices helps policymakers see each state’s challenge and progress in light of what it costs to live in the state.  For example, as Linda Giannarelli explained in an Urban Institute forum this week, looking at the impact of Georgia’s anti-poverty programs without taking account of its cost of living relative to some other states would suggest that the child poverty rate for 2008 was 16.7 percent, as opposed to the official figure of 19.3.  But after taking account of  the lower cost of living in Georgia (relative to Massachusetts, for example), the new measure shows that safety net policies brought the child poverty rate down to 13.8 percent (see figure below).  The cost of living is only one piece of the puzzle in understanding the impact of state policies.  Another is the impact on poor people in different age groups.  Giannarelli and her colleagues show that by changing the mix of programs in the safety net, a state can focus to good purpose on different age groups, with different outcomes.  So Massachusetts’ safety net helps seniors more than it helps children (which may serve a state with an aging population) while Georgia’s helps children more.  On balance, this suggests, federal   incentives for states to help children can reduce inter-generational poverty.

One feature of the RISE bill that isn’t very encouraging is that the program is to be permanent.  That suggests that the poor—like the weather-- “will always be with us.” Yet, if this bill or another one like it is effective, at least the same poor people won’t be poor year after year.

Effects of Safety net on SPM Poverty Rate: Children under 18, 2008

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To See Social Security’s Future, Look Beyond the Headlines

| Posted: November 10th, 2011

The headline for a front-page article in the Washington Post’s October 30 issue says that Social Security went “cash negative” this year. While Halloween weekend might be an appropriate time to scare people as they sip their morning coffee, it doesn’t set the right tone for a balanced discussion on how to “fix” Social Security. Fortunately, several new data sources on who does and doesn’t benefit from this program can guide our thinking about what could be done to preserve Social Security’s solvency without adverse effects on the most needy.

A new website launched by the Office of Retirement Policy (ORP) at the Social Security Administration contains fact sheets that show graphically who gains from Social Security. While everyone is familiar with Social Security payments as the foundation for retirement income, many don’t think about how much children benefit. ORP’s “Child Beneficiaries and Poverty” fact sheet points out that 3.2 million children received benefits in 2004 because one parent was deceased, disabled, or retired. Almost half of these children (1.3 million) would have been living in poverty without those benefits. Another fact sheet highlights who does not, and under current law will not, receive Social Security. These are more likely to be people who work infrequently, workers in occupations or industries not covered by the program, or legal immigrants who arrive too late to build up the requisite credits.

Poverty Rates with and Without Social Security Benefits, 2004

A Commission to Modernize Social Security report tells us more about those lifted out of poverty by Social Security and those who receive low or no benefits. “Plan for the Future: The Impact of Social Security Reform on People of Color,” documents the dependence of people of color on this program as a main source of income in retirement and when death or disability strikes. Many proponents of privatizing Social Security have argued that Social Security is not a good “investment” for African Americans because of their shorter lifespan. But, as the report points out, African Americans and Hispanics receive a higher rate of return when the full range of benefits, including survivors and disability payments, are considered. The authors point out that a young or low-income family could not afford to purchase, say, a $400,000 insurance policy that would provide the protection against a breadwinner’s death or disability that Social Security does. These are valuable and needed benefits, especially for the families of workers who have contributed to the economy but received low wages in return for their labor.

African Americans and Hispanic families are also less likely to be able to save for retirement, have little or no prospects of a substantial inheritance from parents or other relatives, and are more likely to have to share their meager earnings with family and friends who are even less well off.  As a result, “Plan for the Future” says, a majority of African American and Hispanic retirees rely on Social Security for over 90 percent of their income, as do more than 4 in 10 Asian and American Indian workers.

Average Percentage of Family Income from Social Security, 2004

The report goes on to outline a package of program changes to help those at the bottom of the labor market while also closing some of the benefit-revenue gap.  While you might not agree with the specific recommendations, the case for preserving and enhancing benefits for those most in need is compelling.

Yes, Social Security does need some adjustments to keep it on track, but the trust fund is not yet empty, so we have a little time to think carefully about how to do that without hurting those who cannot provide adequately for themselves and their families when faced with retirement, disability, or death.

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Low-Wage Work: Is This Any Way To Raise a Family?

| Posted: October 10th, 2011

A generation ago, a man who finished eleventh grade could get an assembly line job in a Detroit auto plant and earn enough to provide his family with a decent living. When retiring, he could count on a comfortable pension and health benefits.  Today, that same young man, if he’s very lucky, can get a similar job in an auto plant, but will make only half the wage of the long-time employees working right beside him.

You could ask if this is fair.  But a more important question is whether this is any way to raise a family?  At about $14/hour, our worker –let’s call him Joe-- could support himself and an unpaid spouse at about twice the poverty level,  with an income of $29,120. But if he and his wife (Mary) have two children, what Joe brought home would just get them over the poverty line for a family of four.  Both Joe and Mary would have to work at that plant to break through the low- income threshold of $44,226.  If one of them lucked out and got the top entry- level wage announced in the Ford Motor Company union settlement this month, either would get $19.28 an hour--over  $40,000 annually. Better? Absolutely, but probably not enough to allow the other spouse to stay home with the kids.

How Much Do Wage Earners Have to Make to Stay Above the Poverty Line?

