1. The Systemic Theft of Black Labor Has Created Housing Disparities

Of course, the impetus for the seismic suffering inflicted on generations of Black Americans via slavery was the theft of their labor. For nearly two and a half centuries, Black people in this country were forced to build wealth for white slaveholders and the nation at large. They succeeded in spectacular fashion. By the middle of the nineteenth century, cotton picked in slave states was not only the number one export product in the United States—it exceeded all other exports combined.¹⁵ The Mississippi River Valley had more millionaires per capita than any other region in the nation.¹⁶ Yet enslaved Blacks gained nothing from their contribution to this bonanza, while whites built wealth that continues to benefit their families today.¹⁷

The end of the Civil War did not stop the exploitation of Black labor. In the communities where freed Black people had been living, land was the critical source of income and wealth. But white southerners would largely refuse to sell land to Black people. Sometimes, the so-called Black Codes that predated Jim Crow laws legally prohibited them from doing so.¹⁸

For the few formerly enslaved Black people who were able to buy rural land in the South, that land was often taken from them by a combination of violence, swindling, and corruption. “A war waged by deed of title” led to the dispossession of 98 percent of Black agricultural landowners in America, Vann R. Newkirk II wrote in a 2019 Atlantic article. Newkirk described how the federal government enabled the theft by allowing racist and corrupt local officials to control the much-needed federal money from the US Department of Agriculture, despite those officials being elected in areas where Black people were blocked from voting.¹⁹

Without land of their own to farm, Black people found they had limited options for survival. Black Code laws blocked Black people from pursuing many occupations and sentenced them to chain gangs if they did not fulfill onerous labor contracts with whites.²⁰ For many Black people, the only remaining path to survival was to return to working for the same whites who once enslaved them, this time as a sharecropper. Fraudulent bookkeeping regularly left the working Black people owing more to the white farmer than their wages would cover.²¹ As Justice Jackson wrote, sharecropping was “de facto reenslavement.”²²

Some Black people managed to escape sharecropping for wage employment, largely in the northern states. Yet they did not escape government-created discrimination in the workplace. In the 1930s, Congress and the Franklin Roosevelt administration passed into law revolutionary New Deal protections for workers, including a minimum wage guarantee, Social Security old-age insurance, the right to organize into unions, and unemployment compensation. But those laws exempted agricultural workers, domestic workers, and tipped workers, professions disproportionately filled by persons of color. Nearly two-thirds of Black workers were blocked from these new benefits.²³

As National Employment Law Project executive director Rebecca Dixon told Congress in 2021, “These exclusions did not accidentally deny Black people and other workers of color the rights and protections given to white workers. Congress intentionally excluded whole categories of workers from vital protections in order to deny Black people the opportunity for economic and social freedom and to preserve a system where employers could profit from racist exploitation.”²⁴

Many of those workplace protection exclusions remain, as does their disproportionate negative effect on the income of workers of color. Less formalized discrimination in the workplace continues as well: one in four Black workers report having been treated unfairly in the past year in hiring, pay, or promotion because of their race.²⁵

The effect of generations of employment racism is that Blacks in the US on average earn 25 percent less than whites in hourly earnings—a gap that has increased in the past forty years.²⁶ Gaps in educational level—themselves deeply impacted by racism in schooling and opportunities—contribute to the wage difference.²⁷ But they don’t explain all of it. College-educated Black men still earn only 80 percent of the wages of college-educated white men.²⁸

There is a clear connection between today’s housing insecurity and the generations of theft and undervaluing of Black labor. Obviously, it is imperative for any household to earn enough money each month to pay rent. Lower incomes also mean less opportunity to accumulate the savings needed to put a down payment on a home. Many of our clients pay far more each month in rent than they would for a comparable home’s mortgage payment, a common situation for renters.²⁹ But they lack the down payment needed to qualify for a mortgage—and the generous benefits that our government provides to homeowners.

2. Our Government Housing Policy Has Benefited Whites and Excluded Blacks

As with employment, our government has long used its housing laws and dollars to favor the prospects of whites while actively suppressing the aspirations of persons of color, particular Black people.

