We Don't Need Policy When Practice Will Do

Maybe redlining wasn't the "aha!" policy that explains today's troubling racial inequality.

A map showing Black and Latino segregation in the nation’s 100 largest metro areas in 2010. Source: https://metroplanning.org/the-cost-of-segregation-2/

I’ve been a big fan of Alan Mallach of the Center for Community Progress for years. I first met him at a Cleveland Fed conference in Cincinnati in 2017, and later interviewed him at the University of Chicago’s Harris School of Public Policy regarding his book The Divided City: Poverty and Prosperity in Urban America. I’m grateful to have him as a regular reader of this newsletter. And, since he said I could use this quote as a blurb, let me add that via email he said the Corner Side Yard is “consistently interesting and often thought-provoking.” Thanks!

Anyway, he reached out to me last week after I’d written about the lack of research on Rust Belt-to-Sun Belt migration in America, and its impact. He noted, quite correctly in my opinion, that there’s also been little research on white flight as well – the migration of whites from cities to suburbs throughout the latter half of the 20^th century, while a major influx of Blacks into Northern cities was also taking place. In his email, he said that “from a social/cultural perspective, it's clearly problematic, and thus not an acceptable topic for research. The fact remains that, in round numbers, while the Great Migration led to 5 million Black people moving to northern cities, simultaneously 15 million white people left those cities.” (Note: this is something I first saw documented in an academic paper by Leah Platt Boustan published in 2007).

“White flight” all along

Mallach wrote and published his own academic paper last year on a similar topic. Mallach’s paper entitled Shifting the Redlining Paradigm: The Home Owners’ Loan Corporation Maps and the Construction of Urban Racial Inequality resulted in some fascinating findings. From his paper abstract:

“While it is important to recognize the racist roots of contemporary urban conditions and Black disadvantage, the focus on the HOLC redlining maps of the late 1930s, which have become a staple of both research and popular literature, is misplaced. Despite statistical associations between the maps and contemporary measures of racialized disadvantage, extensive research has found no evidence to support a connection between them. Instead, the Second Great Migration and white flight, both acting in the context of the exclusion of Black buyers from the growing suburbs, led to the spatial and economic bifurcation of urban Black populations within cities and the reconfiguration of the formerly predominately white ethnic redlined areas as segregated areas of concentrated Black poverty.”

In other words, redlining didn’t segregate American cities. White flight, fed by the Second Great Migration that brought millions of Black people to Northern cities between 1940-1970, did. White flight perhaps wasn’t always racist in its intent, but it was definitely racist in its practice.

That’s too bad, because redlining, and a whole host of other policies, did a lot of heavy lifting in the 2010s to describe racial inequality. Turns out America didn’t need a racist federal policy to resegregate Northern cities; it just needed an economy in need of workers, and a housing development industry finally willing accommodate the needs of a housing-starved public. Sound familiar?

Mallach says that the Home Owners’ Loan Corporation’s “residential security” maps, developed between 1935 and 1940, assessed sections of cities on a scale of A to D, with associated color codes: A (green, meaning excellent residential security), B (blue, for good residential security), C (yellow, for fair residential security) and D (red, indicating poor residential security). Neighborhoods with higher grades were deemed safer for bank investments; lower grades were considered “hazardous”.

The HOLC maps were all but forgotten until rediscovered by Kenneth Jackson in 1980, and leading to his book Crabgrass Frontier, first published in 1985. The term redlining had been coined by sociologist John McKnight in the 1960’s, and was used by housing activists fighting discriminatory housing practices right after the passage of the federal Housing Act of 1968. Interestingly, McKnight came up with the term to describe the lending practices of banks in Chicago at the time.

However, the significance of the maps in academic research grew steadily until 2014 or so, before reaching a peak around 2021. By then academics were using the maps to explain all sorts of negative economic and social conditions that impacted cities in general, and Black urban residents in particular.

Essentially, Mallach argues that the HOLC maps were descriptive, but did not directly lead to the conditions that created concentrated Black poverty in cities. From his paper:

“(The Second Great Migration and subsequent white flight) took place at a time when racial discrimination, perpetuated by lenders, insurers, real estate agents, and local officials, was pervasive, and its extent was severely constrained by those practices and policies.”

Redlining as Absolution

I’ve always had a sense that many white people, particularly white progressives, want to absolve themselves of contributing to systemic racism in one of a couple ways. Some say slavery and Jim Crow have been gone for a long time and have no impact on the economic mobility of Blacks. Others say that they, too, fell victim to racist policies that encouraged them to act in self-interests that were ultimately racist in practice. I think many white progressives sought out policies like the HOLC maps to say they were victims of the system as well.

