Indians in the US make the most because they studied the most

I’m the biggest.
I’m the biggest.
Image: AP Photo/Manish Swarup
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It seems pretty clear.

A recent paper from the US Department of Labor spotlighted the diverse earnings dynamics among America’s racial and ethnic groups. This simple takeaway is that those who identify as Indian have earnings that are head and shoulders above the rest. In 2013, the median weekly earnings of Indians was nearly $1,300 a week, for those age 16 and above. That was more than 17% higher than the $1,100 in median weekly earnings reported by those who identify as Japanese.

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The reason for this is no huge surprise. Education levels among those who identify as Indian are incredibly high: Roughly 76% of those above the age of 25 have graduated from college. “For these ethnic groups, education explains most of the wage differences, since on average Indian, Japanese, and Chinese workers have higher levels of education than the rest of the labor force (education explains half to three-quarters of the observed wage gaps),” Department of Labor analysts wrote in the report.

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Of course, this simple answer also raises a whole bunch of complex questions. Why are levels of educational attainment so high among Indians? Where do the people who identify as Indian do their schooling? How much did it cost? How much of their outsized earnings potential is related to their pathway to the US?

After all, over 70% of people identifying as Indians, according to the Department of Labor’s report were foreign-born. (According to Pew Research, 87.2% of adult Indian-Americans were foreign born in 2010.) And the pathway of many Indian immigrants to the US is much more closely linked to high-skilled employment than other immigrant groups. For example in 2011 about half of the Indian immigrants who received permanent residency in the US with a “green card” had employee sponsorship, much higher than most other Asian groups—except Koreans—according to Pew Research. Indians also dominate among recipients of the US H1-B visa program(pdf), which lets companies hire workers trained for specialty jobs for up to six years.

To be sure, Indian-Americans can be justly proud of the success they’ve had in the states.

But it’s important to note that the structure of the Indian community in the US is also heavily tilted toward professionals who are already highly educated when they arrive. In other words, there’s something of a selection bias at work in these numbers. The story of Indian immigration to the US has been one of America cherry-picking India’s higher-earning professionals, making income comparison with America’s other ethnic groups somewhat problematic.