As we discussed in chapter 2, our current housing crisis should not obscure the fact that the US has in the past achieved massive successes with government housing programs. Starting in the mid-nineteenth century, the Homestead Acts gave away hundreds of millions of acres of public land, nearly 10 percent of all the land in US. “The Homestead Acts were unquestionably the most extensive, radical, redistributive governmental policy in US history,” historian Keri Leigh Merritt says. Merritt estimates that a quarter of the US population are descendants of Homestead Act recipients and thus the beneficiaries of the wealth built through this government program.³⁰

As we saw in chapter 2, the US created the Home Owners Loan Corporation (HOLC) and the Federal Housing Administration (FHA) during the Great Depression. These agencies purchased, insured, and issued mortgages to protect at-risk homeowners and provided others with opportunities to buy houses through significantly lower down payments and interest rates.³¹ After World War II, the Veterans Administration guaranteed mortgages for tens of millions of returning veterans.³²

This government support set the stage for US homeowners to enjoy the predictability of a thirty-year, fixed-rate mortgage, an advantage unheard of in other nations.³³ Recognizing the core role that home equity plays in US family asset-building, this mid-twentieth-century era of huge government support for homeownership is widely acknowledged to be the greatest mass opportunity for wealth accumulation in the nation’s history.³⁴

But not all people were provided that opportunity. These programs both de facto and de jure operated with a “Whites Only” sign on their entrance. Only a few thousand of the 1.6 million families who received land through the Homestead Acts were Black.³⁵ To guide its loan decisions, the HOLC created, and the FHA later adopted, color-coded maps of neighborhoods. On those maps, the color red indicated neighborhoods where Black people lived—and thus an allegedly risky mortgage investment. “Redlining” led to decades of these federal agencies refusing to provide the same support for Black homeownership as whites enjoyed. By so doing, our government dramatically widened the wealth gap already created by slavery, the Black Codes, and Jim Crow.³⁶

Often, the federal government couched its discrimination in terms of alleged concerns about default on the home loans. Other times, no one bothered to disguise the racism. Rothstein writes about a 1941 plan to sell suburban New Jersey property to a dozen middle-class Black families with good credit ratings. The FHA refused to sign off, stating flatly, “No loans will be given to colored developments.”³⁷

Under the federal government’s redlining practices, a single Black household could taint an entire neighborhood as unworthy of investment. This provided an economic incentive for whites to block Black people from living in their communities. One white homeowner in mid-century Levittown, Pennsylvania, said that a new Black neighbor was “probably a nice guy, but every time I look at him I see $2,000 drop off the value of my house.”³⁸

The government-favored neighborhoods typically avoided any risk of redlining by adopting restrictive covenants that blocked the sale or renting of homes to Black persons. State and local governments routinely supported and enforced these covenants, and the US Supreme Court in 1926 ruled they were legal. These covenants were also endorsed by the FHA in the form of higher mortgage approvals for communities that adopted racist covenants.³⁹

The bottom line: our government is guilty of massive housing racism, and the impact is quantifiable. Between 1934 and 1962, 98 percent of the hundreds of millions of dollars in family-transforming FHA loans went to whites.⁴⁰ In New York and northern New Jersey, of the sixty-seven thousand VA-insured mortgages, fewer than one hundred went to non-whites. In many communities across the South, the percentage of loans to non-whites was even lower.⁴¹

In 1948, in the case of Shelley v. Kraemer, the US Supreme Court finally ruled that states could not enforce racially restrictive housing covenants.⁴² The pervasive impact of those covenants was memorably demonstrated by three of the nine Supreme Court justices being forced to recuse themselves from the Shelley case: each of them owned property that was subject to restrictive covenants.

