Housing and Socioeconomic Effects of Segregation

Most literature explains segregation by citing factors such as income distribution, poverty,

education, capital formation, transportation costs, and commuting time as well as preferences for racial

homogeneity, government spending, and religion (Brasington, Hite, & Jauregui, 2015). This concept of de

facto segregation is what constitutes a large proportion of segregation today. Of course, the amount of

segregation wouldnt have been nearly as pronounced as it is today if it werent for the de jure segregation

practices in the United States that ended only with the passage of the Civil Rights Act of 1964. This paper

will attempt to address how racial housing and educational segregation are related, how this effects school

quality, what policies may have played a role in creating our modern segregated communities, discuss

how the labor market ramifications of blacks due to segregation, and offer suggestions of how to make

education more equitable within the United States.

A complex mix of interrelated variables plays a key role in modern housing segregation practices.

For example, whites have higher average incomes than blacks or other minorities. As a result, whites are

able to afford to live in neighborhoods that provide higher levels of public and other amenities

(Brasington, Hite, & Jauregui, 2015). In addition, whites tend to self-segregate into predominately white

neighborhoods and bid higher for properties located in those neighborhoods, driving up home values

(Gaddis, 2017). Racial segregation in the housing market is favored so much, that by increasing racial

segregation by 10% is associated with a 1.9% increase in median home prices for that neighborhood

(Brasington, Hite, & Jauregui, 2015). There is, however, a socioeconomic point in which housing

segregation has a negative impact on home values. According to Brasington et. al., as education and

income levels increase enough, segregation goes from having a negative to a positive impact on housing

values. This suggests that neighborhoods of low socio-economic standing vale racial integration at a

higher rate than their counterparts in higher socio-economic areas.

The literature also shows signs of nonmarket forces in determining neighborhood racial makeup.

These forces include discrimination in the lending and real estate markets and public housing policies,
such as local government regulations and federal regulation of subsidized housing. A 1973 by King and

Mieszkowski found evidence suggesting strong black taste for racial segregation in that black and whites

pay the same rate for housing inside the ghetto but blacks pay less at the border than on the interior of

the ghetto (Brasington, Hite, & Jauregui, 2015). This correlates with whites desire to pay more to live

in neighborhoods that have little to minority families living within them.

Shifting towards education, a study by Siegel-Hawley in 2013 found correlations between school

and housing policies in the southern United States. Since the early 1990s, many southern school systems

have experienced rapid segregation (Siegel-Hawley, 2013). The South is also the first area of the nation to

report a majority share of low-income students (Siegel-Hawley, 2013). The wealth gap translates into

differential rates of homeownership for racial groups and differential racial access to wealthy

neighborhoods and more elite schools (Siegel-Hawley, 2013). As it is common practice and required by

law to draw school-attendance boundaries encircling nearby neighborhoods, this practice buttresses a

reciprocal and cyclical relationship between school and housing segregation (Siegel-Hawley, 2013).

Siegel-Hawley found that prospective homebuyers are often knowledgeable about their housing options in

relation to school districts. She found that these buyers inform themselves of the area through informal

conversations among friends and peers about the degree to which education settings were serving whiting

and wealthier students (Siegel-Hawley, 2013). This informally gathered information largely formed the

basis for decisions about whether or not a neighborhood or school zone should be sought out (Siegel-

Hawley, 2013). In her conclusion, Siegel-Hawley found that school policy can be housing policy in that

metro areas with city-suburban school desegregation plans set in place reported much faster declines in

housing segregation than similar metro areas that were lacking such a plan.

The question now moves to how does housing and education segregation effect school quality

and resources? Property taxes continue to make up a significant portion of local education funds. Property

taxes related to home values and housing prices are in turn linked to school districts and school zones

(Siegel-Hawley, 2013). Housing prices varied significantly on either side of a school-attendance boundary
line, suggesting home prices are closely linked to the racial makeup or performance of a school district

(Siegel-Hawley, 2013). A 2009 study by Dougherty et. al., found that buyers in Connecticut were willing

to pay nearly $7,500 more for a home in order to live in a less diverse school district. Higher home values

in these areas increase the tax revenue of that school district. Schools in these areas are also able to charge

higher tax rates as demand is rather inelastic, i.e. residents are willing to pay a larger premium for a less

diverse school for their children (Brasington, Hite, & Jauregui, 2015). Additionally, housing prices near a

high-scoring public school are nearly 2.4 times greater, on average, than those near a low-scoring public

school (Siegel-Hawley, 2013). This contributes to a situation where typical low-income students go to a

school scoring at a much lower percentile on state tests than did a typical middle or high-income student

(Siegel-Hawley, 2013). This reinforces the idea that income and home values, and to some degree race,

are directly linked to school quality and types of resources available.

