Contribution of Asian Americans to the Economy

A recent nationwide study, The Rise of Asian Americans, (June 2012) published by the nationally known Pew Research Center concludes:

Asian Americans are the highest-income, best-educated and fastest-growing racial group in the United States. They are more satisfied than the general public with their lives, finances and the direction of the country, and they place more value than other Americans do on marriage, parenthood, hard work and career success.

This is an extraordinary transformation for an ethnic group in America. A hundred years ago, Asian Americans (mostly men) worked in low-skill low-wage jobs in mining, farming and railroad building.

In recent years the percentage of Asians in the US has increased dramatically. Between 1965 and 2011, the number of Asian Americans grew from 1percent to 6.2 percent (18.2 million) of the US population. Most Asians in America trace their roots to China, India, Japan, Korea, the Philippines and Vietnam.

Asian Americans earn a whole lot more than other groups—an average of $66,000 compared to an average of $49,000 for all Americans. The disparity in incomes is correlated with higher levels of education among Asian Americans. Within this group, incomes vary widely according to level of education and training. Not all Asian Americans are rich, and they do not all have PhD’s

The modern wave of Asian immigration to the U.S. is about five decades old. In recent years, Asian immigration into the U.S. has risen faster than Hispanic immigration. In 2010 Asian immigration accounted for nearly 36 percent of total immigration in the U.S. compared to 31 percent for Hispanics.

The entrepreneurial talent and the educational attainment of Asians has been a boon to the US economy. The success of Asians in America as entrepreneurs in high-tech and knowledge based industries in world class innovation hubs like Silicon Valley has been remarkable. In her 1999 research paper entitled “Silicon valley’s New Immigrant Entrepreneurs,“ UC Berkeley Professor AnnaLee Saxenian, covering data for the period between 1980 and 1998, found that immigrants accounted for roughly a third of the scientific and engineering workforce in Silicon Valley, and that Indian or Chinese CEOs were running a quarter of its high-technology firms. What is more impressive is that 17 percent of the Valley’s tech firms were run by Chinese immigrants, including Taiwanese, and 7 percent were run by Indians.

In 2006, Vivek Wadhwa, Director of Research at the Entrepreneurship Center at Duke University, and his research team collaborated with Saxenian to update her work. Their conclusion was that the Silicon Valley trend had become a nationwide phenomenon. For U.S. high tech companies founded between 1995 and 2005, nearly a quarter had a chief executive or lead technologist who was foreign-born. These companies generated over $50 billion in revenue and created 450,000 jobs in 2005. In Silicon Valley, the share of immigrant-founded startups had risen to more than half of all startups.

In a January 2012 Inc. magazine article, Vivek Wadhwa concludes that “Indians were the most numerous of the high tech company founders. They had founded more startups than the next four groups (from Britain, China, Taiwan, and Japan) combined. The proportion of Indian-founded startups in Silicon Valley startups had increased from 7 percent to 15.5 percent, even though Indians make up just 6 percent of the Valley’s working population.”

For the past decade or so, businesses and employers in the U.S. have been facing a critical challenge finding the right people with the right skills to fill jobs in order to retain their competitive positions in the global economy. (Mary Walshok, Tapan Munroe, Henry Devries, Closing America’s Job Gap, WBusiness Books,2011) According to the US Bureau of Labor Statistics in May 2012 more than three million jobs were vacant despite an unemployment level of more than 8 percent in the US economy. Most of these jobs required STEM (science, technology, engineering, and mathematics) background.

 Asian Americans have been particularly successful in bridging this gap. Without this group, America’s serious skills gap problem would be a whole lot worse. Forty nine percent of Asians have completed college compared to 28 percent of all Americans. They are particularly focused on STEM subjects. In 2010, US universities awarded 45 percent of all science and engineering degrees to Asians.

As Wadhwa’s paper points out, Asians in America comprise a highly educated and skilled 21st century workforce. Overall, the data clearly shows that the growth of the Asian American population has been a boon to the US economy via their entrepreneurial contributions as well as by helping to bridge the skills gap.

 

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