Asian American workers: Diverse outcomes and hidden challenges

| Executive Briefing

Events since the start of the COVID-19 pandemic, including the murder of George Floyd and the rise in anti-Asian violence, have increased the prominence and urgency of diversity, equity, and inclusion in the public conversation, including in the C-suite. Against this backdrop, our new report, Asian American workers: Diverse outcomes and hidden challenges, may be long overdue.1

While visible acts of violence against Asian Americans have garnered headlines, Asian Americans’ distinctive challenges at work have often been overlooked. The stakes of violent attacks and workplace challenges are different, but they have common roots in stereotypes and misconceptions about Asian Americans as perpetual foreigners—that is, outsiders. In our report, we use data and analysis to dispel these misconceptions, acknowledge the accomplishments and contributions of Asian Americans, and propose next steps for leaders and organizations. More research needs to be done, but our goal is to spark an expansive, ongoing conversation about better inclusion and advancement for Asian Americans at work.

Debunking the monolith myth

Asian Americans are often spoken of as if they are a monolith (a uniform group). This concept by definition obscures diversity within the Asian American population. What’s more, immigration has always shaped—and shifted—the composition of the Asian American population, which means the concept of the Asian American monolith never quite fit.

Nearly 20 million Asian Americans live in the United States as US-born citizens, naturalized citizens, and foreign-born residents.2 Among Asian American workers, 35 percent are East Asian, 35 percent are Southeast Asian, and 27 percent are South Asian (Exhibit 1).

The 8.8 million Asian American workers are split about evenly across three main ethnic subgroups.

Their wide-ranging distribution across industries and roles underscores the diversity of experiences among Asian American workers. They are overrepresented in low-paying occupations such as manicurists and skin care specialists, cooks, and sewing-machine operators. At the same time, they are also overrepresented in higher-wage technical fields such as software development and computer programming. The large variance of wages between these occupation clusters means Asian Americans have the highest income inequality among races in the United States.3

This distribution translates to markedly different economic outcomes. For instance, among foreign-born Asian Americans who are not permanent residents—the group with the highest economic inequality—12 percent of South Asian men and 21 percent of South Asian women earn less than $30,000 a year.

Although Asians Americans as a group experience poverty rates in line with the White population, data for specific Asian American subgroups reveal significant pockets of poverty. About four million (one in five) live on less than 200 percent of the federal poverty level.4 Several ethnicities, including Chinese, Hmong, Laotians, Nepalese, and Pakistanis, have higher poverty rates than the US average of 12 percent, with Chinese Americans accounting for almost one-third of all Asian Americans living in poverty.

Even when Asian Americans are in high-wage fields (those with a median wage above $100,000 a year), they make $0.93 for every dollar earned by their White colleagues.5 This persistent shortfall in compensation contradicts the perception that Asian Americans are excelling across the board. The earnings gap is correlated with Asian American underrepresentation at higher-paying manager levels.

No one’s model minority

The term “model minority” is often used in the United States to highlight the perceived success of Asian Americans. This stereotype sets Asian Americans apart from the rest of society and is often divisive, especially when used to compare other people of color unfavorably with Asian Americans.

Of course, some top-line data feed the model minority stereotype. In the aggregate, 54 percent of Asian Americans hold at least a bachelor’s degree. One out of four Asian children born to families in the bottom quintile of household incomes joins the top quintile as an adult.6 Although that number is lower for Asian children born to US-born mothers—one out of six instead of one out of four7—the intergenerational upward economic mobility is still higher for Asian Americans than for their White counterparts. But within these impressive top-line numbers, Asian American ethnicities experience a wide range of outcomes.

Even with high educational attainment and upward economic mobility, Asian Americans are often seen as doers and not leaders. Advancement sputters as Asian Americans move up the corporate ladder, where high levels of representation at the entry level do not translate to high levels in senior management positions (Exhibit 2). The share of Asian Americans decreases with greater seniority, and so does their share of promotions. For example, McKinsey’s Women in the Workplace study surveyed more than 400 large organizations across the United States in 2021 and found that Asian Americans account for 9 percent of senior vice presidents but just 5 percent of promotions from senior vice president to the C-suite. Asian American women make up less than 1 percent of these promotions.

Asian American employees drop in representation and promotions at senior levels; Asian women experience the greatest decrease.

