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The Cost of Segregation
Lost income.
Lost lives.
Lost potential.
The steep costs all of us in the Chicago region
pay by living so separately from each other.
The Metropolitan Planning Council (MPC) partnered with
the Urban Institute to conduct this research. Urban Institute
is a Washington D.C.-based organization that conducts research
to understand and solve real-world challenges in a rapidly urban-
izing environment. Urban Institute does not take positions on
issues. Scholars are independent and empowered to share their
evidence-based views and recommendations shaped by research.
Thank you to our dedicated research partners at Urban Institute:
Greg Acs, Rolf Pendall and Mark Treskon.
The Chicago Community Trust and the John D. and
Catherine T. MacArthur Foundation funded this research.
The Chicago Community Trust is a community foundation dedi-
cated to improving our region through strategic grant making,
civic engagement and inspiring philanthropy. The MacArthur
Foundation is one of the world’s largest independent foundations
and supports creative people, effective institutions, and influential
networks building a more just, verdant and peaceful world.
We are grateful for their financial and intellectual support of this
project, in particular Ianna Kachoris, Tara Magner, Peggy Davis
and Joanna Trotter.
Cover photo: Ann Fisher (CC)
THE COST OF SEGREGATION   1
Contents
The Cost of Segregation	 2
Lost income	 4
Lost lives	 6
Lost potential	 8
How Chicago compares	 10
What does a less segregated region look like?	 12
What would it take for Chicago to achieve median levels of segregation?	 13
How segregation impacts Latinos	 14
Segregation in Chicago: Causes and effects	 15
The impact of segregation on people, neighborhoods and regions	 16
Next steps	 17
Data, measures and methods	 18
References	19
Acknowledgments	20
View this report online at metroplanning.org/costofsegregation
Sean Munson (CC)
2   THE COST OF SEGREGATION
The Cost of Segregation
The Metropolitan Planning Council, together with Urban Institute and a team of
regional policy advisors, analyzed segregation patterns in the 100 largest metro-
politan areas in the country.
We examined three types of segregation: economic segregation, African Amer-
ican-white segregation and Latino-white segregation. We then examined what
impacts we would see if the Chicago region reduced its levels of segregation to
the median levels of segregation of the nation’s 100 biggest metros. The core of
this report is a summary of our findings. The findings for African American-white
segregation were the most pronounced in our study, yet they are not the only indi-
cator of how segregation is experienced by race in this region. We share additional
data about the impact of segregation on Latinos at other points in this report.
We embarked on this study with two driving questions
in mind.
What does it cost all of us in metropolitan Chicago to live so
separately from each other by race and income?
What can we do to change these patterns of segregation, so
that everyone living in our region can participate in and create a
stronger future?
The answer is that segregation is not only an issue in low-income communities or
communities of color. Everyone pays a price, measured in lost income, lives and
education.
100 largest U.S. metro areas
Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National
Trends and the Case of Chicago: 1990-2010. Washington, D.C.: Urban Institute.
THE COST OF SEGREGATION   3
Everyone deserves an opportunity to earn a living—and the
economy is better off when everyone participates in it. Yet,
not everyone in the Chicago region has the same pathway to
economic success.
Over generations, policies and practices have set up barricades in and around
Chicago, ultimately leading to a region where people of different races and
incomes live separately from one another. Some of these boundaries can be seen
on a map. Others are invisible yet powerful barriers that affect local public school
performance, business investment, workers’ preparation for today’s jobs and what
kinds of employment—if any—are available within a reasonable commute of
where a person can afford to live.
Like bricks of a wall, these decisions have stacked up over decades, and individ-
uals, communities and our entire region are living with the consequences.
Economic and racial segregation has strangled opportunities for millions of people.
Disinvestment has devastated entire city neighborhoods and suburban villages,
towns and cities. Lack of diversity also hurts affluent communities, where limited
housing options often mean that young people cannot afford to return when
starting their own families, retirees cannot afford to stay and valued employees are
priced out.
Add it up, and it’s clear that segregation holds back the entire region’s economy
and potential—and whether we realize it or not, it’s costing all of us. Our social
fabric and our economy will be stronger if we all have more opportunities to live,
work and go to school with one another.
Eric Allix Rogers
4   THE COST OF SEGREGATION
The Chicago region’s gross domestic product, a leading measure of economic
performance, would also rise by approximately $8 billion.1
That’s an increase
two-and-a-half times greater than the Chicago region’s average annual growth of
the gross domestic product. This is a boost sure to create significant positive ripple
effects for our region and its tax base.
If we reduced the levels of economic and African American-white
segregation to the national median...
Lost income
Incomes for African Americans in the
Chicago region would rise an average
of $2,982 per person per year.
The region as a whole would earn an
additional $4.4 billion in income.
THE COST OF SEGREGATION   5
The link between segregation, job access
and income
Research shows that economic segregation and income inequality
compound and exacerbate each other’s effects.2
With income
and wealth inequality on the rise nationally since 1980, house-
hold resources available to spend on housing vary by community.
The housing market reacts to this inequality in ways that worsen
segregation: Affluent households are more able to comfortably
afford high-cost options in certain communities, while lower-in-
come households spend higher shares of their income for lower-
cost options in different communities.
The result is a self-reinforcing cycle, in which income inequality
creates segregation and segregation furthers income inequality.3
These lowered incomes have a cost: research has shown that if
the average incomes of people of color were raised even beyond
the national median, up to the average incomes of whites, our
gross national product would increase by $1.9 trillion.4
How do we reduce income segregation and racial earning and
wealth gaps? It’s not simple, and the answers may range broadly,
from creating a local Earned Income Tax Credit to housing poli-
cies that avoid concentrating where the wealthy and the poor
live, to more transit options to connect workers to jobs. MPC will
be exploring these policies and many others as we seek a path
forward for accelerating our desegregation.
$8 billion
Amount the regional gross domestic
product would grow if the Chicago
region was less segregated
Latino and African American earnings lag behind whites
Chicago region per capita incomes, adjusted for inflation
P er capita incomes by race
Chicago region, adjusted for inflation
$0
$10,000
$20,000
$30,000
$40,000
$50,000
1990 2000 2010
White
Black
Latino
African
American
Source: Graph by MPC, based on analysis of 1990 and 2000 Censuses and 2008–2012 five-year American
Community Survey
6   THE COST OF SEGREGATION
There is no way to fully account for a lost human life. However, it
is possible to tally a number of relevant direct and indirect costs.
Using the region’s 2010 homicide rate—the most recent figures
available at the regional level—our study found that the Chicago
area could have boosted its economy simply by being a safer
place to live.
So what drives Chicago’s relationship between segregation and
homicides? How can we improve public safety in our communi-
ties to save lives, as well as maintain a thriving economy, stable
property values and a growing population? These are among
the questions MPC is asking as we seek solutions to Chicago’s
violence and its segregation. In our next phase of work, we are
focusing on four areas: police reform, the geographic concen-
tration of crime and violence, criminal justice policy, and how
place impacts the re-entry and recidivism of people with criminal
records.
The Chicago region’s homicide rate would drop by 30 percent—the equivalent
of saving 229 lives in the city of Chicago in 2016—if we reduced the level of
segregation between African Americans and whites to the national median.
Lost lives
Joshua Lott
THE COST OF SEGREGATION   7
The link between segregation, homicides and strong communities
Chicago’s rising homicide rate is an urgent
concern for the region because any untimely
loss of life is a tragedy. For too long, though,
too many have had the misperception that
Chicago’s violence did not impact them. In fact,
violence has a ripple effect: it removes residents
from communities by death and incarceration,
unravels families and traumatizes survivors. Each
of these factors saps the capacity of students
and workers and makes the city and region a
less appealing place to live and work. Of the 10
U.S. cities with highest murder rates, Chicago
ranks eighth. Most of these cities have high
levels of economic and racial segregation as
well.
