Planning Magazine

Eliminating Racial Segregation Is Good Economic Policy

Income disparities and racial segregation are deeply intertwined, burdening both people of color and the U.S. economy. Here's how we can reverse that trend.

Article Hero Image

Fifteen miles separate Maurice's home (top) in the 6400 block of South Hermitage in the Chicago neighborhood of Englewood, and his "map twins," Jon and Paula, who live on the 6400 North block on the same street in the mostly white neighborhood of Edgewater. The strangers met and visited each other's homes through the Folded Map project. They were astonished by the disparity between their neighborhoods while recognizing they valued the same neighborhood amenities. Photos by Tonika Lewis Johnson.

icon dis rup tor stacked syllables

Part of the Disruptors Series

In 2017, social justice artist Tonika Lewis Johnson set out to document Chicago's racial segregation. Through video interviews, photographs, and a forthcoming documentary, her Folded Map project pairs "map twins," or people who live at corresponding addresses opposite one another on Chicago's North and South Sides, to zero in on the very real differences in access, opportunity, and quality of life.

Most people are aware of Chicago's divisions, she says. "But the issue is, we've normalized it."

Indeed, the city is widely reported to be one of the most segregated in the country. "Today's Chicago is the product of decades of policies that have had the effect of isolating communities of color," says Prosperity Now, a nonprofit organization dedicated to financial stability and prosperity. But Chicago isn't alone.

More than half a century after the Fair Housing Act outlawed policies like redlining, racial segregation continues to plague the U.S., even as it gallops toward an expected minority-majority in the next few decades. In a Brookings Institute analysis of 51 metro areas, the average segregation level on a scale of zero (completely integrated) to 100 (completely segregated) was 59.4, driven in large part by northern cities that were once destinations of the Great Migration. Cleveland, Detroit, Chicago, New York, and Milwaukee — which had the highest level of racial segregation, at 79.8 — all top the list.

At the same time, income inequality has been increasing for decades. Black households made about $33,000 less than the white median household income in 2018, a gap that has increased by $9,200 since 1970. And many are concerned the coronavirus pandemic will only widen the gap. A September poll from NPR found some startling disparities: 72 percent of Latinx respondents, 60 percent of Black households, and 55 percent of Native Americans reported significant financial hardships due to COVID-19. Only 36 percent of white households said the same.

Studies show that these dual issues are deeply intertwined. As calls for racial justice continue across the country, experts say planners and government officials must address segregation to tackle income inequality. Failure to do so not only unjustly burdens Black Americans and other communities of color; it also impedes state and local economic growth.

Generations of loss

The Chicago Metropolitan Planning Council (MPC), an independent, nonprofit planning organization, set out in 2015 to study the city's racial divisions and identify a more equitable way forward. The resulting 2018 report, The Cost of Segregation, quantifies the widespread financial impacts on all neighborhoods, even the whitest and most affluent.

"Chicago's segregation is inextricably linked to racism," the report says, but "segregation is not only an issue in low-income communities or communities of color. Everyone pays a price, measured in lost income, lives, and education." If the city's economic and racial segregation were reduced to even the national median, MPC's research indicates, Black Chicagoans would gain $2,982 per person annually, and the city could save 229 lives (a roughly 30 percent decline in the area's homicide rate). And if the region as a whole took steps to desegregate Chicagoland residents, it would see an $8 billion increase in gross domestic product.

Zooming out to the country at large, people of color earn 63 percent of white Americans' earnings of the same age and gender, according to The Business Case for Racial Equity, a 2018 report from the W.K. Kellogg Foundation and Altarum. The Federal Reserve, which defines wealth as the difference between assets and liabilities, found in its 2019 Survey of Consumer Finances that white families typically have eight times the wealth of Black families, and five times the wealth of Latinx families. If these inequities continue to go unaddressed, milestones like sending children to college or buying homes could become even further out of reach for many people of color, says Sarah Treuhaft, vice president of research at PolicyLink, a national research institute advocating for racial and economic equality.

Closing the income gap could boost the average annual income for people of color by $14,696, according to the National Equity Atlas, a nonprofit partner of PolicyLink that describes itself as "America's most detailed report card on racial and economic equity." And overall earnings could see an increase of $1 trillion, resulting in higher spending power and more financial security for communities of color, according to The Business Case for Racial Equity.

Failure to act costs the government, too. The report estimates that closing the earnings gap between whites and people of color could ultimately increase federal tax revenue by $450 billion and state and local tax revenues by at least $100 billion. And if that gap is closed relatively quickly, by 2050, the benefits magnify. The U.S. could see $2.6 trillion in additional consumer spending, plus a bigger boost in tax revenue: $1.4 trillion more for the federal government and $325 billion more at the state and local levels.

