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Unfair “Fair Housing”

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Unfair “Fair Housing”

The new Obama administration policy to “deconcentrate” poverty is a threat to communities. Spring 2016
Economy, finance, and budgets

A divisive issue has arisen in Hillary Clinton’s tony adopted hometown of Chappaqua (population 1,400), in New York’s Westchester County: affordable housing—specifically, whether to permit the construction of subsidized apartments for low-income families near the train station. In 2009, the county reached a settlement with the federal government of a lawsuit alleging that it had failed to remove racial and income-related barriers for poor residents seeking better housing—in effect, that it had discriminated. Since then, HUD has doggedly pushed Westchester, including its wealthy localities, to finance hundreds of new units of subsidized housing and to market them aggressively, particularly to minorities.

What’s at stake goes beyond Westchester County. Through its expansive “fair housing” policies, the Obama administration wants to ensure that poor minorities, who have historically clustered in low-income urban neighborhoods, can avail themselves of the better schools and greater safety of high-income suburban locales. As HUD puts it: “No child’s ZIP code should determine her opportunity to achieve.” Support for “deconcentrating poverty”—that is, reducing the percentage of poor people within specific localities by relocating them elsewhere—has gained additional momentum from a recent Supreme Court decision and new social-science research.

It’s far from clear, though, that black or other minorities will benefit from such policies. An aggressive “deconcentration” push could introduce race and class tensions into hundreds of communities by overriding the powerful dynamic of the American housing market, in which residents earn their way up the socioeconomic rungs of a “housing ladder.” Deconcentration policies also undermine the achievements of minorities who have moved to more affluent communities through their own hard efforts. A better course would be to enforce an older view of fair housing—simply ensuring access for everyone who can afford to move to a neighborhood and aggressively prosecuting violations—and, crucially, to encourage a culture of upward mobility, in which people take advantage of opportunity.

Since the 1930s, the federal government has subsidized housing for low-income households. But the various forms of such subsidized housing have all run into trouble of one kind or another. Public-housing projects have become the locus of crime and long-term poverty. Housing-voucher holders have tended to concentrate in lower-income neighborhoods. The original goals of subsidized housing—to provide safe and sanitary living conditions as well as an environment that would increase the likelihood of upward mobility—have proved elusive. Enter the Obama administration, with an approach that inverts the traditional approach to subsidized housing—seeing relocation of still-poor families to wealthier areas as a key to economic advancement and favoring housing subsidies for these purposes. In its recently issued rule for “affirmatively furthering fair housing,” the administration has formalized this goal:

HUD will provide publicly open data for grantees to use to assess the state of fair housing within their communities and to set locally-determined priorities and goals. . . . HUD will provide open data to grantees and the public on patterns of integration and segregation, racially and ethnically concentrated areas of poverty, disproportionate housing needs, and disparities in access to opportunity. This improved approach provides a better mechanism for HUD grantees to build fair housing goals into their existing community development and housing planning processes.

Recent research, at least at first glance, suggests that neighborhood segregation is still holding blacks back. A Stanford Graduate School of Education study released in June 2015 and based on census data found that even affluent blacks are likely to live in communities in which average incomes are lower than their own—and that poor whites are likely to live in neighborhoods in which average incomes are higher than their own. Blacks earning $50,000 a year live in neighborhoods where the annual median income is just $42,000. White families with incomes as low as $13,000 a year, by contrast, live in neighborhoods in which the annual median income is $45,000. As the Stanford study summarized: “[M]iddle-income black and Hispanic households are much more likely to live in poor neighborhoods—which tend to have weaker schools, more crime and bigger social problems—than whites or Asians who earn the same amount of money. This segregation may be constraining the upward mobility of black and Hispanic children compared with their white and Asian peers.”

The recent work of Harvard economists Raj Chetty, Nathanial Hendren, and Lawrence Katz, in turn, suggests that using federal programs to relocate poor minorities to wealthier areas could boost the upward mobility of disadvantaged kids. Their 2015 paper, “The Effects of Exposure to Better Neighborhoods on Children,” upended previous research on the Moving to Opportunity program, a HUD initiative that used vouchers to relocate poor families living in public-housing projects into more affluent areas of Baltimore, Boston, Chicago, Los Angeles, and New York. Earlier studies found virtually no benefits from these efforts. Some families were offered a housing voucher to move to a less poor neighborhood, others a voucher that let them move to any neighborhood they wished. Using IRS records to track the earnings of voucher recipients over time, the Harvard researchers, however, found that life prospects of young children whose parents moved to better-off, “high mobility” areas did improve: “The findings imply that offering families with young children living in high-poverty housing projects vouchers to move to lower-poverty neighborhoods may reduce the intergenerational persistence of poverty and ultimately generate positive returns for taxpayers.”