Chicago is a microcosm of both trends: In 2016,
more than half of the city’s homicides occurred
in 11 communities that were predominantly
people of color and home to some of the city’s
highest rates of poverty. Chicago ranked last in
population growth in 2015 among the nation’s
10 largest cities. One study firmly links homi-
cides to population loss for cities, positing that
every additional homicide over the previous year
results in the loss of 70 residents.8
167 more people would
have lived that year,
earning some $170
million over the course
of their lifetimes.5
The region would have
saved some $65 million
in policing costs and an
estimated $218 million
in corrections costs.6
Residential real estate
values would have
increased by at least
$6 billion.7
Homicides by race
City of Chicago only
0
100
200
300
400
500
600
700
1990 2000 2010
White
African
American
Latino
In 2010, the number of African American homicides in Chicago was
over 17 times the number for whites
City of Chicago only. Data not available for more recent years.
Source: Graph by MPC, based on data from the Chicago Police Department, Research and
Development Division, 2011 Chicago Murder Analysis
If the regional homicide rate had been 30 percent lower in 2010...
8   THE COST OF SEGREGATION
The lifetime earnings gap between a person with a high
school diploma and a person with a four-year college degree is
$1,078,446.9
Our research found a correlation between lower
levels of segregation and a higher percentage of the population
holding a bachelor’s degree, for both African Americans and for
whites.
This means the Chicago region is losing out on some $90 billion
in total lifetime earnings as a result of our education gap.
83,000 more people in the Chicago region would
have bachelor’s degrees if we reduced the level of
segregation between African Americans and whites
to the national median.
Lost potential
THE COST OF SEGREGATION   9
The link between segregation, school
quality and college preparedness
Education is the backbone of a prepared workforce. And the
more educated a region’s workforce, the more attractive that
region is to employers. Yet the U.S. President’s Council on Jobs
and Economic Competitiveness found that by 2020 there will
be 1.5 million too few college graduates nationwide to meet
employers’ demands.
The Chicago region is already losing ground. Just 12 percent of
the region’s Latinos over the age of 25 held bachelor’s degrees
in 2010, compared to 20 percent for African Americans and
44 percent for whites. The region ranked ninth among the
nation’s 10 largest metro areas in the rate of new job growth
from December 2015 to December 2016, according to the latest
report from the Bureau of Labor Statistics.10
If Chicago is to
unlock its competitive advantages and prepare the next gener-
ation of educated workers, deliberate desegregation must be
emphasized.
Education must play a major role in the region’s long-term
growth. We are exploring strategies to provide diverse educa-
tional settings and how to replicate sound policies that are
working in public schools—these types of policies will be key to
prepare the Chicago region for tomorrow’s job market.
#9
Chicago’s rank among nation’s 10
largest metro areas in the rate of job
growth from Dec. 2015 to Dec. 2016
Latinos have the lowest bachelor’s degree attainment
at 12%, with African Americans at 20%Bachelor's degree attainment by race
Chicago region
White
Black
Latino
Get the data
0%
10%
20%
30%
40%
50%
1990 2000 2010
African
American
Source: Graph by MPC, based on analysis of 1990 and 2000 Censuses and 2008–2012 five-year American
Community Survey.
10   THE COST OF SEGREGATION
How Chicago compares
In 2010, the Chicago region had the...
5th
highest
combined racial
and economic
segregation
9th
highest Latino-
white segregation
10th
highest African
American-white
segregation
20th
highest economic
segregation
The Chicago region is not alone when it comes
to being racially and economically segregated—
metropolitan regions around the country remain
starkly segregated. Yet two-thirds of the nation’s
largest regions reduced their economic segrega-
tion more than Chicagoland did between 1990
and 2010.
Chicago is fifth in the nation in our combined
measure of racial and economic segregation.
The national map below shows the 100 largest
regions and how they rank.
The Chicago region has consistently ranked
in the top 10 highest levels of African Ameri-
can-white racial segregation from 1990–2010.
The findings for African American-white segre-
gation were by far the most pronounced, and so
we focus on that measure in this section.
1 - 10
11 - 20
21 - 40
41 - 60
61 - 80
81 - 100
Los
Angeles
Kansas
City
Detroit
Milwaukee
Chicago
PhiladelphiaCleveland
Newark New York
Bridgeport
Rank
most to least
segregated
Comparing the nation:
Ranking of segregation in 100 largest U.S. metro areas, 2010
Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National Trends and
the Case of Chicago: 1990-2010. Washington, D.C.: Urban Institute.
THE COST OF SEGREGATION   11
How Chicago compares to three highly segregated regions
How Chicago compares to three moderately segregated regions
Chicago, Philadelphia, Cleveland and Newark are similar in terms of African American-white segre-
gation, population and racial demographics, as well as persistent levels of segregation over the
decades. The difference between Chicago and the national median of segregation (the dashed line)
indicates how far we are from achieving a moderate level of segregation.
It is not inevitable that a city and its surrounding suburbs are segregated to the degree that the
Chicago region is. Other regions across the country are similar to Chicago in terms of population
and demographics, but are more racially integrated among African Americans, Latinos and whites.
Some regions have also dramatically reduced segregation from 1990 to 2010: Atlanta improved
from 21st
to 41st
most segregated, while Chicago only moved from 8th
to 10th
.
Regions with high levels of African American-white
segregation
African American-white segregation as measured by Spatial Proximity Index
Chicago
Cleveland
Newark
Philadelphia
Median
1
1.2
1.4
1.6
1.8
2
2.2
1990 2000 2010
Regions with moderate levels of African American-white
segregation
African American-white segregation as measured by Spatial Proximity Index
Chicago
Atlanta
Houston
Raleigh
Median
1
1.2
1.4
1.6
1.8
2
2.2
1990 2000 2010
21st
41st
8th
10th
44th
45th
9th
30th
40th
48th
45th
59th
Source: Urban Institute, based on 2011-2015 American Community Survey (ACS) five-year estimates.
Source: Urban Institute, based on 2011-2015 American Community Survey (ACS) five-year estimates.
Raleigh-
Durham
12   THE COST OF SEGREGATION
Chicago region: Concentrated racial segregation
1 dot = 1,000 people
Population: 8,505,977
White (52.2%)
African American (17.0%)
Latino (22.4%)
ton
20 40 Miles
Houston region: Moderate racial segregation
20 miles
1 dot = 1,000 people
Population: 6,076,171
White (37.8%)
African American (17.0%)
Latino (36.3%)
What does a less segregated region
look like?
These maps illustrate where white, African
American and Latino people live. Each
dot represents 1,000 people. Compare
the pattern in Houston, a region with a
moderate level of racial segregation, to
the concentrated racial segregation of the
Chicago region.
20 miles
Source: Maps by MPC, based on Urban Institute map and
analysis of 2011-2015 American Community Survey (ACS)
five-year estimates
THE COST OF SEGREGATION   13
While Chicago’s economic and racial segrega-
tion has decreased modestly since 1990, major
drops are needed to reach the national median
level of segregation.
If we continue desegregating at our current
pace, we will not reach the median level of
Latino-white segregation until between 2050
and 2060 and the median level of African
American-white segregation until between 2060
and 2070. With lost income, lives and potential
on the line, we don’t have that kind of time. We
need more deliberate interventions to accelerate
our progress.
Drop from 1990 to 2000   Drop from 2000 to 2010   Drop required to reach 2010 national median
Economic segregation African American-white segregation Latino-white segregation
What would it take for Chicago to
achieve median levels of segregation?
-4.6%
-3.0% -2.9%
-5.3%
-8.3%
-7.3%
-18.5%
-36.1%
-28.0%
With lost income, lives and
potential on the line, we
can’t afford to continue at
our current pace.
Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National Trends and the Case of
Chicago: 1990-2010. Washington, D.C.: Urban Institute.
