Racial Housing Segregation in the United States

Introduction 

Racial segregation has been a longstanding issue in the United States. It has been a main concern for politicians since the end of the Jim Crow laws in 1954. The Civil Rights Act of 1964 was a historically significant legislative achievement that ended segregation in public places and prohibited racial discrimination in all employment and housing opportunities based on race, gender, color or nationality. Even though racial segregation has since declined, it is still significant in the 21st century, especially in the housing market. This paper will address the shortcomings of the housing model proposed by the J.K. Bruckner in his Lectures on Urban Economics. The research identifies the underlying variables that explain some of the key drivers of racially segregated housing, which Brueckner’s model fails to consider. In order to improve this simple model, we need to question some of the assumptions in Brueckner’s model and consider other variables that segregate minority groups and society. 

Problem Definition 

Almost five decades have passed since the Fair Housing Act of 1968, which among other things, disallowed discrimination based on race, nationality or color in the rental or sale of housing. The Civil Rights Act of 1964, Voting Act of 1965 and all other bills that followed have enabled desegregation and integration of racial minorities into society . As a result, explicit racial discrimination has diminished and racial minorities have received equal opportunity and treatment. However, prominent segregation in housing location between whites and non-whites, especially African Americans, might suggest that discriminatory behavior and segregation have taken another form. The levels of segregation have been the highest for African Americans and the declines in these levels has been the smallest in metropolitan areas where the majority of African Americans are concentrated (Farley, 2005). This is important because residential location is crucial in determining employment opportunities, quality of education and overall standard of living. 

In the case of employment, for example, residential segregation can set minority groups at a disadvantage because of obvious reasons including the distance between their residence and place of work, inadequate information about employment outside their areas of residence and disadvantaged employment of African Americans in all-white residential areas (Kain, 1968). Additionally, constraints on residential location deny minority groups the chance of obtaining an equal level of public goods such as education. Therefore, white individuals receive a higher level of education than non-whites, creating a racial achievement gap. A study conducted by the Economic Policy Institute, concluded that education policy is normally dependent on housing policy. This is because it is necessary to desegregate low-income and affluent neighborhoods to effectively desegregate schools (Rothstein, 2014). This study, along with many others concerning racial residential segregation in the US, prove that residential segregation is not solely a consequence of economic circumstances. 

Aside from ethical reasons, racial residential segregation contributes to other socioeconomic problems like criminality, health and income which affects all residents in a given area. According to a study conducted by the Urban Institute, if Chicago’s black-white residential segregation was reduced to the median level of the 100 most-populous commuting zones (CZs), the homicide rate would decrease by 30% (Keels, Duncan, DeLuca, Mendenhall, & Rosenbaum, 2005). Therefore, racial residential segregation has a significant impact on the overall economy. Even though Brueckner’s model explains segregation, to some degree using variables including income and preference of the level of public good, it fails in adequately modeling urban residential structure. In order to improve the model, we need to take into account other variables and redefine some underlying assumptions. Finally, this research proposes that racially and economically desegregating policies can help provide a sustainable model that addresses segregation. 

Economic Model/Policy Landscape 

In “ Lectures on Urban Economics”, one of the key aspects of Brueckner’s urban model is concerned with the “socially optimum” level of public good and services. The socially optimal level is where the marginal benefit, in a jurisdiction, is maximized. Thus, where marginal benefit equals marginal cost. Furthermore, according to Brueckner’s model there are three instruments by which jurisdictions can set their level of public goods; [1] Majority voting [2] Voting with one’s feet [3] Capitalization and Property Value Maximization ( Brueckner, 2011) . By using each of these mechanisms, Brueckner compares and analyses the outcomes and provisions of public goods and services (Brueckner, 2011). 