In order to understand the current conditions of segregated housing and education, one should

explore the formal polices that helped to get us to this point. The Equal Educational Opportunity Act

(EEOA) was created in 1974 to serve as a guide on the integration of public schools in the United States.

Section 1701 of the EEOA states that all children enrolled in public schools are entitled to equal

educational opportunity without regard to race, color, sex, or national origin. Additionally, the Act states

that the neighborhood is the appropriate basis for determining public school assignments (Cornell

University Law School, n.d.). The EEOA dismantles the maintenance of dual school systems, in which

students are assigned to schools solely on the basis of race, color, sex, or national origin that denies those

students equal protection of the law guaranteed by the 14 th Amendment (Cornell University Law School,

n.d.). Section 1703 of the EEOA explains that no state may assign a student to a school, other than the

one closest to his or her place of residence within the school district in which he or she resides for the

basis of segregation by the aforementioned protected classes. The law clarifies that the student must

attend a school of appropriate grade level and type of education for that student (Cornell University Law

School, n.d.). The federal government can intervene and impose remedies that are essential to correct
particular denials of equal opportunity or equal protection of the law. These remedies include: assigning

students to schools nearest to their residence, permitting students to transfer from a school in which a

majority of the students are their race, color, or national origin to a school in which a minority are of their

race, color, or national origin, creation or revision of attendance zones or grade structures without

requiring transportation, and construction of new schools or closing of inferior schools (Cornell

University Law School, n.d.). The EEOA clarifies that if there is a residential shift after a school district is

deemed desegregated and the school then becomes primarily segregated, then the school is not in

violation of the EEOA.

A second major policy, the Fair Housing and Equal Opportunity Act (FHEO), helped to shape the

current segregation patterns. The FHEO prohibits discrimination in the sale, rental, and financing of

dwellings based on race, color, religion, sex, or national origin (HUD, 2007). This includes the sale and

rental of housing and mortgage lending practices. For example, one cannot refuse to rent or sell housing,

make housing unavailable, deny a dwelling, provide different housing services or facilities, or use block

busting (HUD, n.d.). Additionally, one cannot refuse to make a mortgage loan, impose different terms and

conditions on a loan, or discriminate appraising a property on the basis of the aforementioned protected

classes (HUD, n.d.). Other limitations include one cannot threaten, coerce, intimidate, or interfere with

anyone exercising a fair housing right (HUD, n.d.). The FHEO exempts owner-occupied buildings with

no more than four units, single family housing sold or rented without the use of a broker, and housing

operated by organizations and private clubs that limit occupancy to members (HUD, n.d.). The FHEO

attempts to end de jure segregation and limit de facto segregation, however the latter still remains quite

high in the modern United States.

When searching for a home, the FHEO also imposes restrictions on what realtors and brokers are

able to tell a prospective homebuyer. Fair-housing laws prohibit brokers and realtors from providing

information about people that could be constructed as discriminatory in any of the fourteen protected

categories (Toy, 2007). Realtors and brokers cannot directly disclose crime rates or the racial makeup of a
building or area as this may violate fair-housing laws, but they can suggest to prospective buyers how to

research the neighborhood (Toy, 2007). Additionally, realtors and brokers are permitted to name school

districts when directly asked, but should not advertise the district as some districts have distinctive racial

compositions (Toy, 2007). By advertising the district, it may be seen as a way of expressing preference

for a certain race (Toy, 2007).

The segregation and inequalities experienced in the housing market and educational systems have

had impacts on blacks and other minorities within the United States. Opportunity depends in large part on

the neighborhood and schools that children will grow up and learn within (Siegel-Hawley, 2013). White

majority areas tend to have higher incomes than minority majority or no majorities areas (Klassen, 2017).

Educational levels among whites are higher than Hispanics and blacks across the Los Angeles County

study area (Klassen, 2017). Lower educational attainment rates are associated with lower median annual

wages (Torpey & Watson, 2014). Since minorities tend to attend lesser performing schools, they receive a

lower quality education. These students are less likely to advance into post-secondary education which

would increase their potential annual wages (Torpey & Watson, 2014). Another study found that longer

school attendance is positively correlated with higher mean income (Houthakker, 1959). Those who

graduate from university with a bachelor degree earn approximately 61% more over their lifetime than

those who just graduated from high school (Houthakker, 1959).