Major drops needed in the Chicago region to reach national
median level of segregation
Drop from 1990 to 2000   Drop from 2000 to 2010   Drop required to reach 2010 national median
Economic segregation African American-white segregation Latino-white segregation
14   THE COST OF SEGREGATION
How segregation impacts Latinos
While Latinos make up 25 percent of the Chicago Housing Author-
ity’s eligible public housing population, they occupy just 9 percent
of available units and only one in ten individuals on waiting lists is
Latino.15
While the overall Latino population is increasing in the Chicago region, 92 percent
of majority-Latino suburbs in the Chicago region lost population between 2014
and 2015.16
61 percent of all Latino students in the Chicago region attend a
majority-Latino school; 78 percent of the students attending these
majority-Latino schools identify as low-income.17
Population changes in Pilsen and Logan Square
Latino population White population
-20%
20%
40%
-26%
Pilsen
22%
-35%
Logan Square
44%
Dramatic change in Latino-white population balance in Chicago’s
Pilsen and Logan Square neighborhoods, 2000 to 2013
Across the country and in the Chicago region, segregation between African Amer-
icans and whites is more pronounced than it is between Latinos and whites. At
the same time, segregation causes unique and often negative impacts to Latinos
in metro Chicago that merit further exploration. For instance, Latino household
mobility is often the result of displacement caused by real estate speculation rather
than the family’s upward economic mobility,11
Latinos are underrepresented in
public housing,12
and while more suburbanized, they are typically clustered into
older de-industrialized and disinvested areas of the region.13
Chicago’s two most gentrifying neighborhoods, Pilsen and Logan Square, each
lost substantial Latino population from 2000 to 2013 (26 percent and 35 percent,
respectively) while gaining substantial white population (22 percent and 44
percent, respectively).14
Source: Graph by MPC, based on analysis of 2006-2010 and 2011-2015 American
Community Survey (ACS) five-year estimates
THE COST OF SEGREGATION   15
Segregation in Chicago:
Causes and effects
Rooted in racism, federal and local policies established racial and economic
segregation in the Chicago region. After the start of the Great Migration in 1916,
the Chicago Real Estate Board (CREB) instituted racially restrictive covenants that
prohibited African Americans from purchasing, leasing and occupying housing
outside of a small area on the city’s South Side. These covenants were legal and
allowed racially discriminatory housing policies to continue for decades.
The widespread practice of “redlining” in Chicago further exacerbated segre-
gation by denying certain communities access to financial capital and resources.
The redlined African American neighborhoods were deemed high-risk to financial
institutions, making it impossible or unrealistically expensive to get mortgages or
take out loans for small businesses. After World War II, national and local policies
helped give rise to two distinct paths: suburban homeownership for whites and
massive public housing developments in already overcrowded,
disinvested areas for African Americans and later Latinos.
Latino immigration and settlement into Chicago grew most
significantly beginning in the 1970s. By 1980, more than 60
percent of residents of the Pilsen and Little Village neigh-
borhoods were Latino and by 1990, Logan Square and West
Town were largely Latino, as well. From 1990 to 2010, Latinos grew from 6.6
percent to nearly 18 percent of the suburban population, clustered in areas such
as Cicero, Aurora and Waukegan; between 2000 and 2010, six majority-white
suburbs flipped to majority Latino, including west suburban Berwyn and northwest
suburban Carpentersville.
The forces of racial and economic segregation persist today. Current government
policies tend to benefit those with existing wealth, such as homeowners who
receive federal tax benefits. People of color are disproportionate recipients of
predatory loans, even when they have similar or better assets and credit score
as whites, in part due to discrimination in the banking and housing industries.18
Majority white, affluent areas often enact policies that hinder the availability
of economic mobility options, such as zoning laws that limit multi-family rental
housing or smaller homes that might be more affordable.
Rising income inequality is also a driver of contemporary segregation and has the
most detrimental consequences for communities of color because these popu-
lations are more likely to be middle to low-income. In short, the current social,
economic and political dynamics within the region largely maintain, rather than
ameliorate, the inherited segregation of past eras.
The forces of racial and
economic segregation
persist today.
16   THE COST OF SEGREGATION
Simply put, segregation on the basis of race and class results in
inequitable opportunities for education and other public services,
job prospects and even health outcomes.
In fact, ample evidence demonstrates the
link between concentrations of poverty and
negative outcomes for low-income people
and the neighborhoods where they live. For
example, youth growing up in high-poverty,
racially segregated neighborhoods are more
likely to experience negative educational
outcomes, from reduced high school gradu-
ation rates to academic test performance.19
These early challenges for youth translate to
losses in economic advancement over their
lives, including stifled opportunities to become
homeowners or start businesses.
But does segregation effect entire regions
and everyone living within them? While the
data is clear about the negative effects for lower-income popu-
lations and communities of color, there is growing evidence that
metropolitan areas with high levels of segregation suffer from
economic impairments as well. Regions with higher levels of
inclusion generate more long-term economic growth, while areas
with higher levels of segregation have slower economic growth
and shorter periods of economic growth.20
The “vicious circle of sprawl and economic segregation…imposes
significant costs on all parts of metropolitan areas,” according
to Dreier and co-authors.21
The losers include taxpayers living
in more affluent parts of metro areas, who must pay for public
services to address the effects of segregation, such as the criminal
justice and public health systems.
This project fills gaps in the current evidence about the financial
cost of segregation for entire regions. It demonstrates that
there is a real price to the Chicago region for our high levels of
persistent segregation, which is paid in lost income, lost lives and
lost potential.
The impact of segregation on people,
neighborhoods and regions
THE COST OF SEGREGATION   17
Next steps
The results of this study show that economic and racial segrega-
tion have significant costs for metropolitan regions—and for the
Chicago region, in particular. Our data makes clear how segrega-
tion takes its toll in very concrete ways.
Future analysis and modeling is needed to gain more under-
standing about these costs, including how people of different
races experience them.
For now, we know that we can create a more robust regional
economy by making our city and suburbs less racially and
economically segregated. The second phase of this initiative will
identify how we can accelerate our rate of desegregation and
create a more inclusive, prosperous path forward for all. That
work will include developing a projected baseline scenario for
the Chicago region that assumes the continuation of our current
patterns of racial and economic segregation and an alternative
vision that incorporates policy changes in housing, transporta-
tion, public safety, health and education.
Chicago’s present-day segregation did not occur overnight and
it was not a process that occurred “naturally.” Private and public
policies and programs built our divides: Restrictive housing
covenants. Urban renewal. Redlining. Predatory lending and
the massive foreclosures that followed. Illegal discrimination
against housing voucher holders. It is not merely by chance that
public school quality closely follows the racial composition of the
student body, or that after the housing bubble, property values
have recovered or even risen in well-to-do, largely white commu-
nities while they remain well below for much the South and West
sides of Chicago. Our history can point us to our future: Just as
we created the status quo, we can tear down these barricades to
opportunity and forge a new reality.
It’s no longer an option to do nothing. With lost income, lives
and potential on the line, we can’t leave change to chance. We
need to invest in our future by investing in inclusion.
We are working with neighborhood groups, local advocates and
national advisors to identify the most effective policies and build
the political courage to enact them. At the top of our list will
be strategies that enable each person to achieve his or her full
potential, thereby creating a brighter future for all of us.
It’s no longer an option
to do nothing. We
need to invest in our
future by investing in
inclusion.
18   THE COST OF SEGREGATION
Data, measures and methods
There are three major parts to the study:
First, our research partner Urban Institute analyzed segregation in the 100 most
populous commuting zones (CZs, which correspond generally with metropolitan
areas) from 1990, 2000 and 2010, using Census and American Community Survey
data.
To determine the trend and level of segregation in these metro areas, Urban
Institute mainly used two indices:
To analyze economic segregation: The study uses the Generalized Neighbor-
hood Sorting Index (GNSI). The GNSI measures the extent to which people of
similar incomes “clump” together within a given metropolitan region.
To analyze racial segregation: The study measures both African American-white
and Latino-white racial segregation using a spatial proximity (SP) index. This
explores the extent to which groups cluster together within a region.
Second, the study analyzes the relationships between both economic and racial
segregation and CZ-wide outcomes. The analysis considers the effect of segrega-
tion for the overall population, whites, African Americans and Latinos. We chose
five measures because we could obtain consistent data across three decades and
they all capture important societal costs. The five outcomes of interest are:
•	Median household income
•	Per capita income
•	Proportion of residents age 25 or older with four-year college degrees
•	Life expectancy of residents
•	Homicide rate
Third, the study determines what outcomes the Chicago region would likely have
if its level of segregation were to decrease to the median, based on outcomes in
CZs near the median.
For more detailed descriptions of the methods, refer to Urban Institute’s report,
available at metroplanning.org/costofsegregation.
