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Chicago segregation costs residents an estimated $4.4 billion every year

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“The Cost of Segregation” report puts stark numbers to the cost of the status quo

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Chicago’s struggle with crime has become the subject of national headlines—as well as a presidential fixation. While leaders at all levels look for solutions to a vexing problem, political debates have become stages for slinging blame.

A new study, The Cost of Segregation, released earlier this week, suggests one of the biggest culprits is Chicago’s legacy of racial and economic segregation, which has become a burden on the entire city. While this fact isn’t news to most Chicagoans, the detailed analysis conducted by the Metropolitan Planning Council and Urban Institute, two leading urban policy think tanks, is eye-opening: According to the study, a more equitable Chicago could increase its economic output by as much as $8 billion every year.

It’s a damning report, one that suggests simplistic talk of sending in the troops to “stop crime” ignores both the realities on the ground, as well as the root causes of economic disparity. At a time when new HUD Secretary Ben Carson is talking about “A Plan for Urban Renewal,”this kind of analysis can be an important reference point.

The study’s authors—Gregory Acs, Rolf Pendall, and Mark Treskon of the Urban Insitute, and Amy Khare of the Metropolitan Planning Council—broke down nearly three decades of economic and census data, looking at the separation of specific demographic groups on multiple fronts: African-American/White, Latino/White, and by economic status. Chicago-area data was compared to statistics from the 100 largest commuting zones in the country, which are roughly analogous to metropolitan areas.

The researchers’ conclusions suggest that segregation not only impacts those denied more opportunities, but also affects the quality of life for all residents, even those with access to economic opportunity: “Higher levels of racial segregation are associated with lower incomes for blacks, lower educational attainment for whites and blacks, and lower levels of safety for all area residents,” according to the study.

The study also points to the fact that more holistic approaches are needed to address segregation. "It's a study of correlation," study co-author Marisa Novara told the Chicago Tribune. "We see a very clear relationship between changes in segregation and certain outcomes."

Here, some key takeaways from the report:

Segregation is an epic drain on the economy and human potential

There is no question that segregated housing policies have had serious impacts on community well-being. But the Metropolitan Council and Urban Institute’s attempts to put real numbers on the problems provide a tangible sense of scale.

For residents of the seven-county Chicagoland area examined in the study, if black-white segregation levels were merely reduced to the national average, annual incomes would increase by $4.4 billion, and the city’s economy could produce $8 billion more in goods and services.

Chicagoland’s African-American population has stayed in roughly the same parts of the region for the last three Census reports.
"The Cost of Segregation" Metropolitan Planning Council, Urban Institute (March 28, 2017)

The study’s prognosis for economic prosperity get even more remarkable, if black-white segregation and economic segregation in Chicago were to be reduced to the median national levels: African-American residents could earn another $2,982 annually (a 15 percent increase), and 83,000 more residents could have earned bachelor's degrees in the last three decades (adding another $90 billion in collective lifetime earnings).

Chicago isn’t even the most segregated city in the U.S. According to the report, the top four metro areas with the most pronounced segregation are Philadelphia, Bridgeport, Connecticut, New York City, and Milwaukee, in descending order.

Some forms of segregation are getting worse

One of the biggest takeaways is that segregation in Chicago isn’t just a legacy issue that’s slowly getting better; in some ways, it’s actually becoming more pronounced. While certain aspects improved in the 1990s, especially racial segregation, the report found that from 2000 to 2010, in contrast, economic segregation increased.

And as Curbed has previously reported, this is a nationwide issue. According to a City Observatory report, the number of Americans living in regions of concentrated poverty, which often correspond to segregated neighborhoods, doubled from two million in 1970 to four million in 2010. The Cost of Segregation report found that economic segregation had increased between 2000 and 2010 in 72 of the 100 metro areas analyzed.

Existing policies are exacerbating the problem

Segregation and poverty continue apace, and many existing policies aren’t helping Chicagoans. The report noted that government policies tend to benefit those with wealth—such as a federal tax benefits for homeowners—and many income-based policies to create investment in cities haven’t made discernible impact on concentrated poverty. Exclusionary policies, such as caps on multifamily rental housing, also tend to preserve current, segregated population patterns.

If Chicago doesn’t make more focused efforts to desegregate, the study found that the level of black-white segregation in the city will lag behind the nationwide average until sometime between 2060 and 2070.