In Brueckner’s analysis, he concludes that majority voting results in an under- or over-provided level of public goods and services which usually strays away from the socially optimum level when the demands for different income groups are not symmetric. This imbalance can be corrected through his second mechanism; voting with one’s feet. This mechanism implies that households move to different jurisdictions depending on their preferred level of public goods and services which in turn creates homogenous communities (Brueckner, 2011). Another way, that Brueckner suggests socially optimal levels of public goods and services is through capitalization and property-value maximization which, again, creates homogenous jurisdictions. In this last mechanism, Brueckner links house prices to the level of public goods which suggests higher rents and property values in areas with better provision of public goods and services. Therefore, housing is segregated in terms of income through welfare and tax competition (Brueckner, 2011). 

Nonetheless, out of the three mechanisms, “Voting with one’s feet” and “Capitalization and Property-Value Maximization” are of utmost importance since they directly affect residential housing segregation. The underlying assumption in both mechanisms is that several homogenous jurisdictions are created and organized based on the preferred level of public good or service. However, the error in his analysis is that preferences, in reality, are restricted by income and not by the desired level of public good. In reality, no parent would prefer to enroll his children at lower quality school. That is, African Americans living in crowded metropolitan areas are forced to send their children to lower quality schools because they can’t afford residence in other suburban areas that offer better schools and education. Considering this redefinition of preferences, “voting with one’s feet” contemplates segregate households based on income and not preferred level of public goods and services. 

Additionally, Brueckner’s model suggests that wealthier households create or move to expensive homogenous neighborhoods through welfare and tax-competitions. This, again, suggests that provision of public goods and services will separate communities according to income which is an important insight in regard to racial segregation. Given the inherent link between income and race, it is appropriate to protest this model, as it creates a perpetuating cycle which is unfavorable to both racially diverse and low-income households. During the postwar era, for example, certain policies were implemented that favored white individuals. The government explicitly subsidized the mortgages, and hence the relocation, of whites to suburbs. Builders were provided with federal loan guarantees so long as they ensured that no sales were made to black individuals and that they limited resale to blacks in a phenomenon described as an incompatible racial element (Rothstein, 2016). These explicit discriminatory policies of the post war era have created a racial wealth inequality which has been consistent and ever-increasing throughout the years. According to Economic Policy Institute, 2013 data shows that the median average wealth of whites was estimated at $134,230 whereas the estimated wealth of blacks was estimated at only $11,030 (Economic Policy Institute, 2017). This massive inequality could potentially be explained by the unequal wealth distribution by the US Department of Housing and Urban Development during the post-war period. 

Another factor that Brueckner’s model fails to consider is preferences of residential areas in terms of racial composition. Aside from distance from employment location and provision of public goods and services, in reality, racial composition is taken into account when deciding where to live. According to numerous studies, it’s suggested that many white households avoid locating in neighborhoods with increasing minority populations (Bobo & Zubrinsky, 1996). A study finds that: 

“ The type or form of prejudice that shapes residential integration attitudes appears to depend, however, on majority or dominant group status versus minority or subordinate group status” (Bobo & Zubrinsky, 1996). 

This study suggests that white people perceive living in areas with minority populations, black in particular, is an indicator of subordinate status. These preferences and prejudices, which have been inherited through past discrimination, set minority groups at a disadvantage by creating segregated communities (Zubrinsky & Bobo, 1996). Other studies that bolster the argument of prejudice, suggest that socioeconomic circumstances are not the sole explanatory variables for the persistent racial housing segregation in the United States. In a contrary review to Clark’s paper (1986), George Galster concludes that housing discrimination practices hold equal explanatory power in explaining racial housing segregation (Galster, 1988). Another study sponsored by the Department of Housing and Urban Development, which further supports this claim, indicates that 15-26% of African American and Hispanics face adverse treatment on their visit to real estate and rental offices (Hannon & DeFina, 2005). Therefore, it is necessary to acknowledge how racial residential segregation might be rooted in policies and the model. 

