The Economic Impact of Housing Segregation and Discrimination on Families of Color

At Women + Real Estate™, our mission is to empower women to build wealth through real estate. Understanding the economic impact of housing segregation and discrimination is crucial for making informed decisions and advocating for equitable policies. This article in our series Creating Opportunities: HUD Vouchers and Housing Equity. delves into how these systemic issues have affected families of color and what can be done to create more inclusive opportunities.

Section 8 Program Overview

Authorized by Congress in 1974, the Section 8 Program includes the housing choice voucher program, administered locally by public housing agencies and funded by the federal government. This program assists very low-income families in affording housing in the private market. Families receive direct assistance and can choose their own housing, including single-family homes, townhouses, and apartments, as long as it meets program requirements.

Moving to Opportunity (MTO) Experiment

From 1994 to 1998, the Moving to Opportunity (MTO) experiment was conducted in five cities: Chicago, New York, Baltimore, Boston, and Los Angeles. It tracked the outcomes of 4,600 families living in high-poverty public housing. These families were required to use their housing vouchers in areas with poverty rates under 10 percent. The study found improved mental and physical health for adults who moved, but no significant economic impact was identified.

Research by Opportunity Insights

A series of research studies conducted by Opportunity Insights and directed by Harvard economist Raj Chetty, John Friedman, and Nathaniel Hendren, re-examined these findings. Despite the availability of housing vouchers, low-income families remain segregated in low-opportunity areas due to factors such as landlord discrimination, search assistance, and moving costs.

In Seattle and King County, a partnership with the local housing authority provided services to remove barriers to moving into high upward mobility neighborhoods. This resulted in a significant increase in the number of families moving into these areas, demonstrating that families do not prefer to stay in low-opportunity areas but face significant barriers to moving.

The Opportunity Atlas

Developed from this research, the Opportunity Atlas examines the impact on income and opportunities based on the neighborhoods where children grow up. Using anonymous data from 20 million Americans from childhood to their mid-30s, the atlas answers the question: which neighborhoods in America offer children the best chance to rise out of poverty?

The research found that the impact was greatest on children who were young (below age 13) when their families moved to better neighborhoods using a housing voucher. Moving to a lower-poverty neighborhood significantly improves college attendance rates and earnings, with an estimated increase in lifetime earnings of approximately $302,000. These children also live in better neighborhoods as adults and are less likely to become single parents. Key issues examined include incarceration rates, college attendance rates, fertility rates, and marriage patterns.

You can see the data for your own neighborhood on the Opportunity Atlas.

Recommended Reading and Viewing

For a deeper understanding of this history, we recommend:

HUD Section 8 Housing Choice Voucher program

“The Color of Law” by Richard Rothstein
- Print Version
- Audio Version
“Segregated by Design” (Short Film)
- Watch Here
“Mapping Inequality: Redlining in New Deal America”
- Search here

Disclosure