"There's a large extent to which the segregation that was created via these programs is effectively permanent," says an NYU professor studying spatial inequality.
A regular installment about race and money in America, from the authors of "The Black Dollar"
Good morning. As the year draws to an end, we are hoping to reach as many people as we can to draw them into conversation about race and money. Thank you for reading and for sharing this with your friends.
The Q&A.
Jacob Faber, an assistant professor at New York University, studies “spatial inequality.” That term refers to how opportunities, advantages and disadvantages are distributed throughout our physical world. It draws on the older economic discipline of economic geography, which has often been used for discussions of globally distributed wealth and resources.
We are fascinated by new academic work like Jacob’s paper on the lasting impact of redlining. Louise caught up with Jacob this week.
Louise: I read your paper - “We Built This: Consequences of New Deal Era Intervention in America’s Racial Geography” - and one place I think is good to start is with your statement that “The Great Depression was not only an employment crisis, but a housing crisis.” In 1933, you note, approximately half of the nation’s mortgage debt was in default.
Could you say a little bit more about that because it hadn't been my impression that there were a lot of homeowners before the Great Depression.
Jacob: It's a good thing to highlight. And you're right, and I had shared that understanding of the Great Depression as mainly an employment crisis before starting this research.
It certainly was an employment crisis, arguably the worst employment crisis in American history. And, stemming from that, the housing market was also in severe distress, and it was probably the most severe housing market collapse in American history.
Louise: Wait, you are saying the Great Depression was the worst housing market collapse of all time? I covered the 2008 financial crisis and that housing collapse was quite severe. How many Americans even owned homes before the Great Depression? I didn’t think it was so many.
Jacob: You are right in that understanding. Less than half of Americans owned their homes before the New Deal. But foreclosures were still rampant. Rental properties are still owned by someone. So people were evicted because they couldn't pay rent or because the building they were renting in went into foreclosure. So it's another aspect of the housing market and specifically mortgage finance is that the dynamics of the mortgage market also impacts renters quite a bit.
Louise: Yes, Ebony and I have been doing a lot of contemporary reporting and that very much comports with what we've seen. In 2008, many of the people who experienced dislocation from foreclosure were renters.
But back to the 1930s. A major program in the New Deal was the government’s creation of the Home Owners’ Loan Corporation (HOLC), which formally introduced redlining to America through its requirement of maps that rated neighborhoods by “desirability.” You highlight in your paper that there are some places that did not have redlining. How did that occur?
Jacob: The HOLC asked appraisers to make maps for all cities that had a population above 40,000 people. We know from the historical record that that rule was imperfectly followed. So, for example, there are maps of entire counties like Essex County in northern New Jersey and Westchester County immediately north of New York City. There were maps made of sections and metropolitan areas. There were separate maps for each of the boroughs of New York City. There were maps of cities that were above that threshold that included appraisals of some outlying suburban areas. So because of this, there were a lot of cities and towns that had populations below this threshold that ended up being captured within this agency mapping project. And there were cities below 40,000 that are now above that.
Louise: OK, so in your research, you looked at these cities that had appraisal maps versus the ones that didn’t. How have the two groups fared?
Jacob: These appraised places are still far more segregated than in places that weren't appraised. In fact, the gap between appraised and other places has not closed really at all since its inception in the ‘50s and ‘60s. And so there's a large extent to which the segregation that was created via these programs is effectively permanent.
Louise: And when you say “these programs,” you mean the programs that also spun out of the HOLC work, such as loans backed by the Federal Housing Administration and the Veterans Administration.
Just to focus on “this gap” a bit more. Your paper measures this gap using three indices. They are:
The Black isolation index
The white-Black dissimilarity index
The information theory index
Tell me more about these indices and what they show us.
Jacob: These are the most commonly used measures of segregation, and part of that is due to the fact that they're easier to interpret than other measures. The Black isolation index is the average neighborhood percentage that is Black for a Black person living in a specific city or town. So the higher that number, the higher share of a Black person's neighbors are also Black within within a town. But, you know, even that is still somewhat abstract. I think that the way to think about contextualizing the impact of the Home Owners’ Loan Corporation is that all of those indices have been declining since 1960-ish for appraised places and for the poorest places. But appraised places are about two decades behind the poorest places in that decline.
Louise: Wow, so even as things improve, the gap lingers between places that had redlining maps and places that didn’t. So in your paper, you say we need momentum to bring public policy to change this. Do you have policies in mind?
Jacob: I think that we have to start with a recognition of the necessity of reparations. I think that there's no getting around the fact that the wealth gap that we see today is a consequence of these large federal programs. So there has to be a redistribution of wealth and you know, that has to be racially specific. There are also geographic concerns. So, you know, it's worthwhile investing in some of these historically red line communities where there are still quite a bit of disadvantages. But that has to be tested against kind of contemporary measures of inequality and segregation. And the good news is that we, you know, we very much know what we did to segregate people. We basically paid people to segregate. And so, you know, we can create financial incentives for people to integrate.
The Latest Highlights.
Skincolor seems to still matter in some home sales. In case you missed it, this story last week on a San Francisco couple that ‘erased themselves’ from their home to see if the appraised value would go up is fascinating.
Re-understanding history can be challenging. But that is part of what is going on right now, says David Ikard of Vanderbilt University in a podcast from Ted Talks called “How to Be a Better Human.” This is a great listen and may make you rethink your understanding of the Rosa Parks story as well as generational differences today on the way we view history.
Racial bias comes up in AI models, and so this move by lots of big companies to work on the way they use AI in hiring models could be impactful. We are watching with interest.
One of the most sobering books that you should consider buying (if you don’t own it already) is Pauli Murray’s “States’ Laws on Race and Color.” Originally published in 1950, this book lists all the state and local laws and ordinances in effect at that time that mandated racial segregation. It is one of the thickets books on our bookshelves and it’s worth every page. Murray is an activist that more people are talking about in light of the new documentary “My Name is Pauli Murray.” Here is a fascinating interview with the writer and editor of that new film.
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Thanks for reading.