While times could get better and the plant could raise wages and give out bonuses, as Ford is doing this year, there’s no guarantee that they will in the future.  So what happens when Joe retires?  Instead of a surefire pension, Joe and Mary will have to figure out how to make about $2,000 a year in employer contributions and whatever else they can scrape together into a retirement nest egg.  In a bonus year, their choice might be to spring for a car as good as the one they make—or add to their retirement account. That would be a hard call, especially since current public policy offers saving incentives for the well-to-do rather than the not so well off.

There are policies that could make the tradeoffs a little easier for low- income families, and there are ways to pay for them.  Examples from  “Asset Building for Today’s Stability and Tomorrow’s Security” by Signe-Mary McKernan and Caroline Ratcliffe include providing refundable tax credits for home mortgage payments for moderate income families and allowing Individual development accounts (IDAs) to be used for vehicle purchase and upkeep.

It might be good for the economy to bail out companies, but if the workers get thrown overboard, what’s the real point?  Just ask Joe.

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What Should We Look for in the President’s Jobs Speech?

| Posted: September 6th, 2011

On Thursday, September 8, President Obama will address a joint session of Congress. He is expected to deliver a “jobs speech” that the White House press office says will include “bipartisan proposals to rebuild the American economy by strengthening small businesses, helping Americans get back to work, and putting more money in the paychecks of the middle class and working Americans.”

The big question for many –especially those hardest hit by the recession--will be “How many of those in non-working America will have any paycheck as a result of the proposals?” The answer depends on what’s in the jobs package.

Unemployment hasn’t slammed all workers or regions equally. Some groups and some areas have suffered more than others.  In many communities, the recession just accelerated a decline that was already taking place. So what would a jobs program do for these groups and places?

A tax break for businesses that hire additional employees may spur employers who were on the brink of hiring to move ahead, but it probably won’t spark large-scale hiring in communities where economic expansion is not already afoot.  Likewise, incentives for innovation make sense and may put businesses that take the bait in a more competitive position globally, but the results may not register for several years.

Investment in infrastructure could generate up to 100,000 jobs in a year, based on statistics from the Transportation Department’s ARRA spending in the 10 months of that program.  But where these jobs go depends on the details of the deal.  Nearly every US community needs some kind of new infrastructure, but program funds would do the most good if distributed preferentially to communities with the highest unemployment rates.  And if the proposal is to help African American males— who have the highest unemployment rates and have been out of work longer than most—it must ensure equal access to the new jobs. Requiring minority subcontractors or monitoring affirmative action would help.

A complete jobs program would also feature measures to ensure that workers whose skills have grown rusty during extended joblessness will be attractive to employers and productive once hired.  Here the answer is a sizable increase in current or enhanced workforce training programs.

It’s rumored that some of these features might be in Obama’s package, but will the package be big enough to dent the problem?  And will a Congress seemingly keener to cut expenditures than to cut the jobless rate pass it if it is? All of us will have to wait and see. Meanwhile,  some of us have already been waiting far too long for another shot at employment.

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Is There a Way to Close the Growing Wealth Gap?

| Posted: August 5th, 2011

A recent Pew Research Center report-- Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics -- reveals that in 2009 the gap between white households and black and Hispanic households was twice as large as it had been over the two prior decades.  Whites had 20 times the wealth of black households and 18 times the wealth of Hispanic households.

While the gap is alarming, as heavy media attention to the study attests, even more distressing is the absolute level to which African American and Hispanic wealth had fallen.   Median wealth for Hispanic households was only $6,325 in 2009, down 66 percent from 2005.  For African Americans, the percentage drop was somewhat smaller (53 percent), but they had only $5,677 in median wealth in 2009.   This tiny cushion compares to $113,149 for white households and $78,066 for Asians.

This decline in wealth comes during a precarious economic time when households need assets to replace lost income  and fund personal  advancement.  Research by Urban Institute senior fellows Signe-Mary McKernan and Caroline Ratcliffe with Katie Vinopal has shown that assets can soften the blow when unemployment or poor health strikes families.  A reserve can also fund a college education or a new family business.  Increasingly, workers are also expected to supplement Social Security and private pensions or retirement funds with other savings.

Percentage of Families Who Experience Material Hardship, Given an Adverse Event, By Asset Poverty Status

The burst housing bubble was a major factor in the decline for all households. But because African American and Hispanic households have proportionally more of their assets tied up in housing than white households, these minorities suffer more from this decline.  Hispanics found themselves concentrated in the states hurt most by the housing collapse. For African Americans,  personal foreclosure problems combined with  high foreclosure rates’ impact  on housing values in their neighborhoods most likely account for their situation.

So is the best way to avoid wealth declines in the future  to discourage more people from homeownership?  Not when housing is still the easiest way for most people to build significant assets over the long term.  That means that the real question is what policy options work best when few government resources seem to be available. One option would be to make  the homeowners mortgage interest deduction  more progressive.  As  McKernan and Ratcliffe point out in Enabling Families to Weather Emergencies and Develop: The Role of Assets, tilting the deduction more toward moderate income families could do more to reduce the cost of homeownership for moderate income households than the current structure.

Now that Congress is seeking ways to reduce federal budget deficits, a bold look at the huge tax expenditure of mortgage interest deductions should include options that would favor the less privileged.  Caps or limits on the deduction could be combined with a tax credit to benefit those who don’t itemize. Alternatively, a sliding scale deduction could give more moderate- income families a leg up .

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