Solutions/Model Adjustments 

Brueckner’s model suggests ways of achieving the socially optimal level of public good or service in a jurisdiction. Nevertheless, some of its assumptions concerning preferences of public goods and services are considered problematic. Adjustments to the model would entail huge changes in the housing structure which might be unrealistic. Nevertheless, there are some potential solutions that can be exercised, in the future, through federal policies and regulations which will integrate both mixed race and income groups in segregated areas. Beside the ethical principles in providing equal opportunity and public resources to citizens, these policies will benefit the United States as a whole by improving racial income inequalities and overall standards of living. Taking these factors into consideration, the proposed model solutions are: 

Revitalize poor neighborhoods 

Provide subsidies 

Direct regulation 

Deconstruction of exclusionary zoning laws 

Revitalize poor neighborhoods 

Some of the initiatives taken in the past to correct racially segregated areas, and in turn improve the standard of living for minorities, have not yielded the expected results. Additionally, other government sponsored programs like the HOPE VI program help further segregation, according to Roisman (2008). As he writes: 

The incentives HUD built into the HOPE VI program virtually guaranteed that replacement housing would be limited to the same racially isolated neighborhoods rather than racially diverse, high opportunity areas, and HUD has administered the voucher program in such a way as to discourage families from moving to those high opportunity areas (Roisman, 2008). 

The HUD was funded the amount of $5 million in 2009 and a staggering $124 million in 2010 in attempts to revitalize distressed public housing areas (Housing and Urban Department, 2009). However, Roisman (2008) argues that this is a program guised to maintain segregation by encouraging lower income minority groups to reside in the city center, where resources are starved, and public schools are the worst, and maintain the suburban area predominantly white (Roisman, 2008). 

On the other hand, the HOPE VI program, which revitalizes poor neighborhoods, helps lessen the gap between the quality of public goods and services offered in rich suburban areas and poor racially segregated metropolitan areas. Consequently, one might argue that programs like HOPE VI can, in the long term, help break stereotypes and white fears about minority populated neighborhoods as their quality and standard of living improves. The results might not be evident in the short run, but it would be the first step towards integration. 

Provide subsidies 

One policy proposal involves providing housing subsidies to both low income and/or racial minorities in highly segregated areas. The reason behind providing subsidies to both low income groups and racial minorities is to avoid overcrowding the low-income group in an area exclusively with racial minorities. Moreover, these subsidies could take place in the form of a tax credit, development of affordable housing in high income areas, housing vouchers or a combination of the previously stated policies (Arbaci, 2007). This measure will encourage low income and racially diverse households to relocate in suburban areas and escape the crowded underprovided areas. However, how will relocation and desegregation benefit society as a whole? Data by the US Census Bureau indicates that approximately eighty percent of blacks that are employed in the central city reside there while only approximately twenty percent reside in the suburbs. The same ratio favoring residence and employment in the suburbs applies to whites. Given that job location and residential location are correlated, this would create better employment opportunities to racial minorities. At the time, the unemployment rate for African Americans was approximately 14%, more than double the unemployment rate of 6% for whites (United States Census Bureau, 1999). Such a policy would make sense both ethically and economically if it was implemented, upheld, and controlled by the federal government, to avoid jurisdictional bias. 

Direct regulation 

A second policy that could be implemented in accordance to the policy mentioned above is directly regulating developers to assure that they will promote racial desegregation and require agencies to collect all racial and economic data concerning their development locations (Roisman, 2008). A revision and enforcement of the Fair Housing Act can prohibit and discourage discriminatory behavior in the sale or rent of property. Arguments against the effectiveness of this policy may include the difficulty of detecting discriminatory behavior which will consequently discourage individuals from reporting discriminatory behavior. Therefore, the federal government ought to provide sufficient data collection and testing to determine a model that detects discriminatory behavior or that has a certain discriminatory behavior threshold. Additionally, constant monitoring and testing of data as well as close contact by the HUD will keep development agencies on their toes. 