After the Shelley decision, massive segregation did not stop. Many communities simply substituted their overtly racist covenants with rules that limited neighborhoods to single-family homes with large lot sizes and parking restrictions. These exclusionary zoning rules had the same effect as the racist covenants they replaced: most persons of color were barred from the communities. Sociologist Matthew Desmond calls exclusionary zoning “our politer, quieter means of promoting segregation.” In most areas of our country, it is fully legal. Exclusionary zoning’s effects and efforts to eliminate it are discussed more in chapter 6.⁴³

3. Predatory Housing Practices Disproportionately Harm Black Americans

When racist government housing practices prevented Black families from obtaining the household stability and financial advantages from homeownership that whites received, a crew of shady actors stepped in to take advantage. The seminal account of this nefarious government-capital partnership is Keeanga-Yamahtta Taylor’s Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership.⁴⁴ Blocked from FHA and other government-backed loans, Black and brown people who sought the advantages of homeownership had no choice but to enter into deeply exploitative purchase agreements and/or loans. Taylor calls the phenomenon “predatory inclusion.”⁴⁵

That predation often came in the form of home contract purchases, sometimes known as rent-to-own or land sales contracts. These forms of contract purchases are still widespread in communities where access to favorable credit is not available. The common denominator among them is that the contract terms are skewed at all turns in favor of the seller.⁴⁶ The purchaser has to provide a large down payment and make high monthly payments but is denied any equity until the contract is completed. The seller retains the deed. If a single payment is late or missed, the seller promptly strips the purchaser of both the home and the purchaser’s investment in it—and often resells the house to yet another contract purchaser.⁴⁷

One analysis by researchers from Duke University and the University of Illinois–Chicago estimated that these contracts accounted for as many as 95 percent of homes sold to Black families in Chicago during the 1950s and 1960s. Contract prices were routinely marked up more than 80 percent from the true value of the homes, and Blacks paid almost $600 more per month in current dollars than they would have under a conventional mortgage. The researchers estimated that these rapacious housing contracts stripped Black families in Chicago of as much as $4 billion in wealth they would have accumulated under conventional mortgage purchases.⁴⁸

For many of the Black families who could get a mortgage, the exploitation continued. As of the beginning of the twenty-first century, Black homeowners were 50 percent more likely than their white peers to be holding a subprime loan, which features higher payments and interest rates that can spike significantly.⁴⁹ These loans’ predatory terms set the stage for Black victimization in the 2008 foreclosure crisis, when more than half of the wealth accumulated in US Black and brown communities was devoured.⁵⁰ In 2012, Wells Fargo Bank, the largest residential home mortgage originator in the United States, paid $184 million to settle a Justice Department suit alleging that during 2004–2009 it pushed Blacks and Hispanics into predatory loans even when they qualified for more favorable terms.⁵¹ The year before, Bank of America’s Countrywide Financial had settled similar litigation for $355 million.⁵²

Again, the government was complicit in this outcome: the US had for decades prior to 2008 been deregulating the banking and finance industries, incentivizing subprime mortgage lending.⁵³ And when the crash happened in 2008, the government sold foreclosed homes to private equity corporations at discount prices.⁵⁴

The saga continues. Just as wage gaps and exclusionary zoning ordinances endure as more veiled successors to the overt racism of past generations, government-sanctioned racial capitalism in the housing market is alive and well. Federal government and Brookings Institution research estimates that, controlling for other factors like housing and neighborhood quality, homes in Black neighborhoods are typically valued at 23 percent less than similar homes in white neighborhoods. That disparity robs an average of $48,000 in value from each of these Black neighborhood homes. That leaves their owners vulnerable to the latest iteration of real estate exploitation: mass purchases of single-family homes by investors.⁵⁵

The record-breaking surge of investor home purchases is heavily concentrated in Black-majority neighborhoods. Analysis of single-family home sales by Georgia Tech researchers revealed that in some Black neighborhoods, 76 percent of purchases were by investors.⁵⁶ An analyst from the realty company Redfin explained why to the Washington Post: “We know historically that places where minorities live are undervalued or lower priced.”⁵⁷

Racism’s impact on valuations causes investors to identify these homes as bargains to buy and then rent or flip. Multiple investigations and lawsuits report investors are using deceptive practices and targeting elderly or desperate homeowners, with the goal of buying the houses at a fraction of their value.⁵⁸

In eviction court, we see the result of these predatory practices. Locked out of the value of homeownership, Black families are more than twice as likely to be renters as white families.⁵⁹ That does not mean their housing is inexpensive: many of our clients are paying more each month in rent than the lawyers representing them do for their own home mortgages.