THE COST OF SEGREGATION   19
References
1.	 The gross domestic product (GDP) by metropolitan area (or
region) is the counterpart of the national gross domestic
product (GDP), which is how the U.S. Department of
Commerce measures U.S. economic activity (Bureau
of Economic Analysis, U.S. Department of Commerce
https://www.bea.gov/newsreleases/regional/gdp_metro/
gdp_metro_newsrelease.htm). In our analysis, we drew from
the methodology of the National Equity Atlas and per capita
gross domestic product figures from the U.S. Department of
Commerce to calculate a 1.58 percent rise in the Chicago
commuting zone’s gross domestic product with the assump-
tion that a rise in a region’s per capita income produces an
equivalent rise in its gross domestic product.
2.	 Florida, Richard, and Charlotta Mellander. “Segregated
city: The geography of economic segregation in America’s
metros.” Martin Prosperity Institute, (2015). http://martin-
prosperity.org/media/Segregated%20City.pdf; calculations
and analysis by the Metropolitan Planning Council
3.	 Reardon, Sean F., and Kendra Bischoff. “The continuing
increase in income segregation 2007-2012,” Stanford
Center for Education Policy Analysis, (2016). http://cepa.
stanford.edu/content/continuing-increase-income-segrega-
tion-2007-2012
4.	 Turner, Ani. “The business case for racial equity,” National
Civic Review, 105.1 (2016). http://onlinelibrary.wiley.com/
doi/10.1002/ncr.21263/abstract
5.	 Shapiro, Robert J. and Kevin A. Hassett. “The economic
benefits of reducing violent crime: A case study of 8
American cities.” Center for American Progress, (2012).
https://cdn.americanprogress.org/wp-content/uploads/
issues/2012/06/pdf/violent_crime.pdf; Numbers adjusted
to 2016 dollars, calculations and analysis by Metropolitan
Planning Council
6.	 Ibid; calculations and analysis by the Metropolitan Planning
Council
7.	 Ibid; calculations and analysis by the Metropolitan Planning
Council
8.	 Cook, Phillip J., and Jens Ludwig. Gun violence: The real
costs. Oxford University Press on Demand, (2000); calcula-
tions and analysis by the Metropolitan Planning Council
9.	 Carnevale, Anthony P., Stephen J. Rose, and Ban Cheah.
“The college payoff: Education, occupations, lifetime
earnings.” Georgetown University Center on Education and
the Workforce, (2011), https://cew.georgetown.edu/cew-re-
ports/the-college-payoff/ ; calculations and analysis by the
Metropolitan Planning Council
10.	 Bureau of Labor Statistics, “Chicago area employment-No-
vember 2016, Local rate of employment growth below
national average,” (2016). https://www.bls.gov/regions/
midwest/news-release/areaemployment_chicago.htm
11.	 Betancur, John. “Gentrification and community fabric in
Chicago.” Urban Studies 48.2 (2011): 383-406.
12.	 Troche-Rodriguez, Madeline. “Latinos and their housing
experiences in metropolitan Chicago: Challenges and
recommendations.” Harvard Journal of Hispanic Policy, 21
(2009): 17-34.
13.	 Chicago Metropolitan Agency for Planning, “Impacts of
Latino population growth on comprehensive planning in
the Chicago metropolitan region: Technical paper.” (2008).
http://www.cmap.illinois.gov/documents/10180/35654/
LatinoTechRptV1.pdf/97b460a8-c414-4e95-8db5-b4e-
22b0ada09; Also see Roth, Benjamin J. Roth, “Bajo el
Mismo Techo The Latino community in suburban Chicago:
An Analysis of Overcrowded Housing.” Research Report of
Latinos United, (2008); Holloway, Adrienne M. “The minority
suburbs: Are low-income Latino households moving into
suburban opportunity neighborhoods? A case study of the
Greater Chicago region.” Journal of Intercultural Disciplines;
Scarborough 15 (Spring 2016).
14.	 Chicago Area Geographic Information Study, Dept. of
Geography, University of Illinois at Chicago. http://www.
gif-explode.com/?explode=http://i.imgur.com/xZoKnTa.gif
15.	 Chicago Housing Authority, CHA Quarterly Report, 3rd
Quarter, 2016. http://www.thecha.org/assets/1/6/Full_2016_
Q3_Draft_11222016.pdf
16.	 Loury, Alden. “Data points: Chicago’s segregation isn’t just in
the city,” Metropolitan Planning Council, June 2016, https://
www.metroplanning.org/news/7324/Data-Points-Chicagos-
segregation-isnt-just-in-the-city
17.	 Fall Enrollment Counts 2015-2016, School and
District Summary, Illinois State Board of Education,
http://206.166.105.35/research/htmls/fall_housing.htm
18.	 Roithmayer, Daria. Reproducing racism: How everyday
choices lock in white advantage. New York University Press,
2014.
19.	 Chetty, Raj, Nathaniel Hendren, and Lawrence F. Katz.
“The effects of exposure to better neighborhoods on
children: New evidence from the Moving to Opportunity
Experiment.” American Economic Review 106 (4): 855–902
(2016); Sampson, Robert J. Great American city: Chicago
and the enduring neighborhood effect. Chicago: University
of Chicago Press (2012); Sharkey, Patrick. Stuck in place:
Urban neighborhoods and the end of progress toward racial
equality. Chicago: University of Chicago Press (2013).
20.	 Li, Huiping, Harrison Campbell, and Steven Fernandez. “Resi-
dential segregation, spatial mismatch, and economic growth
across US metropolitan areas.” Urban Studies 50.13 (2013):
2642–2660; Benner Chris, and Manuel Pastor. “Brother,
can you spare some time? Sustaining prosperity and social
inclusion in America’s metropolitan regions.” Urban Studies
52.7 (2015): 1339–1356.
21.	 Dreier, Peter, John H. Mollenkopf, and Todd Swanstrom.
Place matters: Metropolitics for the twenty-first century. Third
Edition, Revised. Lawrence, Kansas: University Press of Kansas
(2014). Quote from page 58.
20   THE COST OF SEGREGATION
Acknowledgments
This project has been guided at every step by a committed group of advisors. Special thanks to:
Betsy Benito
Corporation for Supportive Housing
Matthew Brewer
MPC Board Member
Rob Breymaier
Oak Park Regional Housing Center
Chris Brown
Southwest Organizing Project
Todd C. Brown
MPC Board Chair
Paul Carlisle
MPC Board Member
Chicago Metropolitan Agency
for Planning (CMAP)
Chris Conley
MPC Board Member
Patricia Fron
Chicago Area Fair Housing Alliance
Andy Geer
Enterprise Community Partners
Angela Hurlock
Claretian Associates
Joe Iaccobucci
Sam Schwartz Consulting
Bernita Johnson-Gabriel
Office of the Mayor, City of Chicago
formerly with Quad Communities
Development Corporation
Rachel Johnston
Chicago Rehab Network
Ianna Kachoris
MacArthur Foundation
Juan Carlos Linares
Latin United Community Housing
Association (LUCHA)
Sylvia Puente
Latino Policy Forum
Raul Raymundo
The Resurrection Project
Jay Readey
Metro Alliance
Jennifer Ritter
ONE Northside
Robin Shabes
IFF
Rachel Scheu
Elevate Energy
Paul Shadle
DLA Piper
Geoff Smith
Institute for Housing Studies at DePaul
University
Heather Smith
Field Foundation of Illinois
Joanna Trotter
Chicago Community Trust
Kyle Whitehead
Active Transportation Alliance
Laura Williams and
Shumeca Pickett
World Business Chicago
Paula Wolff
Illinois Justice Project
The views expressed in this report are those of the authors and should not be attributed to advisors,
funders or MPC board members.
MPC lead authors
Marisa Novara
Vice President
Alden Loury
Director of Research and Evaluation
Amy Khare
Consultant
MPC staff and research assistants
Emily Blum
Kendra Freeman
Chloe Gurin-Sands
Madeline Shepherd
Jessica Smith
Andres Villatoro
Shehara Waas
Thank you to Breann Gala, Mandy
Burrell Booth and Chrissy Mancini
Nichols, our former colleagues,
who assisted with the creation and
curation of this project in earlier
stages.