Overreliance on public housing deprived blacks of one of the key means of upward mobility: home-value appreciation.

On closer inspection, though, it isn’t so clear what story the Harvard and Stanford studies are telling. The Stanford study doesn’t answer a key question: Are people self-segregating? Nothing in its findings precludes the possibility that some minority households, whatever their income, simply choose to live in predominantly minority neighborhoods. That may, of course, reflect their view of likely white animosity, but it may also suggest their sense of where they will have more in common with neighbors. Nor do the findings rule out that a family may prefer not to move, even if HUD thinks that doing so is in its best interest. Blacks often lack financial resources to move to wealthier areas; by some estimates, blacks have less than eight cents in assets for every dollar in whites’ assets. Liberals often cite this racial wealth gap as evidence that historical discrimination continues to play a role in putting blacks at a disadvantage. But the idea that the wealth gap reflects only a history of housing discrimination ignores the role that public and subsidized housing has played in limiting the growth of African-American assets. The arrival of large numbers of African-Americans in northern cities in the 1940s and 1950s coincided with the dramatic expansion of public housing, which many of these newcomers moved into. Blacks’ overrepresentation in public housing continues today; the most recent HUD data show that blacks occupy 44 percent of HUD-subsidized rental housing. This long-term overreliance on public housing deprived blacks of one of the key means of upward mobility available to waves of immigrants: home-value appreciation.

The Harvard study also merits skepticism, especially because of its call for a dramatic expansion of “deconcentration” programs. In fact, the United States already has broadly deconcentrated poverty: some 77 percent of poor black families live in nonpoor neighborhoods, according to Rutgers public-policy professor Paul Jagowski. (He also finds that the chance that a low-income white family will live in a high-poverty neighborhood has, since 2000, increased more than that for black families.) A disproportionate rate of black poverty has persisted, however. This is not to dismiss entirely the Harvard findings on the benefits that young black children enjoyed from living in wealthier areas, but data from a limited sample shouldn’t be given equal weight with the much broader evidence that relocation is not a silver bullet for black advancement.

The case for dispersing the poor through subsidized housing remains shaky, at best.

America’s residential communities are not, as the HUD worldview implies, divided along a bright line between the poor inner city and wealthy suburbs. They can be thought of instead as rungs on a ladder, encompassing a series of neighborhoods where housing costs move up incrementally and where residents share many common characteristics, from socioeconomic status to the belief that they have earned that status. Though this phenomenon is often referred to as socioeconomic segregation or stratification, it can also serve to encourage tolerance, including among different races and ethnicities. As the sociologist Herbert Gans observed in his 1961 book The Levittowners, “Experience with residential integration in many communities, including Levittown, indicates that it can be achieved without problems when the two races are similar in socioeconomic level and in the visible cultural aspects of class.” So it was that ethnic groups that were rivals in the cities, such as the Irish, Italians, Jews, and Poles—some not even considered “white” by nineteenth-century nativists—made common cause in the postwar suburbs. They understood that they were joined in a virtuous conspiracy of shared values: maintaining public order, good schools, safe streets, and clean parks. Where today’s HUD implicitly views such good communities as the creation of money and privilege, these residents saw the fruits of self-sacrifice and constructive life decisions—marriage and education, as well as careful local governance.

The converse of the Gans formula for tolerance is also true: forcing social classes together can generate considerable tension. As with affirmative action, it inevitably raises—fairly or unfairly—the question of whether new minority recipients are deserving. Nobody understands the risks of such a policy better than middle-class minorities. They have often sacrificed to move up and out of poor neighborhoods, in just the way that HUD once sought to encourage. “As an African-American who happily resides in one of the aforementioned towns targeted for this deplorable lower-income housing, I am appalled at this decision to reward those individuals who . . . chose the easy way out instead of dedicating oneself to hard work,” said a black resident of the affluent New York suburb of Larchmont, in response to the Westchester County settlement. “My wife and I worked hard to be able to purchase a home and PAY TAXES in one of these towns, just like everyone else who resides in them.” Another said: “As an African-American, I am tired of the practice of placing government housing in otherwise middle-class and affluent neighborhoods. . . . All it does is reinforce a stereotype that all African-Americans are laggards when it comes to educating ourselves, rising socially and advancing economically. It is not as though there aren’t African-Americans already living in these neighborhoods in Westchester.”