The labor market outcomes are just as pronounced as economic outcomes when considering

housing and educational segregation consequences. The mechanisms by which education affects labor

include: years of schooling, educational level attained, attainment of a particular credential, educational

system, investments in education, and schooling quality (Ionescu & Cuza, 2012). When all other

characteristics are held equal, those with a better education seem to produce higher incomes (Ionescu &

Cuza, 2012). Those who are better educated also typically have lower unemployment rates, even in

economic turndowns (Ionescu & Cuza, 2012). Additionally, more educated individuals are less likely to

be involved in alienating repetitive labor and more likely to be involved in work that permits greater
autonomy, creativity, more novelty and opportunity for continued learning and personal growth (Ionescu

& Cuza, 2012). Finally, Ionescu and Cuza found that there is a strong relationship between annual

expenditure per pupil and earnings than between total public expenditure on education and earnings.

However, they also found that there is a strong relationship between employment rates and total public

expenditure on education (Ionescu & Cuza, 2012). The findings suggest that spending more on education

as a whole and on a per student basis produces the best results for favorable labor market outcomes.

Tying back to housing and educational segregation, despite formal laws prohibiting these actions, put

blacks and other minorities at a disadvantage. Since minorities tend to live in poorer areas, school districts

spend less as a whole and per pupil than a more affluent and white neighborhood would. This childhood

disadvantage follows these children throughout their lives by ways of income, wealth, and employment

disparities that their more affluent and white counterparts tend to enjoy based off of improved schooling.

To help resolve these inequities due to segregated race, I propose amending the Equal

Educational Opportunity Act. In order to accomplish this task, the EEOA should be altered in two ways.

The first method would be to allow students and parents to more freely choose their school district. This

will allow parents and students to select schools that will allow the child to better succeed based on school

curriculum, standing, racial and ethnic makeup, and among other factors. In order to transfer schools not

within a reasonable bussing distance, students would need to provide their own transportation. In

addition, those who wish to transfer schools from a non-failing school would need to pay a tuition fee to

the district based on average per pupil spending plus any other applicable fees. The tuition fees would

allow districts to maintain a balanced budget. In order to maintain the general quality of the school, there

would be a limit of the number of students who may be accepted into the district that the current EEOA

has implemented (Cornell University Law School, n.d.). The general goal of this amendment is to open

the transferring eligibility requirements to include school districts that are not failing, but who are

performing below the general acceptable average. By opening up this method to more students, this
amendment hopes to help make education more equitable among the poor and racial and ethnic

minorities.

Part two of amending the Equal Educational Opportunity Act is to overhaul the Elementary and

Secondary Education Act within this overarching piece of legislation. More specifically, I would like to

propose changes to the Every Student Succeeds Act. The first change to this act would be to reform Title

1 funding. Instead of rewarding adequate to overachieving schools, more money should be allocated to

schools in need to boost their resources and allow them to hire the necessary staff or purchases needed

materials (Gaddis, 2017). This would also remove the issue with cutting school funding for

underperforming schools as cutting their budgets will only further disadvantage students. Next, I propose

changing the Adequate Yearly Progress (AYP) goals. First, AYP targets should be assigned based on

regional averages to differences found within the region. When the region reaches a more equitable status,

AYP targets should then be boosted to the state level. Once again, when the state achieves a more

equitable level of education, the AYPs should be boosted to the national level. By working on these

targets in pieces, education boards can set realistic targets to catch up to their peers in a reasonable time.

My final suggestion, also regarding the AYPs, is to change the consequences for failing to meet the goals.

After two years of failing to reach the goals, school transfer options should be implemented as currently

stated (Gaddis, 2017). In addition, emergency funding should go to the school to help address the

education gap. After three years of failing to meet the AYP, accredited teachers and administrative staff

who specialize in failing schools should be brought in. Teachers would be able to work with the students

to personally understand the deficiencies. Administrators would work with the teachers and staff to alter

the curriculum as needed. Finally, after four or more years of failing to meet the AYP, the education

agency in charge should begin to replace staff and administration as currently stated (Gaddis, 2017).

However, this method should work from a top-down perspective, replacing administrative staff and

department heads in order to bring change into the workplace. In addition, a bottom-up approach to ideas

should be used in order to understand what still needs addressed in the classroom setting.
 The ramifications of segregation in both the housing market and formal education have lifelong

effects for children of all races and socioeconomic status. Based off of where a child lives, his or her

future is greatly determined based on the type of education (s)he receives, who that child is exposed to,

and what connections that child may be able to make. Housing and education policies are distinctly

intertwined as several studies have shown. The racial segregation of minorities away from whites has put

them at an economic disadvantage that will last for generations. In order to remedy this problem, de facto,

not just de jure segregation needs to be paired down to a more equitable level. However, in order to do

this, more formal policies would need to be put into place as well as societal changes concerning the

affinity for other races. With neither of these likely to occur in the coming decades without some sort of

catalyst, one can safely assume that minorities will continue to be segregated away from whites and be

outperformed by their wealthier and whiter counterparts.

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