Design
Ryan Griffin–Stegink Webitects
Copyright © March 2017, Metropolitan Planning Council.
Permission is granted for reproduction, with attribution to
Metropolitan Planning Council.
View this report online at metroplanning.org/costofsegregation
For more than 80 years, the Metropolitan Planning Council (MPC)
has made the Chicago region a better place to live and work by
partnering with businesses, communities and governments to
address the area’s toughest planning and development challenges.
MPC works to solve today’s urgent problems while consistently
thinking ahead to prepare the region for the needs of tomorrow.
140 S. Dearborn St.
Suite 1400
Chicago, Ill. 60603
312 922 5616
metroplanning.org
@metroplanners

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Cost of-segregation

  • 1. The Cost of Segregation Lost income. Lost lives. Lost potential. The steep costs all of us in the Chicago region pay by living so separately from each other.
  • 2. The Metropolitan Planning Council (MPC) partnered with the Urban Institute to conduct this research. Urban Institute is a Washington D.C.-based organization that conducts research to understand and solve real-world challenges in a rapidly urban- izing environment. Urban Institute does not take positions on issues. Scholars are independent and empowered to share their evidence-based views and recommendations shaped by research. Thank you to our dedicated research partners at Urban Institute: Greg Acs, Rolf Pendall and Mark Treskon. The Chicago Community Trust and the John D. and Catherine T. MacArthur Foundation funded this research. The Chicago Community Trust is a community foundation dedi- cated to improving our region through strategic grant making, civic engagement and inspiring philanthropy. The MacArthur Foundation is one of the world’s largest independent foundations and supports creative people, effective institutions, and influential networks building a more just, verdant and peaceful world. We are grateful for their financial and intellectual support of this project, in particular Ianna Kachoris, Tara Magner, Peggy Davis and Joanna Trotter. Cover photo: Ann Fisher (CC)
  • 3. THE COST OF SEGREGATION   1 Contents The Cost of Segregation 2 Lost income 4 Lost lives 6 Lost potential 8 How Chicago compares 10 What does a less segregated region look like? 12 What would it take for Chicago to achieve median levels of segregation? 13 How segregation impacts Latinos 14 Segregation in Chicago: Causes and effects 15 The impact of segregation on people, neighborhoods and regions 16 Next steps 17 Data, measures and methods 18 References 19 Acknowledgments 20 View this report online at metroplanning.org/costofsegregation Sean Munson (CC)
  • 4. 2   THE COST OF SEGREGATION The Cost of Segregation The Metropolitan Planning Council, together with Urban Institute and a team of regional policy advisors, analyzed segregation patterns in the 100 largest metro- politan areas in the country. We examined three types of segregation: economic segregation, African Amer- ican-white segregation and Latino-white segregation. We then examined what impacts we would see if the Chicago region reduced its levels of segregation to the median levels of segregation of the nation’s 100 biggest metros. The core of this report is a summary of our findings. The findings for African American-white segregation were the most pronounced in our study, yet they are not the only indi- cator of how segregation is experienced by race in this region. We share additional data about the impact of segregation on Latinos at other points in this report. We embarked on this study with two driving questions in mind. What does it cost all of us in metropolitan Chicago to live so separately from each other by race and income? What can we do to change these patterns of segregation, so that everyone living in our region can participate in and create a stronger future? The answer is that segregation is not only an issue in low-income communities or communities of color. Everyone pays a price, measured in lost income, lives and education. 100 largest U.S. metro areas Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National Trends and the Case of Chicago: 1990-2010. Washington, D.C.: Urban Institute.
  • 5. THE COST OF SEGREGATION   3 Everyone deserves an opportunity to earn a living—and the economy is better off when everyone participates in it. Yet, not everyone in the Chicago region has the same pathway to economic success. Over generations, policies and practices have set up barricades in and around Chicago, ultimately leading to a region where people of different races and incomes live separately from one another. Some of these boundaries can be seen on a map. Others are invisible yet powerful barriers that affect local public school performance, business investment, workers’ preparation for today’s jobs and what kinds of employment—if any—are available within a reasonable commute of where a person can afford to live. Like bricks of a wall, these decisions have stacked up over decades, and individ- uals, communities and our entire region are living with the consequences. Economic and racial segregation has strangled opportunities for millions of people. Disinvestment has devastated entire city neighborhoods and suburban villages, towns and cities. Lack of diversity also hurts affluent communities, where limited housing options often mean that young people cannot afford to return when starting their own families, retirees cannot afford to stay and valued employees are priced out. Add it up, and it’s clear that segregation holds back the entire region’s economy and potential—and whether we realize it or not, it’s costing all of us. Our social fabric and our economy will be stronger if we all have more opportunities to live, work and go to school with one another. Eric Allix Rogers
  • 6. 4   THE COST OF SEGREGATION The Chicago region’s gross domestic product, a leading measure of economic performance, would also rise by approximately $8 billion.1 That’s an increase two-and-a-half times greater than the Chicago region’s average annual growth of the gross domestic product. This is a boost sure to create significant positive ripple effects for our region and its tax base. If we reduced the levels of economic and African American-white segregation to the national median... Lost income Incomes for African Americans in the Chicago region would rise an average of $2,982 per person per year. The region as a whole would earn an additional $4.4 billion in income.
  • 7. THE COST OF SEGREGATION   5 The link between segregation, job access and income Research shows that economic segregation and income inequality compound and exacerbate each other’s effects.2 With income and wealth inequality on the rise nationally since 1980, house- hold resources available to spend on housing vary by community. The housing market reacts to this inequality in ways that worsen segregation: Affluent households are more able to comfortably afford high-cost options in certain communities, while lower-in- come households spend higher shares of their income for lower- cost options in different communities. The result is a self-reinforcing cycle, in which income inequality creates segregation and segregation furthers income inequality.3 These lowered incomes have a cost: research has shown that if the average incomes of people of color were raised even beyond the national median, up to the average incomes of whites, our gross national product would increase by $1.9 trillion.4 How do we reduce income segregation and racial earning and wealth gaps? It’s not simple, and the answers may range broadly, from creating a local Earned Income Tax Credit to housing poli- cies that avoid concentrating where the wealthy and the poor live, to more transit options to connect workers to jobs. MPC will be exploring these policies and many others as we seek a path forward for accelerating our desegregation. $8 billion Amount the regional gross domestic product would grow if the Chicago region was less segregated Latino and African American earnings lag behind whites Chicago region per capita incomes, adjusted for inflation P er capita incomes by race Chicago region, adjusted for inflation $0 $10,000 $20,000 $30,000 $40,000 $50,000 1990 2000 2010 White Black Latino African American Source: Graph by MPC, based on analysis of 1990 and 2000 Censuses and 2008–2012 five-year American Community Survey
  • 8. 6   THE COST OF SEGREGATION There is no way to fully account for a lost human life. However, it is possible to tally a number of relevant direct and indirect costs. Using the region’s 2010 homicide rate—the most recent figures available at the regional level—our study found that the Chicago area could have boosted its economy simply by being a safer place to live. So what drives Chicago’s relationship between segregation and homicides? How can we improve public safety in our communi- ties to save lives, as well as maintain a thriving economy, stable property values and a growing population? These are among the questions MPC is asking as we seek solutions to Chicago’s violence and its segregation. In our next phase of work, we are focusing on four areas: police reform, the geographic concen- tration of crime and violence, criminal justice policy, and how place impacts the re-entry and recidivism of people with criminal records. The Chicago region’s homicide rate would drop by 30 percent—the equivalent of saving 229 lives in the city of Chicago in 2016—if we reduced the level of segregation between African Americans and whites to the national median. Lost lives Joshua Lott
  • 9. THE COST OF SEGREGATION   7 The link between segregation, homicides and strong communities Chicago’s rising homicide rate is an urgent concern for the region because any untimely loss of life is a tragedy. For too long, though, too many have had the misperception that Chicago’s violence did not impact them. In fact, violence has a ripple effect: it removes residents from communities by death and incarceration, unravels families and traumatizes survivors. Each of these factors saps the capacity of students and workers and makes the city and region a less appealing place to live and work. Of the 10 U.S. cities with highest murder rates, Chicago ranks eighth. Most of these cities have high levels of economic and racial segregation as well. Chicago is a microcosm of both trends: In 2016, more than half of the city’s homicides occurred in 11 communities that were predominantly people of color and home to some of the city’s highest rates of poverty. Chicago ranked last in population growth in 2015 among the nation’s 10 largest cities. One study firmly links homi- cides to population loss for cities, positing that every additional homicide over the previous year results in the loss of 70 residents.8 167 more people would have lived that year, earning some $170 million over the course of their lifetimes.5 The region would have saved some $65 million in policing costs and an estimated $218 million in corrections costs.6 Residential real estate values would have increased by at least $6 billion.7 Homicides by race City of Chicago only 0 100 200 300 400 500 600 700 1990 2000 2010 White African American Latino In 2010, the number of African American homicides in Chicago was over 17 times the number for whites City of Chicago only. Data not available for more recent years. Source: Graph by MPC, based on data from the Chicago Police Department, Research and Development Division, 2011 Chicago Murder Analysis If the regional homicide rate had been 30 percent lower in 2010...