I think it’s better to understand the HOLC maps as one form of the kind of discrimination that really took hold after the official downfall of Jim Crow with the 1964 Civil Rights Act. I’ve called it Northern Exclusion, and I believe the industrial Midwest perfected it.

In 2018, I participated in a conference in Detroit hosted by the Federal Reserve Bank of Chicago. It was called “Tools toward Market Restoration: Where Growth and Opportunity Converge,” and it was a conference that brought together practitioners deeply interested in changing the fortunes of cities experiencing “chronic market failure.”

The conference was book-ended with two presentations that spoke to the phrase. The conference's opening speaker was Richard Rothstein, Distinguished Fellow with the Economic Policy Institute and author of The Color of Law: A Forgotten History of How Our Government Segregated America. He made clear that the presence and persistence of today's urban ghettos -- a term he used because he believes it more accurately describes their development and use -- was the outcome of federal policy established as part of the New Deal's Home Owner's Loan Corporation (HOLC). Through the development of its Residential Security Maps for cities nationwide, designed to categorize neighborhoods by their mortgage worthiness, "redlined" communities (almost always Black communities) were starved of the financial resources necessary to keep them as viable communities over time.

The conference concluded with a presentation by Marisa Novara, formerly the vice president with Chicago's Metropolitan Planning Council. She was the non-profit agency's lead on an intriguing study that MPC conducted with the Urban Institute, The Cost of Segregation. MPC wanted to quantify the impact of segregation on the economic and social well-being of Chicagoans. Through their research, MPC found that, overall, metro Chicago had the fifth-highest level of combined racial (black and Latino vs. white) and economic segregation of the nation’s 100 largest metro areas. They also found that if metro Chicago had a level of segregation equal to the median of the 100 largest metros, the region would have:

o An additional $4.4 billion in income in the region, amounting to nearly $3,000 per person, across the board;

o An additional 83,000 people in the region with bachelor's degrees, fueling the increase in income;

o A regional homicide rate that would be 30 percent lower; and

o Residential real estate values that would be $6 billion more.

After Rothstein's presentation, I asked him if he thought that Rust Belt cities like Chicago bore more of the economic brunt of segregation, slowing their ability revitalize and compete with cities having a less difficult segregation legacy. He said, surprisingly to me, no. He contended that redlining and subsequent disinvestment happened across the country. Each has a sad story about lost income, lost opportunity, lost wealth and lost lives.

I politely disagreed with his point, and the MPC report provided evidence in support of mine:

This map, produced for the Cost of Segregation report, shows the top 100 metros ranked by levels of segregation in 2010. The ten metros ranked highest in segregation are named. At the time of the report Chicago ranked fifth highest out of 100 metros for racial and economic segregation. I don't think it's a coincidence that the metro areas that were Great Migration destinations -- the places Blacks fled the South for the North and West for better job and life opportunities prior to 1970 -- are the ones that are most segregated today. In fact, the ones that are most segregated now are the ones that saw the most in Black migration – in absolute numbers – during that period. That means today's most segregated metros resulted in more lost income, more lost opportunity, more lost wealth and more lost lives, than those that are less segregated today. That's the definition of disparate impact.

I'd even take my point one step further. Sun Belt metros, particularly in the South, that were once noted for their mid-20th century segregation, like Atlanta, Dallas and Houston, had significant post 1970 -- read: post-Fair Housing Act -- growth that effectively diluted previous segregation patterns. Those three metros today each have more than three times the population they had in 1970. Others, like Seattle, the San Francisco Bay Area, Denver and Phoenix, never had large Black populations to begin with and never really concerned themselves with the impacts of segregation; the in-migration of Blacks was negligible compared to Rust Belt cities.

From my perspective, it’s easy to see how Rust Belt cities continue to be weighed down by their segregation legacies. Had they continued to grow after 1950 the way they had prior, perhaps segregation would’ve eroded more quickly. Had they attracted fewer Black residents at the time, maybe they would’ve experienced an outcome similar to Seattle, the Bay Area, Denver and Phoenix. Of course, that implicitly acknowledges the racist premise of white flight.

Whatever. The fact remains that segregation, and the economic concentration of poverty still impacts Rust Belt cities more than others, and is still a chief barrier to their revitalization. We should never forget that.