When people look at us, they don’t really see a leader. They see someone smart, good with numbers, but not someone who can lead a team.

East Asian man, 20s, US-born, financial services manager

The perpetual foreigner at work

The idea of the perpetual foreigner is not so much a stereotype as a common perception of Asian Americans that casts them as outsiders in American society regardless of their history here. The perpetual-foreigner misperception may contribute to Asian Americans’ lower rates of professional advancement and to their underrepresentation at the highest levels of their fields—even in fields where Asian Americans are overrepresented.

Asian Americans experience lower inclusion and receive less support at work than their White peers. Our research finds that Asian Americans perceive lower levels of fairness, feel less able to be themselves at work, and are less likely to report that their sponsors are effective at creating opportunities for them (Exhibit 3).

Asian American employees, particularly East Asian and Southeast Asian, perceive lower inclusion than their White peers.

This perception is especially pronounced for East and Southeast Asian employees. When asked whether their company provides all employees with the mentorship and coaching they need to be successful, only 27 percent of East Asian employees and 32 percent of Southeast Asian employees agreed, compared with 44 percent of White employees.8Race in the workplace: The Black experience in the US private sector,” McKinsey, February 21, 2021. Employees in general often perceive a low level of fairness, but Asian Americans feel it even more.

I do think that my cultural upbringing makes it more difficult to feel comfortable advocating for myself. It’s a confidence issue—I’m almost afraid that I’ll get fired.

South Asian woman, 30s, immigrant as a child, software engineer

Sponsors—organizational leaders who create opportunities and advocate for more junior colleagues to grow and advance at their organization—are an important part of inclusion in the workplace. Asian American employees appear to have levels of sponsorship that are in line with their White counterparts, but a closer look reveals discrepancies at senior levels of the organization. For senior managers and above, 52 percent of Asian American employees reported having sponsors, ten percentage points lower than White employees. And at more senior levels, Asian American employees’ perception of sponsor effectiveness drops significantly.9

A way forward

Asian Americans’ challenges are not necessarily visible to senior leaders—who are disproportionately White—because of how the three misconceptions about Asian Americans interact. The model minority stereotype makes it easy to assume Asian Americans are already doing well at work; the myth of the monolith makes it easy to think that targeted support and detailed data about their experiences are not necessary; and the perpetual-foreigner mindset among people who are not Asian American makes it more difficult for Asian Americans to feel included and to advance.

Addressing these challenges will take sustainable, cross-sector efforts. Five actions could offer a constructive starting point:

Collect more granular data about Asian American workers. Gathering more granular data about the experiences of Asian Americans at work can help employers and leaders better understand Asian American employees—their specific contributions, challenges, and needs. Employers, public statistics agencies, and researchers alike could consider collecting data disaggregated by ethnicity.

Support Asian American workers at critical moments. Granular data can help to inform corporate leaders about the experiences of Asian Americans at critical moments in their professional journeys, such as recruitment, evaluation, and promotion. To help address lower perceptions of fairness, companies should continue working to eliminate implicit bias (for example, traditional ideas of leadership qualities) from job interviews and evaluations.

Address inclusion challenges for Asian American employees. Developing programs that educate employees on how to identify and address inappropriate or biased behavior could help to improve inclusion for Asian American workers, including guarding against bias in workplace conversations. Another way to improve inclusion is to establish and support Asian American employee resource groups (ERGs).

Create sponsorship opportunities for Asian American workers. Effective sponsorship is critical for career advancement. Since sponsorship for Asian American employees tends to decrease both in engagement and effectiveness at higher levels in corporate America, more active advocacy will be required to connect prospective sponsors with Asian American colleagues.

Address Asian American issues as part of corporate responsibility. Many companies already have a presence in their communities and engage in outreach as part of environmental, social, and governance (ESG) efforts. Addressing Asian American issues as part of the corporate social-responsibility agenda could not only mobilize Asian American employees to participate (thereby improving inclusion) but also educate workers about the Asian American population and its subgroups.

Much work remains to be done to craft effective policies and programs. We don’t have all the answers, but we hope this report’s analysis serves as a starting point to spur constructive and creative action.

Organizations throughout the United States already have many of the tools they need to recognize Asian Americans’ needs at work and provide matching support. Doing so can unlock Asian Americans’ full potential as citizens and colleagues. It’s time to stop overlooking this valuable population.

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