These black residents of Westchester are yearning for a truly postracial America, where African-Americans are no longer a special case for social policy and where their own accomplishments matter. (See “Housing as Busing,” Autumn 2009.) They understand that good communities are neither inevitable nor inherited; they must be built and maintained day by day. But doing so requires a sense of commonality. America has had considerable success in achieving this, but HUD’s approach threatens to alter, by fiat, the spontaneous ways in which Americans form tolerant, diverse communities.

Based on their incomes, African-Americans are not underrepresented in Westchester County, even in the wealthiest communities. As of the 2000 census, Scarsdale was 1.5 percent black; Pound Ridge, 1.2 percent. That may sound low, but there simply aren’t many affluent blacks in the entire county. Only 2 percent of black households in Westchester earned more than $200,000 in 2000—a total of 911 families—compared with 12.6 percent of white households. What such figures don’t show is any intent to exclude on the basis of race—the fundamental violation of fair housing, at least in its traditional interpretation.

That interpretation has come under fire. In a June 2015 decision, the Supreme Court effectively affirmed HUD’s right to interpret fair housing far more broadly. By a 5-4 vote, the Court agreed with a group called the Inclusive Communities Project that the Texas Department of Housing and Community Affairs had reinforced “segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.” The case stemmed not from private-housing discrimination but from the application of the low-income housing tax credit, a government-subsidy program that supports the construction of low-cost rental units. Texas had chosen to subsidize more units in poorer neighborhoods rather than fewer units in affluent, more costly neighborhoods—as would inevitably be the case any time HUD pushed to locate subsidized units in wealthier suburbs, where property is more expensive. Under the Court’s ruling, even if the state were not acting explicitly to deny individual households the right to rent or buy in nonminority communities, the “disparate impact” of its policy supported the case for change.

Is HUD seeking to help the poor—or to make sure that the rich cannot insulate themselves from the poor?

In his dissent, Justice Samuel Alito noted that the ruling ignored the old-fashioned requirement to prove intent to discriminate. The Cato Institute’s Walter Olson suggested that the ruling could encourage the Obama administration “to turn disparate-impact law into an engine of revolutionary changes in local government and housing practice, introducing, for example, such concepts as a local government obligation to pursue subsidized federal housing grants and to enact laws forcing private landlords to accept Section 8 tenants.” Such a push would mean more bad news for those minority homeowners who have worked hard and moved to better neighborhoods by making good life choices.

Is HUD really seeking to help as many of the poor as possible—or to make sure that the rich cannot insulate themselves from the poor? Limited numbers of black (or Hispanic) families can afford to move to affluent suburbs. HUD gets the question right: How best to encourage poor African-Americans, and the poor generally, to advance themselves? But it gets the solution wrong. In fact, HUD proposes to send a pernicious message to African-Americans and other minority groups: a neighborhood in which you are the majority population must not be a good neighborhood.

Moreover, isolated public-housing projects going up in the far corners of affluent suburbs could easily become new ghettos—and with no guarantee that the relocated families will see their children’s lives improve meaningfully. Even if a program of emptying poor neighborhoods were a poverty cure, it can hardly be considered practical. Indeed, at some point, minority elected officials, losing constituents in poor districts, would likely object.

The Moving to Opportunity and other relocation-first approaches are far from the only imaginable ways to encourage upward mobility among public-housing residents. Other ways might be found to use the rent-payment system to reward work. As it is now, when public-housing tenants’ incomes go up, so do their rents—by 30 cents on every dollar. Also helpful would be a time limit on new tenancies—perhaps five years, as with cash public assistance. An open-ended promise of an inexpensive apartment—made more expensive if one works harder and succeeds—hardly seems like the way to encourage upward mobility. But that’s our current policy.

The most effective way for the American poor to improve their prospects is to embrace a culture of upward mobility. Such a culture would be based on constructive life choices supported by public policy that should seek to encourage and reward work and improve public education. As Nathan Glazer wrote in 2010: “To frame a self-help policy narrative based on what is generally understood as the American immigrant path may be the best choice available: acceptance of how hard it is to get ahead in America, but recognition that one’s efforts can and often will succeed. That approach, after all, does have the merit of being largely true.” It may not be altogether fair to suggest that African-Americans compete on similar terms with other poor ethnic groups. But as the complications that quickly arise when considering HUD’s new approach to fair housing make clear, there’s simply no practical alternative.

Photo: Downtown Chappaqua, in New York’s Westchester County, where federal officials are trying to force the construction of affordable housing. (Hearst Connecticut Media/Greenwich Time, Tyler Sizemore/AP Photo)

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