Blacks'
confinement to segregated neighborhoods systematically reduces their access
to investment opportunities. The middle class invests the largest share of its
wealth in housing equity, which amounts to 43% of white assets and 63% percent
of black assets. Confined to less-desired neighborhoods, blacks attain a much
lower average rate of return on their housing investment than do whites. The
current generation of black homeowners has, as of 1990, suffered a cumulative
loss of $58 billion for this reason.Because creditworthiness depends on wealth,
blacks' lower home values mean they are less able to obtain credit on favorable
terms than otherwise equally qualified whites: The current generation of blacks
has suffered a cumulative loss of $24 billion due to denial of mortgages and
higher mortgage interest rates. (See Melvin Oliver & Thomas Shapiro, Black
Wealth/White Wealth
(1995), pp. 64, 150-1.)
"Black/multiethnic
suburbs pay tax rates that are, on average, about 65% higher than those of white
suburbs, even after differences in affluence are taken into account." (Thomas
J. Phelan & Mark Schneider, Race, Ethnicity, and Class in American Suburbs,
31 Urb. Aff. Rev. 659, 673 (1996))
Public
services delivered to segregated communities do not benefit groups living elsewhere.
The segregation of blacks therefore makes it difficult for them to join effective
political coalitions for delivering public services to their neighborhoods.
By contrast, white ethnic groups such as Irish-Americans, Italian-Americans,
and Jews commonly live in the same neighborhoods, given them a common interest
in lobbying for public services.
The
industrial decline of major cities can be traced to the immediate post-WWII
era, when businesses found it more profitable to build in the suburbs and closed
down older, less efficient city factories. This trend accelerated with the macroeconomic
shocks of the 1970s (inflation, stagnation, energy crisis).
Most
job growth has occurred in predominantly white suburbs. The cost per mile of
travelling to work is at least fifty percent higher for African-Americans than
for whites. Often, public transportation does not cross city boundaries. Housing
discrimination imposes barriers on blacks to moving where the jobs are located.
These factors lead to fewer job opportunities and substantial depression in
urban African-American wages. See Harry Holzer and Keith Ihlanfeldt, "Spatial
Factors and the Employment of Blacks" New England Econ. Rev. (1996).
Lack
of access to credit is a major cause of low rates of black entrepreneurship.
Among all privately owned U.S. businesses, half were started by their owners;
the other half were inherited or purchased. By contrast, 94% of black-owned
businesses are self-started (centuries of discrimination and segregation have
left blacks with little to inherit). Business startups depend heavily on personal
and family wealth, which is leveraged into lines of credit. Residential segregation,
by depressing housing appreciation and reducing access to credit, therefore
depresses black business startups, upon which blacks disproportionately rely
to get into business. See Thomas D. Boston, Affirmative Action and Black Entrepreneurship
(1999), pp. 76-79.
Poverty
is a neighborhood, not just an individual characteristic. A poor person living
in a middle-class neighborhood can benefit from the spillover economic effects
of her more prosperous neighbors--more businesses are open, creating more job
opportunities and lower consumer prices due to competition. Segregated neighborhoods
with concentrated poverty lack access to these "positive externalities."
A
small but salient segment of poor segregated African-Americans have adopted
an "oppositional culture," rejecting mainstream values of hard work,
sobriety, self-reliance and parental responsibility. Massey and Denton ascribe
this to the conditions of ghetto, which deprive blacks of opportunities to succeed
through behaviors valued in the wider society, and who therefore seek alternative
paths to prestige. "Oppositional culture" is not specifically black;
it appears as "a common psychological adaptation" among groups who
are systematically subordinated by dominant groups. (Massey and Denton, p. 167,
citing John Ogbu, Minority Education and Caste (Academic Press, 1978))
Members
of segregated communities talk rarely to outsiders. The linguistic isolation
of segregated blacks has led to the development of a distinctive dialect, which
is sometimes difficult for outsiders to understand, and, being associated with
poor education and oppositional culture, is taken as a marker of undesirable
employee characteristics. Speakers of this dialect thus face poorer job prospects.
(Massey and Denton, pp. 162-165)
Antiblack
antipathy preceded segregation, but is reinforced by the reactions of segregated
populations to economic disadvantage. Whites often attribute oppositional behavior
to supposed racial characteristics rather than to the condition of segregation
and disadvantage, reinforcing negative racial stereotypes. See Glenn Loury,
The Anatomy of Racial Inequality (2002).
Social
networks are a crucial gateway to opportunity. If one's family, friends, and
neighbors are poor or unemployed, one lacks the connections needed to learn
about and get access to jobs. 60% of all job openings are advertised through
informal social networks, such as word-of-mouth by firm employees. Segregation
means that whites who get information about job openings are unlikely to know
many blacks at work, in school, or in their neighborhoods. Thus, even if whites
did not discriminate, blacks would still be excluded from many jobs due to their
isolation from the predominantly white social networks of communication and
referral that regulate access to mainstream opportunities.
Even
middle-class suburban blacks suffer from segregation. They enjoy lower-quality
public services, and report lower satisfaction with those services, when they
live in majority-black suburbs, compared to living in consolidated metropolitan
areas where they are a minority. (Ruth Hoogland DeHoog et al., Metropolitan
Fragmentation and Suburban Ghettos: Some Empirical Observations on Institutional
Racism, 13 J. Urb. Aff. 479, 488-90 (1991))
Racial
Segregation as a Cause of Systematic Economic Disadvantage
If you surveyed the
maps in Racial Segregation in the U.S., two facts
would be evident: 1.
Moderate to high levels of black/white racial segregation, and somewhat
lower but still substantial Hispanic/white segregation, are the norm for
major U.S. metropolitan regions.
2. Moderately to highly segregated black and Hispanic neighborhoods are
almost always markedly poor, and poorer than most of the overwhelmingly
white neighborhoods in their metro region.
This raises
a question: are segregated black and Hispanic neighborhoods poorer simply
because their inhabitants happen to be poor, or does racial segregation
cause the poverty of their inhabitants? The model below shows that,
while hardly the only factor, racial segregation is a major cause of systematic
economic disadvantage for blacks. By parallel reasoning, it is probably
also a significant cause of disadvantage for Hispanics, although empirical
evidence on this point is not as extensive as in the case of blacks. Note
that many of the factors below affect middle-class, not just poor, residents
of segregated neighborhoods. Middle-class status, as measured by family
income, occupation, or education, therefore does not confer the same economic
advantages on segregated blacks as on whites.
This
model is drawn from the arguments of Douglas Massey and Nancy Denton in
American Apartheid (Harvard UP, 1993). Roll your mouse over the items
to view explanations of their causal influence. The blue
arrows designate the influence of antiblack racial
antipathy. Racism is a major cause of segregation. But segregation propagates
its own effects mainly through "color-blind" mechanisms. Thus,
it is an error to ascribe the proximate cause of much black disadvantage
to direct discrimination.
Massey and Denton's model subsumes two other major models of systematic
black disadvantage. William Wilson's "spatial mismatch hypothesis"
(The Truly Disadvantaged, UChicago, 1987), postulating that inner
city black poverty is caused by the flight of jobs to suburbs, where blacks
can't reach them, is depicted through the red arrows.
The "culture of poverty" theory, postulating that blacks are poor
because they reject middle-class cultural values, is depicted through the
green arrows.
Some vicious circles--causal paths that return
on themsleves--are observable in this model. White antipathy causes segregation,
which causes concentrated poverty and oppositional culture, which reinforces
white antipathy. Low housing values create worse public finances, causing
poor public services, reducing housing values even further.