  • 10. 8   THE COST OF SEGREGATION The lifetime earnings gap between a person with a high school diploma and a person with a four-year college degree is $1,078,446.9 Our research found a correlation between lower levels of segregation and a higher percentage of the population holding a bachelor’s degree, for both African Americans and for whites. This means the Chicago region is losing out on some $90 billion in total lifetime earnings as a result of our education gap. 83,000 more people in the Chicago region would have bachelor’s degrees if we reduced the level of segregation between African Americans and whites to the national median. Lost potential
  • 11. THE COST OF SEGREGATION   9 The link between segregation, school quality and college preparedness Education is the backbone of a prepared workforce. And the more educated a region’s workforce, the more attractive that region is to employers. Yet the U.S. President’s Council on Jobs and Economic Competitiveness found that by 2020 there will be 1.5 million too few college graduates nationwide to meet employers’ demands. The Chicago region is already losing ground. Just 12 percent of the region’s Latinos over the age of 25 held bachelor’s degrees in 2010, compared to 20 percent for African Americans and 44 percent for whites. The region ranked ninth among the nation’s 10 largest metro areas in the rate of new job growth from December 2015 to December 2016, according to the latest report from the Bureau of Labor Statistics.10 If Chicago is to unlock its competitive advantages and prepare the next gener- ation of educated workers, deliberate desegregation must be emphasized. Education must play a major role in the region’s long-term growth. We are exploring strategies to provide diverse educa- tional settings and how to replicate sound policies that are working in public schools—these types of policies will be key to prepare the Chicago region for tomorrow’s job market. #9 Chicago’s rank among nation’s 10 largest metro areas in the rate of job growth from Dec. 2015 to Dec. 2016 Latinos have the lowest bachelor’s degree attainment at 12%, with African Americans at 20%Bachelor's degree attainment by race Chicago region White Black Latino Get the data 0% 10% 20% 30% 40% 50% 1990 2000 2010 African American Source: Graph by MPC, based on analysis of 1990 and 2000 Censuses and 2008–2012 five-year American Community Survey.
  • 12. 10   THE COST OF SEGREGATION How Chicago compares In 2010, the Chicago region had the... 5th highest combined racial and economic segregation 9th highest Latino- white segregation 10th highest African American-white segregation 20th highest economic segregation The Chicago region is not alone when it comes to being racially and economically segregated— metropolitan regions around the country remain starkly segregated. Yet two-thirds of the nation’s largest regions reduced their economic segrega- tion more than Chicagoland did between 1990 and 2010. Chicago is fifth in the nation in our combined measure of racial and economic segregation. The national map below shows the 100 largest regions and how they rank. The Chicago region has consistently ranked in the top 10 highest levels of African Ameri- can-white racial segregation from 1990–2010. The findings for African American-white segre- gation were by far the most pronounced, and so we focus on that measure in this section. 1 - 10 11 - 20 21 - 40 41 - 60 61 - 80 81 - 100 Los Angeles Kansas City Detroit Milwaukee Chicago PhiladelphiaCleveland Newark New York Bridgeport Rank most to least segregated Comparing the nation: Ranking of segregation in 100 largest U.S. metro areas, 2010 Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National Trends and the Case of Chicago: 1990-2010. Washington, D.C.: Urban Institute.
  • 13. THE COST OF SEGREGATION   11 How Chicago compares to three highly segregated regions How Chicago compares to three moderately segregated regions Chicago, Philadelphia, Cleveland and Newark are similar in terms of African American-white segre- gation, population and racial demographics, as well as persistent levels of segregation over the decades. The difference between Chicago and the national median of segregation (the dashed line) indicates how far we are from achieving a moderate level of segregation. It is not inevitable that a city and its surrounding suburbs are segregated to the degree that the Chicago region is. Other regions across the country are similar to Chicago in terms of population and demographics, but are more racially integrated among African Americans, Latinos and whites. Some regions have also dramatically reduced segregation from 1990 to 2010: Atlanta improved from 21st to 41st most segregated, while Chicago only moved from 8th to 10th . Regions with high levels of African American-white segregation African American-white segregation as measured by Spatial Proximity Index Chicago Cleveland Newark Philadelphia Median 1 1.2 1.4 1.6 1.8 2 2.2 1990 2000 2010 Regions with moderate levels of African American-white segregation African American-white segregation as measured by Spatial Proximity Index Chicago Atlanta Houston Raleigh Median 1 1.2 1.4 1.6 1.8 2 2.2 1990 2000 2010 21st 41st 8th 10th 44th 45th 9th 30th 40th 48th 45th 59th Source: Urban Institute, based on 2011-2015 American Community Survey (ACS) five-year estimates. Source: Urban Institute, based on 2011-2015 American Community Survey (ACS) five-year estimates. Raleigh- Durham
  • 14. 12   THE COST OF SEGREGATION Chicago region: Concentrated racial segregation 1 dot = 1,000 people Population: 8,505,977 White (52.2%) African American (17.0%) Latino (22.4%) ton 20 40 Miles Houston region: Moderate racial segregation 20 miles 1 dot = 1,000 people Population: 6,076,171 White (37.8%) African American (17.0%) Latino (36.3%) What does a less segregated region look like? These maps illustrate where white, African American and Latino people live. Each dot represents 1,000 people. Compare the pattern in Houston, a region with a moderate level of racial segregation, to the concentrated racial segregation of the Chicago region. 20 miles Source: Maps by MPC, based on Urban Institute map and analysis of 2011-2015 American Community Survey (ACS) five-year estimates
  • 15. THE COST OF SEGREGATION   13 While Chicago’s economic and racial segrega- tion has decreased modestly since 1990, major drops are needed to reach the national median level of segregation. If we continue desegregating at our current pace, we will not reach the median level of Latino-white segregation until between 2050 and 2060 and the median level of African American-white segregation until between 2060 and 2070. With lost income, lives and potential on the line, we don’t have that kind of time. We need more deliberate interventions to accelerate our progress. Drop from 1990 to 2000   Drop from 2000 to 2010   Drop required to reach 2010 national median Economic segregation African American-white segregation Latino-white segregation What would it take for Chicago to achieve median levels of segregation? -4.6% -3.0% -2.9% -5.3% -8.3% -7.3% -18.5% -36.1% -28.0% With lost income, lives and potential on the line, we can’t afford to continue at our current pace. Source: Acs, Gregory, Rolf Pendall, Mark Treskon, and Amy Khare. 2017. The Cost of Segregation: National Trends and the Case of Chicago: 1990-2010. Washington, D.C.: Urban Institute. Major drops needed in the Chicago region to reach national median level of segregation Drop from 1990 to 2000   Drop from 2000 to 2010   Drop required to reach 2010 national median Economic segregation African American-white segregation Latino-white segregation
  • 16. 14   THE COST OF SEGREGATION How segregation impacts Latinos While Latinos make up 25 percent of the Chicago Housing Author- ity’s eligible public housing population, they occupy just 9 percent of available units and only one in ten individuals on waiting lists is Latino.15 While the overall Latino population is increasing in the Chicago region, 92 percent of majority-Latino suburbs in the Chicago region lost population between 2014 and 2015.16 61 percent of all Latino students in the Chicago region attend a majority-Latino school; 78 percent of the students attending these majority-Latino schools identify as low-income.17 Population changes in Pilsen and Logan Square Latino population White population -20% 20% 40% -26% Pilsen 22% -35% Logan Square 44% Dramatic change in Latino-white population balance in Chicago’s Pilsen and Logan Square neighborhoods, 2000 to 2013 Across the country and in the Chicago region, segregation between African Amer- icans and whites is more pronounced than it is between Latinos and whites. At the same time, segregation causes unique and often negative impacts to Latinos in metro Chicago that merit further exploration. For instance, Latino household mobility is often the result of displacement caused by real estate speculation rather than the family’s upward economic mobility,11 Latinos are underrepresented in public housing,12 and while more suburbanized, they are typically clustered into older de-industrialized and disinvested areas of the region.13 Chicago’s two most gentrifying neighborhoods, Pilsen and Logan Square, each lost substantial Latino population from 2000 to 2013 (26 percent and 35 percent, respectively) while gaining substantial white population (22 percent and 44 percent, respectively).14 Source: Graph by MPC, based on analysis of 2006-2010 and 2011-2015 American Community Survey (ACS) five-year estimates
