Urban Studies 101

Urban Studies 101 The New Urban Segregation & Gentrification

The history of racial segregation • Before the civil rights era: • Racial segregation was enforced by: • Overt racial prejudice; • Institutional discrimination (Jim Crow in the South and institutionalized discrimination in housing markets in the North; and • Official segregation.

The GI Bill and Home Loans • After World War II the GI Bill provided mortgages to returning veterans. • But the government refused to back home loans in anything but all-white neighborhoods. • Until the 1960s it was legal for white neighborhoods to prohibit black families from buying homes. • So virtually all the loans went to white homeowners.

The Federal Housing Authority • The Federal Housing Authority directed housing loans away from the inner-city and to the rapidly developing suburbs dominated by whites. • Furthermore, the FHA supported segregation. Saying that racial mixing would create urban disorder, it actively blocked the construction of housing for blacks in white neighborhoods. • It also chose to fund water supplies and sewage systems for racially exclusive suburbs, and supported realtors who practiced racially discriminatory practices against Blacks.

Highways • New Federal Highway funds were also directed towards connecting cities to suburbs. • Thus they facilitated the growth of suburbs, for white people, leaving African Americans to live in inner-city areas. • (The growth of suburbs really helped the auto industry, and it catalyzed all kinds of new businesses and industry growth).

White Flight • White families began living inner city areas in droves, in search of a house and a picket fence. Or, the American Dream. • That left African Americans and Hispanics in the inner cities, which had already started to decline due to deindustrialization.

Civil Rights Gains • In theory, the civil rights movement reversed the legality and legitimacy of policies and behaviors based on racial inequality. • Brown Vs. Board of Ed. overturned separate by equal doctrine, the legal basis for segregation. • Civil rights act of 1964 outlawed racial discrimination in employment. • Voting rights act of 1965 enfranchised black voters; • Fair Housing Act of 1968 banned discrimination in housing. • A series of Supreme Court decisions outlawed the placement of public housing units exclusively in black neighborhoods. • 1977 Community Reinvestment Act outlawed redlining (denying people mortgages because their neighbors were Black).

The Persistence of Residential Segregation In 2009, the Urban Institute found that: • One-third of black low-income working families and one-fifth of Hispanics live in high-poverty neighborhoods, compared with only 3 percent of non-Hispanic whites. Similarly, the Lewis Mumford Center found that: • The average native-born black lives in a neighborhood where the median income is $28,475 less than the average native white’s neighborhood.

The Persistence of Segregation • Black-white segregation has moved downward since 1980 • Yet, of the fifty largest metropolitan regions in the country, New York City is the 4th most segregated. In fact, New York City is more segregated now than it was in 1910 (Center for Social Inclusion, 2005). • Most other multiracial societies are not this segregated. The only other place where black-white segregation indices routinely exceeded 70 was the Union of South Africa -- under apartheid.

The Persistence of Segregation? • So segregation persists! • But why? • Is this because of discrimination in the post-civil rights era? • Or is it because Blacks simply prefer to live separately from Whites?

The Three Theories of Racial Segregation in the Post-Civil Rights Period • Theory # 1 - economic differences (not racial ones) separate whites from blacks. • Theory #2 - Blacks self-segregate • Theory #3 - Racial discrimination persists, though in more suble ways than in the past.

Theory # 1 • Geographic separation of whites and blacks results from economic (not racial) differences between them. • By this theory, it is poverty that keeps blacks in ghettos. As blacks become more wealthy, they will leave the inner city for formerly white residential areas, which will become more integrated.

Theory # 1 • But scholars have shown that blacks remain segregated from whites, no matter what their income. • In all regions of the U.S., no matter how much blacks earn, they remain racially segregated from whites. • In the 1990s, the degree of racial segregation was similar for blacks earning $50,000 as for those earning $2500. • This cannot be explained away by lack of knowledge of housing opportunities outside of the ghetto.

Theory # 2 • Blacks self-segregate • According to this theory, high levels of residential segregation are voluntary. Blacks prefer to live in neighborhoods that are nearly 100 percent black.

Theory # 2 • But survey data shows that blacks actually prefer to live in mixed neighborhoods. • 95% of black respondents indicated that they would prefer living in a neighborhood that was 15% to 70% black. • 63% of blacks chose a neighborhood that was 50% black and 50% white as their top choice. This is a considerably higher percentage than that of whites, whose ideal level of racial mixing is much lower.

Theory # 2 • Although whites generally agree that blacks should have the right to live wherever they want, whites express greater apprehension about living in mixed neighborhoods. • These apprehensions are often framed in terms of anti-black prejudice (fear that property values will decline if blacks move in; belief that blacks will not maintain their properties as well as whites).

Mixed Neighborhoods • According to sociologist Emily Rosenbaum (2005) once a neighborhood reaches a 5 percent black population, it begins to experience white flight. • The suburbs don’t integrate much better than urban areas. As blacks move into inner-ring suburbs, white flight pushes other populations further out.

Theory # 3 • Racial discrimination has continues to enforce racial segregation in the housing market. • Racial prejudice by homeowners is not enough, in itself, to explain the persistence of racial segregation. • Active discrimination restricts black access to certain residential areas and enables whites to avoid co-residence with blacks.

