I visited North Minneapolis for the first time during my graduate school orientation. One day of orientation was devoted to visiting different organizations in our community that related to our course of study. My group had the opportunity to visit a church in North Minneapolis and walk the neighborhood with their pastor.
For those of you who are not familiar with North Minneapolis, let me set the context a bit. While I didn’t know it at the time, North Minneapolis is considered by many to be the “bad part” of the city. It’s known for violence, unemployment, and poverty. As with most “bad parts of town” in other cities, most of what is said about North Minneapolis is based more on fear than fact. It also happens to be one of the most, if not the most, racially diverse areas in the city, with the highest population by race being African-American.
Although I didn’t make the connection at the time, I first heard about government-sanctioned segregation and the impact of redlining on this visit to North Minneapolis. The pastor we met with explained how the makeup of this area of town had radically changed over the last 30-40 years as many white families fled to the suburbs. She talked about how major highways had been constructed in such a way as to keep this area of town isolated and segregated. She told us how the area had a reputation of being a center of prostitution and drugs, but that most people using these services were not neighborhood residents. In fact, she said, because the area was so close to downtown Minneapolis, it was easier for business people to take advantage of these services on their way to or from work. It wasn’t as if the “bad people” were being kept out. Instead, this segregation allowed people to separate their bad deeds to a “bad area of town” so they could keep their own neighborhoods “sanitized.”
Before this encounter, I had never realized that the segregation present in most cities around the country today had been intentionally planned. I didn’t realize until last year that there were certain neighborhoods that had rules against selling your home to people who were not white. I also didn’t realize how the mortgage and lending system had been set up to benefit, and still continues to benefit, white families. As part of my commitment to racial and economic justice, I think it’s important to understand the concept of redlining and the lasting financial impact it has had. Here are some of the basics:
What is redlining? According to Investopedia, “Redlining is a discriminatory practice that puts services (financial and otherwise) out of reach for residents of certain areas based on race or ethnicity. It can be seen in the systematic denial of mortgages, insurance, loans, and other financial services based on location (and that area’s default history) rather than on an individual’s qualifications and creditworthiness.” The term comes from the federal government’s color-coded maps of every metropolitan area in the country. According to Richard Rothstein, author of The Color of Law: A Forgotten History of How Our Government Segregated America, in an interview with NPR’s Terry Gross, anywhere African-Americans lived (or lived nearby) was color-coded red “to indicate to appraisers that these neighborhoods were too risky to insure mortgages.” These maps were created as a result of the housing programs begun under the New Deal in 1933. “‘The government's efforts were "primarily designed to provide housing to white, middle-class or lower-middle-class families,’ Rothstein says. ‘African-Americans and other people of color were left out of the new suburban communities — and pushed instead into urban housing projects.’” The Federal Housing Administration (FHA), furthered these efforts by refusing to insure mortgages in and near African-American neighborhoods while also subsidizing builders who were creating subdivisions for whites with a specific requirement: none of the homes be sold to African-Americans.
When did it happen? While the practice began with the government-sanctioned New Deal housing programs in the early 1930s, it continued for decades. Federal law now prohibits home lending discrimination (see the 1968 Fair Housing Act and the 1977 Community Reinvestment Act (CRA)). It’s also important to note that while literal redlining (with the color-coded maps) may no longer exist today, the discrimination still continues in less explicit ways. For instance, consider the issues many Black-owned businesses encountered when they applied for PPP (Paycheck Protection Program) loans last year.
What’s the financial impact? While home lending discrimination may no longer be legal, the impact of redlining is still felt today. Redlining is often alluded to as one of the contributing factors in the racial wealth divide. As Rothstein said, “Today African-American incomes on average are about 60 percent of average white incomes. But African-American wealth is about 5 percent of white wealth. Most middle-class families in this country gain their wealth from the equity they have in their homes.” I think it’s important to not only consider the losses of African-Americans but also the gains that white Americans experienced. Rothstein notes that the homes in these all-white suburban developments often sold for about twice the national median income — but although they were affordable to all working-class families, regardless of race, African-Americans were barred from purchasing them. These homes now sell today for $300,000-$400,000 at minimum, which is 6-8 times the national median income. This is a key example of white privilege and the wealth created as a result of this privilege.
What can I do about it? Particularly if you are a white person, it’s important that you are aware of these policies and their deep financial impact. Just like in my example at the beginning of this post, get to know your city’s history of segregation and redlining. Use an interactive map to see what redlining looked like in your city (or one near you). Remember that this discrimination still continues today. As you hear people call for reparations for African-Americans at various levels of government, remember that reparations are not about “free handouts,” but about repairing wrongs that have had negative financial impacts that have affected generations. Some neighborhoods who historically banned African-Americans are finding ways to do their own forms of reparations.