  • 17. THE COST OF SEGREGATION   15 Segregation in Chicago: Causes and effects Rooted in racism, federal and local policies established racial and economic segregation in the Chicago region. After the start of the Great Migration in 1916, the Chicago Real Estate Board (CREB) instituted racially restrictive covenants that prohibited African Americans from purchasing, leasing and occupying housing outside of a small area on the city’s South Side. These covenants were legal and allowed racially discriminatory housing policies to continue for decades. The widespread practice of “redlining” in Chicago further exacerbated segre- gation by denying certain communities access to financial capital and resources. The redlined African American neighborhoods were deemed high-risk to financial institutions, making it impossible or unrealistically expensive to get mortgages or take out loans for small businesses. After World War II, national and local policies helped give rise to two distinct paths: suburban homeownership for whites and massive public housing developments in already overcrowded, disinvested areas for African Americans and later Latinos. Latino immigration and settlement into Chicago grew most significantly beginning in the 1970s. By 1980, more than 60 percent of residents of the Pilsen and Little Village neigh- borhoods were Latino and by 1990, Logan Square and West Town were largely Latino, as well. From 1990 to 2010, Latinos grew from 6.6 percent to nearly 18 percent of the suburban population, clustered in areas such as Cicero, Aurora and Waukegan; between 2000 and 2010, six majority-white suburbs flipped to majority Latino, including west suburban Berwyn and northwest suburban Carpentersville. The forces of racial and economic segregation persist today. Current government policies tend to benefit those with existing wealth, such as homeowners who receive federal tax benefits. People of color are disproportionate recipients of predatory loans, even when they have similar or better assets and credit score as whites, in part due to discrimination in the banking and housing industries.18 Majority white, affluent areas often enact policies that hinder the availability of economic mobility options, such as zoning laws that limit multi-family rental housing or smaller homes that might be more affordable. Rising income inequality is also a driver of contemporary segregation and has the most detrimental consequences for communities of color because these popu- lations are more likely to be middle to low-income. In short, the current social, economic and political dynamics within the region largely maintain, rather than ameliorate, the inherited segregation of past eras. The forces of racial and economic segregation persist today.
  • 18. 16   THE COST OF SEGREGATION Simply put, segregation on the basis of race and class results in inequitable opportunities for education and other public services, job prospects and even health outcomes. In fact, ample evidence demonstrates the link between concentrations of poverty and negative outcomes for low-income people and the neighborhoods where they live. For example, youth growing up in high-poverty, racially segregated neighborhoods are more likely to experience negative educational outcomes, from reduced high school gradu- ation rates to academic test performance.19 These early challenges for youth translate to losses in economic advancement over their lives, including stifled opportunities to become homeowners or start businesses. But does segregation effect entire regions and everyone living within them? While the data is clear about the negative effects for lower-income popu- lations and communities of color, there is growing evidence that metropolitan areas with high levels of segregation suffer from economic impairments as well. Regions with higher levels of inclusion generate more long-term economic growth, while areas with higher levels of segregation have slower economic growth and shorter periods of economic growth.20 The “vicious circle of sprawl and economic segregation…imposes significant costs on all parts of metropolitan areas,” according to Dreier and co-authors.21 The losers include taxpayers living in more affluent parts of metro areas, who must pay for public services to address the effects of segregation, such as the criminal justice and public health systems. This project fills gaps in the current evidence about the financial cost of segregation for entire regions. It demonstrates that there is a real price to the Chicago region for our high levels of persistent segregation, which is paid in lost income, lost lives and lost potential. The impact of segregation on people, neighborhoods and regions
  • 19. THE COST OF SEGREGATION   17 Next steps The results of this study show that economic and racial segrega- tion have significant costs for metropolitan regions—and for the Chicago region, in particular. Our data makes clear how segrega- tion takes its toll in very concrete ways. Future analysis and modeling is needed to gain more under- standing about these costs, including how people of different races experience them. For now, we know that we can create a more robust regional economy by making our city and suburbs less racially and economically segregated. The second phase of this initiative will identify how we can accelerate our rate of desegregation and create a more inclusive, prosperous path forward for all. That work will include developing a projected baseline scenario for the Chicago region that assumes the continuation of our current patterns of racial and economic segregation and an alternative vision that incorporates policy changes in housing, transporta- tion, public safety, health and education. Chicago’s present-day segregation did not occur overnight and it was not a process that occurred “naturally.” Private and public policies and programs built our divides: Restrictive housing covenants. Urban renewal. Redlining. Predatory lending and the massive foreclosures that followed. Illegal discrimination against housing voucher holders. It is not merely by chance that public school quality closely follows the racial composition of the student body, or that after the housing bubble, property values have recovered or even risen in well-to-do, largely white commu- nities while they remain well below for much the South and West sides of Chicago. Our history can point us to our future: Just as we created the status quo, we can tear down these barricades to opportunity and forge a new reality. It’s no longer an option to do nothing. With lost income, lives and potential on the line, we can’t leave change to chance. We need to invest in our future by investing in inclusion. We are working with neighborhood groups, local advocates and national advisors to identify the most effective policies and build the political courage to enact them. At the top of our list will be strategies that enable each person to achieve his or her full potential, thereby creating a brighter future for all of us. It’s no longer an option to do nothing. We need to invest in our future by investing in inclusion.
  • 20. 18   THE COST OF SEGREGATION Data, measures and methods There are three major parts to the study: First, our research partner Urban Institute analyzed segregation in the 100 most populous commuting zones (CZs, which correspond generally with metropolitan areas) from 1990, 2000 and 2010, using Census and American Community Survey data. To determine the trend and level of segregation in these metro areas, Urban Institute mainly used two indices: To analyze economic segregation: The study uses the Generalized Neighbor- hood Sorting Index (GNSI). The GNSI measures the extent to which people of similar incomes “clump” together within a given metropolitan region. To analyze racial segregation: The study measures both African American-white and Latino-white racial segregation using a spatial proximity (SP) index. This explores the extent to which groups cluster together within a region. Second, the study analyzes the relationships between both economic and racial segregation and CZ-wide outcomes. The analysis considers the effect of segrega- tion for the overall population, whites, African Americans and Latinos. We chose five measures because we could obtain consistent data across three decades and they all capture important societal costs. The five outcomes of interest are: • Median household income • Per capita income • Proportion of residents age 25 or older with four-year college degrees • Life expectancy of residents • Homicide rate Third, the study determines what outcomes the Chicago region would likely have if its level of segregation were to decrease to the median, based on outcomes in CZs near the median. For more detailed descriptions of the methods, refer to Urban Institute’s report, available at metroplanning.org/costofsegregation.