Start with housing

The desperate need to address inequities in the U.S. — and the benefits of doing so — are clear. But how can it be done? As instrumental as housing policy was in creating segregation, it's also one of the chief ways to uproot it, experts say.

"Certain populations are more likely to be born into a household that's not just low income or in poverty, but in a neighborhood where 20, 30, [or] 40 percent or more of people around them also are living in poverty," says Ani Turner, codirector of sustainable health spending strategies at Altarum. "That creates a neighborhood that has less opportunities, fewer businesses to get job experience, sometimes struggling education, sometimes higher crime, less safety, less ability to be exercising, less access to healthy food. All these things interact, [but] it starts with housing and neighborhoods."

MPC also sees housing policy as a path to change. Our Equitable Future, the nonprofit regional planning group's two-part roadmap for advancing racial equity in Chicago, includes a variety of recommendations for housing reform. Lessening local control over affordable housing decisions, for instance, would "ensure that all communities contribute to the city's affordable housing needs."

That can force out lower-income people and anyone who can't afford a home, perpetuating the status quo. Planners should highlight opportunities to modernize existing restrictive regulations, starting with zoning code updates, says Sara Bronin, lead organizer for Desegregate Connecticut and law professor at the University of Connecticut.

Providing affordable, multifamily housing options in high-opportunity areas is critical, research shows. According to The Business Case for Racial Equity, expanding housing vouchers and initiatives like HUD's Moving to Opportunity for Fair Housing program have been shown to result in higher college attendance and higher earnings for participants down the line. But it's not a guarantee: The effectiveness of vouchers is often determined by the availability of housing in high-income areas, plus the willingness of landlords to accept them. Business groups must recognize that opposing these initiatives directly hinders the elimination of racial and economic gaps over the long term, and zoning regulations could integrate lower-income housing into high-end areas, Bronin says.

Similarly, it's not enough to simply increase housing opportunities in disenfranchised communities. While tax abatements for developments in historically redlined communities can spur development, they can also catalyze and subsidize gentrification, says Trevon Logan, professor of economics at The Ohio State University. Protecting affordable housing through government and nonprofit ownership or rent control initiatives is crucial to preventing displacement, he says. Governments can also give existing residents tax abatements and create more targeted tax incentives as a form of housing justice, Treuhaft of PolicyLink says.

Confronting policies that favor homeowners over renters can be a challenge, stemming primarily from NIMBY notions that homeowners are contributors to the community and renters aren't. Treuhaft finds such assumptions racist, given that racial inequities have contributed to more white homeownership for generations. Per U.S. Census data, the non-Latinx white homeownership rate in the third quarter of 2020 was 75.8 percent, compared to Asian, Native, and Pacific Islanders at 61 percent and Black people at 46.4 percent.

Ultimately, closing that gap will be vital to addressing segregation, in Chicago and across the country. "Homeownership long has been central to Americans' ability to amass wealth and is a key strategy to reduce the racial wealth gap," MPC says. "Yet many families of color have long been excluded from the benefits of homeownership because of redlining, mortgage discrimination, predatory lending, and residential segregation."

Unity through transit

According to Pew Research Center, Black and Latinx people tend to live farther from their jobs due to segregation and displacement, are more likely to lack access to a personal vehicle, and depend on public transit the most. A 2016 Pew survey found that, in urban areas, 34 percent of Black residents use public transit on a daily or weekly basis, compared to 27 percent of Latinx and 14 percent of white residents.

The pandemic has only reinforced those patterns. "We've seen a remarkable 'white flight' from public transit," reports Transit, an app that provides bus arrival times and other transportation info in more than 200 cities. Their April study found that, among their U.S. users still taking transit to get where they need to go, less than 25 percent are white, while nearly 40 percent are Black.

"What we have to realize is that if the essential workers that need transit, many of them Black and brown folks, are dependent on transit, then we're all dependent on transit," says Tamika L. Butler, a planner and principal of Tamika L. Butler Consulting. "Folks of color, we've been holding up society on our backs for generations. And so if our lives are at stake, everyone's lives are at stake."

"People of color face longer commute times than white people because of the country's long history of racial segregation," the National Equity Atlas reports. "As urban housing prices skyrocket, people of color are increasingly pushed out of urban areas and away from their employers. As most cities in the United States lack quality public transportation, people of color increasingly face longer commute times."

