Chicago, a City of Segregated Opportunity - Metropolitan Planning Council

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Chicago, a City of Segregated Opportunity

Flickr user Eric Allix Rogers (CC)

The following op-ed originally appeared in Huffington Post on Wednesday, May 31, 2017. It was co-authored with Dedrick Asante-Muhammad, Senior Fellow for the Racial Wealth Divide Initiative at CFED

Historically Chicago has been a beacon of opportunity for Americans from across the country and immigrants from around the world. Chicago is the third largest city in the country with one of the most powerful economies. Demographically Chicago is about 30% African American, 30% Latino, 30% White and about 6% Asian American. There is great diversity in this major urban center in the middle of the country but it is a region that has also come to be characterized by its stark segregation by race and income.

A new report by the Metropolitan Planning Council and Urban Institute, “The Cost of Segregation,” highlights the extraordinary cost of racial and economic segregation in the Chicago region, tallying up over 4 billion dollars lost in income due to segregation and finding that the Chicago region has the 5th highest combined racial and economic segregation in the country .

Today’s Chicago is the product of decades of policies that have isolated communities of color.

These same policies and practices that created segregation in the Chicago region also have dramatic implications for opportunities to build wealth. Segregation and income inequality take on a self-reinforcing cycle, in which income inequality creates segregation, and segregation furthers income inequality. Racial wealth divide data in Chicago recently released by CFED reveals that whites have by far the highest median income, at about $71,000, with people of color’s income ranging as low as $30,000 for African Americans and as high as $56,000 for Asian Americans. We also see that Blacks and Latinos have about 2.5 times the asset poverty rate of whites at 67% and 71%. This racial economic inequality mirrors the racialized housing segregation that exists in Chicago.

Racial and economic segregation accelerates the growth and perpetuation of inequity.

In order to break out of the pattern of ongoing economic and racial segregation in major regions like Chicago, action must be taken at both the federal and local level across a broad range of policy solutions. For example, at the federal level, we need to shift housing policy so that it doesn’t invest so heavily in providing tax benefits to high income homeowners and focuses more on communities like African Americans and Latinos who only have homeownership rates in the mid to low 40 percent. CFED’s “A Downpayment on the Divide” reports calls for policy changes like reinstating the first-time homebuyer tax credit and making it permanent, creating a matched savings program for downpayments, and changing the mortgage interest deduction into a mortgage interest tax credit aimed at moderate income people. Other policy recommendations to explore include reevaluating housing policies that concentrate where the wealthy and the poor live. The answers to the challenges of segregation and inequality are not simple, and the Metropolitan Planning Council will be exploring a number of policy solutions to address these multi-faceted challenges specific to the Chicago region in the months ahead.

Racial and economic segregation doesn’t simply break down opportunities to interact and understand each other across differences; it accelerates the growth and perpetuation of inequity. One of the biggest and most consequential inequities that results from residential segregation is the opportunity for people of color to build wealth. When entire neighborhoods are composed of low-income people of color, for instance, they become much easier to target for predatory home loans that, in turn, make homeowners more likely to suffer foreclosure. As long as there is rampant racism in housing and lending markets, we need strategies that address both desegregation and increased opportunities for wealth building.

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