  • 21. THE COST OF SEGREGATION   19 References 1. The gross domestic product (GDP) by metropolitan area (or region) is the counterpart of the national gross domestic product (GDP), which is how the U.S. Department of Commerce measures U.S. economic activity (Bureau of Economic Analysis, U.S. Department of Commerce https://www.bea.gov/newsreleases/regional/gdp_metro/ gdp_metro_newsrelease.htm). In our analysis, we drew from the methodology of the National Equity Atlas and per capita gross domestic product figures from the U.S. Department of Commerce to calculate a 1.58 percent rise in the Chicago commuting zone’s gross domestic product with the assump- tion that a rise in a region’s per capita income produces an equivalent rise in its gross domestic product. 2. Florida, Richard, and Charlotta Mellander. “Segregated city: The geography of economic segregation in America’s metros.” Martin Prosperity Institute, (2015). http://martin- prosperity.org/media/Segregated%20City.pdf; calculations and analysis by the Metropolitan Planning Council 3. Reardon, Sean F., and Kendra Bischoff. “The continuing increase in income segregation 2007-2012,” Stanford Center for Education Policy Analysis, (2016). http://cepa. stanford.edu/content/continuing-increase-income-segrega- tion-2007-2012 4. Turner, Ani. “The business case for racial equity,” National Civic Review, 105.1 (2016). http://onlinelibrary.wiley.com/ doi/10.1002/ncr.21263/abstract 5. Shapiro, Robert J. and Kevin A. Hassett. “The economic benefits of reducing violent crime: A case study of 8 American cities.” Center for American Progress, (2012). https://cdn.americanprogress.org/wp-content/uploads/ issues/2012/06/pdf/violent_crime.pdf; Numbers adjusted to 2016 dollars, calculations and analysis by Metropolitan Planning Council 6. Ibid; calculations and analysis by the Metropolitan Planning Council 7. Ibid; calculations and analysis by the Metropolitan Planning Council 8. Cook, Phillip J., and Jens Ludwig. Gun violence: The real costs. Oxford University Press on Demand, (2000); calcula- tions and analysis by the Metropolitan Planning Council 9. Carnevale, Anthony P., Stephen J. Rose, and Ban Cheah. “The college payoff: Education, occupations, lifetime earnings.” Georgetown University Center on Education and the Workforce, (2011), https://cew.georgetown.edu/cew-re- ports/the-college-payoff/ ; calculations and analysis by the Metropolitan Planning Council 10. Bureau of Labor Statistics, “Chicago area employment-No- vember 2016, Local rate of employment growth below national average,” (2016). https://www.bls.gov/regions/ midwest/news-release/areaemployment_chicago.htm 11. Betancur, John. “Gentrification and community fabric in Chicago.” Urban Studies 48.2 (2011): 383-406. 12. Troche-Rodriguez, Madeline. “Latinos and their housing experiences in metropolitan Chicago: Challenges and recommendations.” Harvard Journal of Hispanic Policy, 21 (2009): 17-34. 13. Chicago Metropolitan Agency for Planning, “Impacts of Latino population growth on comprehensive planning in the Chicago metropolitan region: Technical paper.” (2008). http://www.cmap.illinois.gov/documents/10180/35654/ LatinoTechRptV1.pdf/97b460a8-c414-4e95-8db5-b4e- 22b0ada09; Also see Roth, Benjamin J. Roth, “Bajo el Mismo Techo The Latino community in suburban Chicago: An Analysis of Overcrowded Housing.” Research Report of Latinos United, (2008); Holloway, Adrienne M. “The minority suburbs: Are low-income Latino households moving into suburban opportunity neighborhoods? A case study of the Greater Chicago region.” Journal of Intercultural Disciplines; Scarborough 15 (Spring 2016). 14. Chicago Area Geographic Information Study, Dept. of Geography, University of Illinois at Chicago. http://www. gif-explode.com/?explode=http://i.imgur.com/xZoKnTa.gif 15. Chicago Housing Authority, CHA Quarterly Report, 3rd Quarter, 2016. http://www.thecha.org/assets/1/6/Full_2016_ Q3_Draft_11222016.pdf 16. Loury, Alden. “Data points: Chicago’s segregation isn’t just in the city,” Metropolitan Planning Council, June 2016, https:// www.metroplanning.org/news/7324/Data-Points-Chicagos- segregation-isnt-just-in-the-city 17. Fall Enrollment Counts 2015-2016, School and District Summary, Illinois State Board of Education, http://206.166.105.35/research/htmls/fall_housing.htm 18. Roithmayer, Daria. Reproducing racism: How everyday choices lock in white advantage. New York University Press, 2014. 19. Chetty, Raj, Nathaniel Hendren, and Lawrence F. Katz. “The effects of exposure to better neighborhoods on children: New evidence from the Moving to Opportunity Experiment.” American Economic Review 106 (4): 855–902 (2016); Sampson, Robert J. Great American city: Chicago and the enduring neighborhood effect. Chicago: University of Chicago Press (2012); Sharkey, Patrick. Stuck in place: Urban neighborhoods and the end of progress toward racial equality. Chicago: University of Chicago Press (2013). 20. Li, Huiping, Harrison Campbell, and Steven Fernandez. “Resi- dential segregation, spatial mismatch, and economic growth across US metropolitan areas.” Urban Studies 50.13 (2013): 2642–2660; Benner Chris, and Manuel Pastor. “Brother, can you spare some time? Sustaining prosperity and social inclusion in America’s metropolitan regions.” Urban Studies 52.7 (2015): 1339–1356. 21. Dreier, Peter, John H. Mollenkopf, and Todd Swanstrom. Place matters: Metropolitics for the twenty-first century. Third Edition, Revised. Lawrence, Kansas: University Press of Kansas (2014). Quote from page 58.
  • 22. 20   THE COST OF SEGREGATION Acknowledgments This project has been guided at every step by a committed group of advisors. Special thanks to: Betsy Benito Corporation for Supportive Housing Matthew Brewer MPC Board Member Rob Breymaier Oak Park Regional Housing Center Chris Brown Southwest Organizing Project Todd C. Brown MPC Board Chair Paul Carlisle MPC Board Member Chicago Metropolitan Agency for Planning (CMAP) Chris Conley MPC Board Member Patricia Fron Chicago Area Fair Housing Alliance Andy Geer Enterprise Community Partners Angela Hurlock Claretian Associates Joe Iaccobucci Sam Schwartz Consulting Bernita Johnson-Gabriel Office of the Mayor, City of Chicago formerly with Quad Communities Development Corporation Rachel Johnston Chicago Rehab Network Ianna Kachoris MacArthur Foundation Juan Carlos Linares Latin United Community Housing Association (LUCHA) Sylvia Puente Latino Policy Forum Raul Raymundo The Resurrection Project Jay Readey Metro Alliance Jennifer Ritter ONE Northside Robin Shabes IFF Rachel Scheu Elevate Energy Paul Shadle DLA Piper Geoff Smith Institute for Housing Studies at DePaul University Heather Smith Field Foundation of Illinois Joanna Trotter Chicago Community Trust Kyle Whitehead Active Transportation Alliance Laura Williams and Shumeca Pickett World Business Chicago Paula Wolff Illinois Justice Project The views expressed in this report are those of the authors and should not be attributed to advisors, funders or MPC board members. MPC lead authors Marisa Novara Vice President Alden Loury Director of Research and Evaluation Amy Khare Consultant MPC staff and research assistants Emily Blum Kendra Freeman Chloe Gurin-Sands Madeline Shepherd Jessica Smith Andres Villatoro Shehara Waas Thank you to Breann Gala, Mandy Burrell Booth and Chrissy Mancini Nichols, our former colleagues, who assisted with the creation and curation of this project in earlier stages. Design Ryan Griffin–Stegink Webitects
  • 23. Copyright © March 2017, Metropolitan Planning Council. Permission is granted for reproduction, with attribution to Metropolitan Planning Council. View this report online at metroplanning.org/costofsegregation
  • 24. For more than 80 years, the Metropolitan Planning Council (MPC) has made the Chicago region a better place to live and work by partnering with businesses, communities and governments to address the area’s toughest planning and development challenges. MPC works to solve today’s urgent problems while consistently thinking ahead to prepare the region for the needs of tomorrow. 140 S. Dearborn St. Suite 1400 Chicago, Ill. 60603 312 922 5616 metroplanning.org @metroplanners