Black families are not only more likely to rent, but they are also more likely than white renters to live in substandard conditions.⁶⁰ The typical scenario we see is a renting client who lives in an unsafe, unhealthy home and has been unable to reach anyone representing the landlord to request repairs. Why? Because the landlords are out-of-state investors motivated to keep maintenance and staffing costs as low as possible.⁶¹ And where did these absentee landlords get the houses our clients rent from them? Often, they snatched up these now-rented homes from a Black homeowner.⁶²

4. Urban “Development” Disproportionately Harms Black Americans

The eviction court where we work is located on the far east side of Indianapolis. When I was growing up in this community a half century ago, the far east side was much more predominately white than it is today. But this became the side of town where many Black families ended up after the gentrification of strong Black neighborhoods in the center of our city, along with the bulldozing of entire blocks of Black communities to make way for interstate highways, an urban university campus, and a medical complex.⁶³ The campus where I teach and the urban highway loop I travel to get to court are both built on the land of displaced Black families.

Our clients’ parents and grandparents used to live in stable communities in the center of our city.⁶⁴ Their descendants now live at the city edges, clinging to apartments infested with rodents and rental homes where mold spreads and the wiring may be deadly. Sometimes they lose their grip on even those sketchy homes: 54 percent of our community’s homeless individuals are Black, almost double the Black overall population by percentage.⁶⁵

Across urban America, this is a sadly familiar story. Starting with the 1949 Housing Act, the federal government spent over $13 billion on a series of programs informally known as urban renewal.⁶⁶ In Black neighborhoods, the programs were more commonly known as “Negro removal.”⁶⁷ And for good reason: Black Americans made up the majority of the quarter-million families displaced by urban renewal, even though Blacks made up less than 15 percent of the nation’s population at the time.⁶⁸

For example, the largest dislocation project was Cincinnati’s Kenyon Barr, where 97 percent of the nearly five thousand families who lost their homes were Black. As University of Pennsylvania historian Brent Cebul has written, displaced renting families sometimes received relocation assistance of just a few hundred dollars. Other times, they received only a flyer listing the names of real estate brokers.⁶⁹

Like with labor theft, redlining, and predatory lending, Black victimization led to white profit. As was the case in many cities, our city’s Black displacement led to our urban areas being reshaped into “meds and eds” complexes that are now easily accessible by the newly built highways, which allowed white suburbanites to smoothly commute to the new high-paying jobs.⁷⁰ Local historian and activist Wildstyle Paschall wrote for New America about the leveling of the Indiana Avenue community anchored by thriving Black-owned businesses, including Madam C. J. Walker’s beauty supplies empire, and hundreds of acres of multigenerational Black neighborhoods:

The destruction of the Indiana Avenue neighborhoods amounts to the decimation of 100 years of Black neighborhoods and culture. Many one-time Indiana Avenue–area Black homeowners and business owners couldn’t relocate for the price of their original investments. And so business owners became employees, homeowners became tenants, and both groups were robbed of their ability to leave intergenerational capacity, stability, or wealth to their children… . And it happened as a result of a plan coordinated by universities, hospitals, city leaders and state government. All of these are public institutions, making it a cruel twist of irony that the Black community had helped finance their own annihilation simply by participating in the American economy.⁷¹

Urban renewal did not take every neighborhood from the Black communities. But the ones left standing were often highly segregated and stripped of access to public and private services like health clinics, good-paying jobs, and grocery stores.⁷² That segregation also leaves the Black communities as easy targets for the environmental racism of so-called “sacrifice zones” where toxic-waste dumps, chemical plants, and landfills proliferate.⁷³ Black families being forced into substandard housing has led to Black children having on average twice the level of lead in their blood, exposure that often has severe consequences for cognitive development.⁷⁴

5. Public Housing’s Struggles Are Rooted in Racism

From its beginning, racism harmed our nation’s public housing system. Public housing complexes were routinely segregated by design, with the units designated for Black residents built with cheap, inferior materials.⁷⁵ Federal agencies allowed local governments to site public housing in segregated, poor Black neighborhoods, in part a response to the for-profit real estate industry’s efforts to limit the appeal of public housing for whites.⁷⁶

For example, 98 percent of the public housing units built in Chicago over a fifteen-year period in the 1950s and 1960s were placed in all-Black neighborhoods.⁷⁷ A 1984 investigation by the Dallas Morning News covering forty-seven metropolitan areas revealed that nearly all public housing was segregated by race, with Black housing projects lacking in amenities that white projects enjoyed.⁷⁸

That intentional segregation, along with the greater housing and income opportunities for white households, has led to the US public housing population being disproportionately Black. Forty-three percent of household heads in public housing are Black, with another 26 percent Latino or Hispanic.⁷⁹ This means public housing is and has been especially important for Black families, leaving those families grievously damaged by the systemic demolition, underfunding, and neglect of public housing.

