Indian diaspora have the worst income inequality in America

The Indian community is the wealthiest diaspora in the United States.

NEW YORK – If you have heard ad nauseam talk of the highly skilled Indian American community with its hordes of doctors, software engineers and whiz kid entrepreneurs, who love to make tons of money, help the diaspora get the tag of wealthiest in the US, be prepared for that trend to continue for decades to come.

But here’s the seamier side which doesn’t surface that often: the income inequality among the Indian community in America is the worst, surpassing even the Hispanic and the Black community.

A new survey by the Pew Research Center reveals that Asians are the most economically divided in the country; and the gap is growing larger. Heading that dubious distinction is the Indian community, with the top 10% of the income ladder making an average of $133,500, while the poorest 10% make just under $12,500, well under the poverty level. That’s a difference of 10.7 times.

According to the Pew survey, the top 10% in the Asian community saw their income nearly double between 1970 and 2016, while the earnings of the bottom 10% soared by only 11%, a divide that surpasses the Whites, Blacks and Hispanics.

Immigration, of course, has played a huge role in this disparity. A range of legal options in immigration, including opening up visas to cater to highly skilled workers, and the unskilled as well, through family reunification visas and permanent residency, have undoubtedly led to this income divide over the decades. Nearly 80% of Asian adults in America are foreign-born.

Education levels too have played a major role in the Asian community. When it comes to Indians, 72% have a bachelor’s degree. In comparison, only 9% of Bhutanese have the same educational qualification. This explains the median household income of Indians being $100,000, compared to $36,000 among the Burmese.

Immigrants accounted for 81% of the growth in the Asian adult population from 1970 to 2016, and the foreign-born share among Asians increased from 45% to 78% in this period, according to Pew.

The surge in Asian immigration followed the Immigration and Nationality Act in 1965, which favored family reunification, and the end to the war in Vietnam in 1975. That brought in a wave of refugees. One result was that the share of new Asian immigrants working in high-skill occupations decreased from 1970 to 1990, and the share working in low-skill occupations increased.

More recently, the Immigration Act of 1990 sought to increase the inflow of skilled immigrants. Coinciding with a boom in the technology sector, a new wave of Asian immigrants, many from India, followed under the auspices of the H-1B visa program. Since 1990, there has been an increase in the share of Asian immigrants employed in high-skill occupations.

Asians also held the edge in standard of living over other groups at the top of the income distribution, according to the survey. The income of Asians at the 90th percentile was 13% higher than the income of whites at the 90th percentile in 2016, $133,529 versus $117,986. Upper-income blacks ($80,502) and Hispanics ($76,847) had a similar standard of living in 2016, and both were outdistanced by Asians and whites by a wide margin.

In contrast, lower-income Asians lagged behind lower-income whites. Asians at the 10th percentile of their income distribution lived on $12,478 in 2016, 17% less than the income of whites at the 10th percentile ($15,094). Lower-income blacks and Hispanics trailed by even more, with incomes of $8,201 and $9,900, respectively.

The income gap between Americans at the top and the bottom of the income distribution widened 27% from 1970 to 2016. Among all Americans, those near the top of the income ladder had 8.7 times as much income as those near the bottom in 2016, $109,578 compared with $12,523. In 1970, Americans near the top had 6.9 times as much income as those near the bottom, $63,512 compared with $9,212.

The level of inequality in the US, and the fact that it is comparable with the levels that existed in the 1920s by at least one measure, is of concern to many. Then-Federal Reserve Chair Janet Yellen remarked in 2014, “The extent of and continuing increase in inequality in the United States greatly concern me.”

But others are more sanguine, arguing that the trends in US inequality do not constrain opportunities for those at the bottom of the income distribution.

Another separate study released by Pew this week indicates that the Indian American community is well poised to retain their hold as the wealthiest community, despite the massive incoming divide.

Indians top a record number of foreign graduates of US colleges and universities who obtained temporary authorization to work in the United States through the Optional Practical Training (OPT) program in 2017. However, growth in the once-booming program has slowed dramatically, according to analysis of government data.

In 2017, Indians in OPT stood at 122,100, up from 104,600 from the year 2016. In comparison, China, who is number two after India in sending students to the US, had only 69,200 students on OPT in 2017.

In recent years, the OPT program has surpassed the H-1B visa program as the nation’s largest source of new temporary high-skilled immigrant workers. In 2017, a record 276,500 foreign graduates received work permits under the OPT program, up from 257,100 in 2016, according to data obtained from US Immigration and Customs Enforcement through a public records request.

However, the number of enrollees grew by only 8% in 2017, compared with 34% in 2016. That’s the largest decline in the annual growth rate since 2004, the first year for which data on all foreign students are available. The slowed growth also follows a longer period of rapid expansion for the program. From 2014 to 2016, the number of enrollees nearly doubled in size, growing by 93%.

Going forward, the growth and wealth quotient of Asians will depend a lot on the Trump Administration’s immigration policies, which has seen of late tightening of rules for H-1B visa and stricter conditions for a jump from an F-1 student visa to a work visa.

(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him Follow him on Twitter @SujeetRajan1)