Discrimination in Housing Markets • 1) Steering: Systematic Housing Discrimination by Realtors. • Since the Fair Housing Act of 1968 was passed, outright refusals to rent to blacks became rare, but covert barriers discourage black entry into white neighborhoods. • Realtors are friendly, but they “steer” blacks systematically out of white residential areas.

Evidence of systematic discrimination by realtors • In 2000, nationwide, whites received more favorable treatment than blacks from real estate agents in 17% of housing sales inquiries and in 21.6% of rental inquiries. • The same study showed whites received more favorable treatment than Hispanics in 19.7% of housing sales inquiries and 25.6% or rental inquiries. • Historically, this kind of discrimination has been more prevalent in the North than in the South.

Discrimination in Lending Markets • Discrimination by banks and insurers (such as redlining). • Home Mortgage Disclosure Act data shows that blacks receive: • Less private credit • Fewer federally insured loans • Fewer home improvement loans, and • Less total mortgage money than socio-economically comparable white neighborhoods. • And they are more often the vicitms of “predatory lending.”

The Mortgage Gap • A 2003 study of home lending data showed 48 percent of mortgage applications by blacks resulted in mortgages. • In comparison, nearly 76 percent of applications from whites in 2003 resulted in mortgages. • This study showed that high-income blacks were rejected more often than low-income whites.

Racial Bias in Lending • In studies using paired testing, black and Hispanic communities are “often offered inferior products, charged higher fees, provided less counseling or assistance, or are otherwise treated less favorably than applicants from white communities” (Squires 1999).

Racial Bias in Lending: why? • Sometimes it has to do with personal discrimination; • But sociologist Theresa Morris found that it more often has to do with less personalized practices. • For instance, larger banks tend to offer loans based on credit scores. • This seems to be a “color-blind” system; however, African Americans and Latinos tend to have low credit scores.

Why? • In part, credit scores are based on how much access to credit you have. • African Americans and Hispanics have less access to credit than whites due to: • Employment discrimination • Bank fees and restrictions • Less access to collateral/wealth • Fewer banks in low income neighborhoods

Credit • If you don’t have any credit, it’s much harder to start to accumulate it. • For example, it’s much easier to get a credit card if you have other credit cards. • If you have no credit card, your credit score is extremely low.

The insurance gap • No insurance, no mortgage, no house. • A National Fair Housing Alliance study of large insurers in 9US cities found evidence of discrimination against blacks and Hispanics in approximately half of the tests. • Applicants from minority communities were • refused insurance • offered inferior policies, or • forced to pay higher premiums. • Some were required to produce proof of inspection or credit reports not required in other areas. • Some were held to more stringent maximum age and minimum value policy requirements. • Racial composition of zip codes was strongly associated with the price and number of policies written by insurance companies.

Transportation • Goldsmith and Blakely point out that poor people have to travel further to jobs than wealthier people. • In many cities, high speed public transit serves people living in suburbs headed to inner city jobs (i.e., honky tubes). • Even if people do have access to public transit, it might eat up a big chunk of their income.

Vicious Cycle • How can you accumulate wealth if you can’t build the credit you need to accumulate it? • How can you take advantage of social opportunities if you live in a place with poor schools, high crime, substandard housing, few banks, etc.? • In other words, residential racial segregation underlies virtually every other major societal disparity that exists, including disparities in education, health care and employment.

Areas with lower property values have: • Fewer grocery stores • More environmental hazards • Poor air quality • Worse transportation • Worse services in general • Higher crime • Less access to good health care • Etc.

Whether you own a home affects: • Whether you can get a loan to send your children to college; • The kinds of connections you can make and access to job opportunities • The amount of taxes you pay • The kind of neighborhood you live in (owner vs. renter neighborhoods)

Gentrification & The New Urban Segregation

Gentrification and Displacement • According to urban geographer, Neil Smith, “gentrification is the process by which poor and working class neighborhoods in the inner city are refurbished vial an influx of private capital and middle class homebuyers and renters.” • The Brookings Institute described gentrification as “the process by which higher income households displace lower income residents of a neighborhood, changing the essential character and flavor of that neighborhood.”

A Mixed Bag • Pros and Cons of Gentrification: • While reinvestment is taking place, and before the neighborhood becomes unaffordable, many years can elapse. • During that period, low income residents experience both pros and cons.

Pros: • As new residents come in, the city steps up its services, especially cracking down on drugs, homelessness, etc. • Also there are more amenities.

Cons: • But eventually, property values and rents begin to climb. • Some landlords try devious ways to force out long-term residents. • Sometimes residents just can’t afford the services or taxes in the area. • Eventually long-term residents are priced out and displaced.

Gentrification & Segregation • According to geographers Elvin K Wyly and Daniel Hammel gentrification leads to increase segregation and worsened processes of racial and ethnic discrimination. • In 2000, African Americans trying to buy homes in core gentrified neighborhoods were 1.25 times more likely to be turned down compared with identically qualified African Americans looking elsewhere. • As New York City has become more gentrified, it has become more segregated. In fact, New York City is more segregated now than it was in 1910 (Center for Social Inclusion, 2005).

Urban Studies 101