We discuss more fully in chapter 8 how the US government and local agencies have destroyed well over one hundred thousand public housing units and left many of those that remain in a dangerous and unhealthy state of disrepair. What was the motivation behind this abandonment of public housing? Urban planning professor Edward Goetz conducts a thorough analysis of the public housing crises in Chicago, Atlanta, and New Orleans in his book New Deal Ruins: Race, Economic Justice, and Public Housing Policy. Goetz finds a clear answer: “In these cities the full-scale attack on public housing was employed as a means of eliminating entire communities of poor Black residents.”⁸⁰

When Goetz widened his scope beyond those three cities, he found that Black public housing residents across the nation are far more likely to be displaced than white residents of public housing.⁸¹ Through the demolition and neglect of public housing, we are repeating urban renewal’s sin by targeting the elimination of Black homes.

6. We Can Make Things Right, If We Want To

There is a good reason this discussion of racism’s impact on housing started with income and wealth. The scarce supply of subsidized housing in this nation means that most households of all races depend on the private, for-profit market to secure a roof over their heads. In our eviction defense work, our clients’ housing emergencies usually could be solved with an infusion of cash. That means we can make an enormous impact in our housing crisis by erasing the racial wage and income gaps, which would immediately boost our Black clients’ abilities to find safe, decent housing.

In chapter 6, we explore the possible non-housing remedies for our housing crisis. Beyond just increasing wages, this approach means stepping away from the US’s outsize reliance on the value of our homes as the family safety net. Instead, a robust national pension, disability support, and health care system should provide that security.⁸² Keeanga-Yamahtta Taylor focused her landmark book Race for Profit on the way our housing system has benefited whites and abused Black people. But she does not see the remedy for this toxic legacy coming through housing reforms alone:

The real issue here is how the insistence on homeownership as the solution to economic or racial inequality actually leaves African Americans behind… . This shouldn’t be interpreted as accepting the limits imposed by discrimination or the marginalization of African Americans. Instead, it is a plea that we do not leave the quality of people’s lives in the supposedly invisible hand of the market economy. Instead of relying on the home as an asset to secure retirement or weather an unforeseen health emergency, government should play a larger role in providing retirement benefits or healthcare to ensure consistent and equitable public welfare.⁸³

Housing-specific reforms are called for, too. The FHA and VA et al. proved convincingly that our government can promote stable housing at enormous scale. We should launch similar efforts again—this time, minus the racism. In fact, we should start affirmatively undoing the effects of housing racism. One current program that is widely praised is the US Department of Agriculture’s 502 Direct Loan Program, which provides guaranteed, low-interest loans to first-time homebuyers.⁸⁴ It is a good approach, but the 502 program’s focus on rural homebuyers raises echoes of the white-benefiting housing programs that dominated the last century. A similar effort should target the Black communities that have been left out of past government homeownership programs.⁸⁵

The long legacy of US housing racism has led to multiple reparations proposals that focus on housing subsidies for Black Americans. Seattle, Santa Monica, and Berkeley, California, all have proposals in various stages that are designed to help provide affordable homes for Black residents.⁸⁶ In 2022, the city of Evanston, Illinois, took one of the most tangible reparations steps yet, giving $25,000 housing vouchers to six-hundred-plus Black residents.

A larger, broader Evanston reparations program is planned, but the local Black community deliberately chose housing to be its priority. “Our harm report showed that housing is an area in which we were harmed and stripped away of wealth and opportunity,” said Robin Rue Summons, chairperson of the city’s reparations committee. “So we’ve started with housing.”⁸⁷ We should all follow their lead.