By
Robert Reich
Almost
lost by the wave of responses to the Supreme Court’s decisions last week
upholding the Affordable Care Act and allowing gays and lesbians to marry was
the significance of the Court’s third decision – on housing
discrimination.
In
a 5-4 ruling, the Court found that the Fair Housing Act of 1968 requires
plaintiffs to show only that the effect of a policy is discriminatory, not that
defendants intended to discriminate.
The
decision is important in the fight against economic apartheid in America –
racial segregation on a much larger geographic scale than ever before.
The
decision is likely to affect everything from bank lending practices whose
effect is to harm low-income non-white borrowers, to zoning laws that favor
higher-income white homebuyers.
First,
some background. Americans are segregating ever more by income in terms of
where we live.
Thirty years ago most cities contained a broad spectrum of residents from wealthy to poor. Today, entire cities are mostly rich (San Francisco, San Diego, Seattle) or mostly impoverished (Detroit, Baltimore, Philadelphia).
Because
a disproportionate number of the nation’s poor are black or Latino, we’re
experiencing far more segregation geographically.
Which
is why, for example, black students are more isolated today than they were 40 years ago. More
than 2 million black students now attend schools where 90 percent of the student body is minority.
According
to a new study by Stanford researchers, even many
middle-income black families remain in poor neighborhoods with low-quality
schools, fewer parks and playgrounds, more crime, and inadequate public
transportation. Blacks and Hispanics typically need higher incomes than whites
in order to live in affluent neighborhoods.
To
some extent, this is a matter of choice. Many people prefer to live among
others who resemble them racially and ethnically.
But
some of this is due to housing discrimination. For example, a 2013 study by
the Department of Housing and Urban Development found that realtors often show
black families fewer properties than white families possessing about the same
income and wealth.
The
income gap between poor minority and middle-class white communities continues
to widen. While the recovery has boosted housing prices overall, it hasn’t
boosted them in poor communities.
That’s
partly because bank loan officers are now more reluctant to issue mortgages on
homes in poor neighborhoods – not because lenders intend to discriminate but
because they see greater risks of falling housing values and foreclosures.
But
this reluctance is a self-fulfilling prophecy. It has reduced demand for homes
in such areas – resulting in more foreclosures and higher rates of vacant and
deteriorating homes. The result: further declines in home prices.
As
prices drop, even homeowners who have kept current on their mortgage payments
can’t refinance to take advantage of lower interest rates.
Others
who owe more on their homes than their homes are worth have simply stopped
maintaining them. In many poor communities, this has caused the housing stock
to decline further, and home prices to follow.
Adding
to the downward spiral is the fiscal reality that lower housing values mean
less revenue from local property taxes. This, in turn, contributes to worsening
schools, fewer police officers, and junkier infrastructure –accelerating the
downward slide.
All
of which explains why housing prices in poor neighborhoods remain about 13 percent below where they were before the
recession, even though prices in many upscale neighborhoods have fully
rebounded.
And
why about 15 percent of the nation’s homes worth less than $200,000 are still
underwater while just 6 percent of homes worth more than $200,000 are.
Worse
yet for poor communities, most of America’s new jobs are being created in areas
where housing already is pricy, while fewer jobs are emerging in places where
housing is cheapest.
The
toxic mixture of housing discrimination, racial segregation over wide swathes
of metropolitan areas, and low wages and few jobs in such places, has had
long-term effects.
A
Harvard study released in May suggests just how long. The
study tracked several million children since 1980s.
It
found that young children whose families had been given housing vouchers
allowing them to move to better neighborhoods were more likely to do better in
later life – attend college and get better jobs – than those whose families
hadn’t received the vouchers.
The
study points to one solution: housing vouchers that help lower-income families
move into better neighborhoods.
It
also suggests that federal tax credits to encourage developers to build housing
for the poor should be used in racially-integrated communities, rather than
mostly in poor ones.
Not
incidentally, this is the very issue that sparked last week’s Supreme Court’s
decision on fair housing.
If
we want to reverse the vicious cycle of economic apartheid in America, that
decision offers an important starting place.
ROBERT
B. REICH, Chancellor’s Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies, was Secretary of Labor in the Clinton administration. Time Magazine
named him one of the ten most effective cabinet secretaries of the twentieth
century. He has written thirteen books, including the best sellers
“Aftershock" and “The Work of Nations." His latest, "Beyond
Outrage," is now out in paperback. He is also a founding editor of the
American Prospect magazine and chairman of Common Cause. His new film,
"Inequality for All," is now available on Netflix, iTunes, DVD, and
On Demand.