In Columbus, Ohio, for example, cumbersome bus commutes can take as long as two hours, says Trevon Logan. And in Detroit, one of the largest majority Black cities in the country, ballot measures to expand the city's bus lines into the suburbs, where more diverse jobs tend to be located, routinely fail to pass. Meanwhile, downtown options like the People Mover, an elevated train loop, and the recently launched Q-Line, a streetcar that operates for about three miles of Woodward Avenue, are often criticized for serving suburban visitors over local residents' needs.

Where transit should create connections to opportunity, it often adds costs and barriers. Cities with longer commute times have lower levels of intergenerational mobility, or movement between occupations or social classes from one generation to another, which could stem from transportation constraints, Logan says.

If government agencies own the land where they're building affordable housing, that makes it easier to construct affordable transit near affordable housing developments, Treuhaft says. According to PolicyLink's All-Cities initiative, local or regional transit agencies could repurpose government-owned land or acquire privately owned land parcels for equitable transit-oriented development projects, but those acquisition efforts depend on the funding sources available.

Balance commerce with community

With so much to gain from addressing segregation, what's kept so many communities complacent for so long? At times, financial interests in the private sector protect the status quo and override government investment in initiatives that promote racial equality, Altrum's Ani Turner says. And, she adds, some stakeholders don't even believe racial barriers exist.

Ultimately, the market alone won't drive businesses to open in certain communities if residents' incomes don't support them, she says. But the economic argument can be strong motivation. Businesses can and should play a big part in addressing inequality, she insists — it just makes economic sense over the long term.

Economic Restructuring
Further Impacts: Economic Restructuring

Job growth concentrated in large metros exacerbates income inequality and social divisions among and within those areas. Growing metros face longer commutes and rising housing unaffordability, while other metros see an outmigration of talented workers and greater fiscal strain.

But as with housing, it can't just be about moving people to opportunity; communities of color need businesses in their own neighborhoods that offer good jobs, services, and other resources — and they need a variety of them, not just one major employer. In the 1970s, Sears pulled its headquarters from North Lawndale, a predominantly Black Chicago neighborhood. Nearly 50 years later, the unemployment rate was still almost 10 percentage points higher than the overall city's rate, according to the Chicago Metropolitan Agency for Planning's analysis of 2018 American Community Survey data.

To better integrate people across the socioeconomic spectrum, it's important to prioritize mixed-income development, not just high-end development, Turner says. Though high-end housing is lucrative for developers, zoning needs to integrate housing for low-income and middle-income development, too, she says. Creating mixed-income communities helps lower-income households take advantage of the resources their high-income counterparts have, like access to small businesses, parks, grocery stores, and other local amenities, she says.

But all economic development is not good economic development. Often, influential businesses and trade organizations tend to sway policies or regulatory implementations that conflict with the pursuit of racial equality, Turner says. One big example is the disproportionate amount of heavily polluting industries sited in low-income neighborhoods and communities of color, all under the guise of economic development. According to a 2017 report from the NAACP and the Clean Air Task Force, Black Americans are 75 percent more likely to live in communities near hazardous land uses, leading to higher risk of chronic diseases and life-threatening illnesses like COVID-19.

As part of addressing segregation, planners need to play a role in seeking environmental justice in those communities, Treuhaft says.

The long haul

Planner Tamika Butler is hopeful the current racial justice movement will bring substantive change, but she says a lot of posturing is coming from institutions who had the opportunity for it long before now. For planning to make advances, she warns, the profession must first recognize how it has caused harm to marginalized people and neighborhoods.

The demographic makeup of the industry is its own barrier, too. Data on the profession as a whole is difficult to find, but according to a 2018 APA survey, Black, Latinx, and Asian or Pacific Islander planners together comprised only 13 percent of the organization's members. If planning aims to address racial inequality, Treuhaft says, the profession must start by diversifying to better reflect the communities it serves.

"We have to acknowledge that this is going to take time," Butler says. "We didn't just start white supremacy yesterday."

Pushback will come, including from residents with racist attitudes, Treuhaft says. But others will be eager to push for change. Lewis Johnson, the social justice artist, points to Chicago: After she introduced her first set of map twins in 2017, the North Side residents teamed up with their South Side counterparts in Englewood to participate in a beautification project there.

As planners explore their own projects, Lewis Johnson recommends applying their technical knowledge to existing efforts already taking place — and embracing the fact that they can learn from residents. Some neighborhoods are so impacted by disinvestment that it actually inspires innovation, Lewis Johnson says.

"Residents who are not urban planners are just as much experts," she adds.

Tatiana Walk-Morris is a Detroit-native, Chicago-based independent journalist.