Deconstruction of Zoning Laws 

Another measure that can be used to tackle racial segregation is the deconstruction of exclusionary zoning laws. Zoning laws divide land and specify its type of use which include categories such as commercial, industrial, high density and low density residential. The rationale behind zoning laws is to limit the impact of negative externalities such as industrial pollution. Nevertheless, it is argued that high and low density residential zoning laws are used with the implicit objective of racially and economically stratifying households. These exclusionary zoning methods work to maintain high housing cost as well as limit the housing options in an area that allows high income residents to force out low-income residents of which minorities hold a significant percentage. In a study linking zoning regulations, such as minimum lot size requirements, to increasing racial segregation Mathew Resseger (2013) writes: 

“ The coefficient, significant at the 1 percent level, indicates that an extra unit of density, measured in units permitted per acre, increases the black share on the block by 0.38 percentage points, where the baseline average black share is 7 percent in the overall population and 10 percent in the border sample. This suggests quite large effects of shifts in zoning of plausible magnitudes.” 

His finding concludes that in the case of Massachusetts, exclusionary zoning laws exacerbate racial segregation (Resseger, 2013). Nevertheless, other studies suggest that exclusionary zoning laws are not the reason behind racial residential segregation. In a study between a zoned city, Dallas, and an unzoned city, Houston, a dissimilarity index methodology was used to conclude that zoning laws had no effect on the level of racial segregation (Berry, 2001). It might be true that in some areas, in comparison to others, exclusionary zoning laws have little explanatory power. Therefore, the federal government should get directly involved in further analyzing cities and their zoning laws and take effective action in the cities which clearly use these laws in a discriminatory manner. 

Conclusion 

The goal of this paper was to identify the underlying causes of racial residential segregation, analyze the validity of Brueckner’s model, and propose policy and regulatory solutions that desegregate racially segregated communities. It is important to recognize that housing is a complex model with other variables in play which might require thorough analysis and number of policy and structural changes. Nevertheless, this paper has provided historical background and several empirical studies that identify the root causes of racial residential segregation. Moreover, by identifying how our current model operates to disadvantages minorities we can begin thinking of ways to shape our future for the better. My four suggested solutions mark a mere starting point in a continued fight against discriminations and segregation. 

References 

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Berry, C. (2001). Land use regulation and residential segregation: Does zoning matter? American Law and Economics Review, 3(2) , 251-274. 

Bobo, L., & Zubrinsky, C. L. (1996). Attitudes on residential integration: Perceived status differences, mere in-group preference, or racial prejudice? Social forces, 74(3) , 883-909. 

Brueckner, J. K. (2011). Lectures on urban economics. MIT Press. 

Farley, J. E. (2005). Race, not class: explaining racial housing segregation in the St. Louis metropolitan area, 2000. Sociological Focus, 38(2) , 133-150. 

Galster, G. (1988). Residential segregation in American cities: A contrary review. Population research and policy review, 7(2) , 93-112. 

Hannon, L., & DeFina, R. (2005). Violent crime in African American and white neighborhoods: Is poverty's detrimental effect race-specific? Journal of Poverty, 9(3) , 49-67. 

Housing and Urban Department. (2009). FY 2010 HOPE VI Funding Information . Retrieved from Housing and Urban Department: https://www.hud.gov/program_offices/public_indian_housing/programs/ph/hope6/grants/fy10 

Kain, J. F. (1968). Housing segregation, negro employment, and metropolitan decentralization. The quarterly journal of economics, 82(2) , 175-197. 

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Resseger, M. (2013). The Impact of Land Use Regulation on Racial Segregation: Evidence from Massachusetts Zoning Borders. Boston, MA, USA: Harvard University. 

Roisman, F. W. (2008). Living Together: Ending Racial Discrimination and Segregation in Housing. Indiana Law Review, 41 , 507. 

Rothstein, R. (2014). Modern Segregation. Economic Policy Institute. 

Rothstein, R. (2016). School policy is housing policy: Deconcentrating disadvantage to address the achievement gap. In R. Rothstein, Race, Equity, and Education (pp. 27-43). Cham: Springer. 

Zubrinsky, C. L., & Bobo, L. (1996). Prismatic metropolis: Race and residential segregation in the city of the angels. Social Science Research, 25(4) , 335-374.