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Wealth gap between White and minority communities continues after redlining, other practices

Posted at 7:40 AM, Aug 28, 2020
and last updated 2020-08-28 10:40:49-04

PHOENIX — Redlining emerged after World War II, where White veterans were given government loans for housing through the G.I. Bill.

Many Black veterans were denied those loans, and the government sectioned off -- often with a red line -- suburban areas for Whites, leaving people of color in areas with lower property value. White families were able to pass down the value from their homes to their children, creating generational wealth.

READ MORE: The lasting impact of 'redlining' on communities of color

"So essentially what we have seen is that White Americans have had 80 years to build wealth all throughout the nation in these racially restricted and redlined areas all throughout the country," said Arizona State University Professor Rashad Shabazz. Meanwhile, minority families were left renting, often in housing projects or in homes in declining neighborhoods, Shabazz said.

Lower property taxes meant less money for good schools, and less of a chance at college educations.

"And this is the primary reason that we see this imbalance between White wealth and Black wealth accumulation," Shabazz said.

The staggering gap in wealth continues to this day.

According to The Brookings Institute, in 2016, the net worth of White families was $171,000, compared to the net worth of Black families at just over $17,000.

"I think that it's incumbent on White Americans to have a clear understanding of how their social positions were enabled," Shabazz said. Enabled, he said, not by working any harder, but by the systemic policies in housing that led to their generational wealth.

Even before redlining there was what was known as Restrictive Covenants, where it was written, flat out in the deeds to properties, that homes in certain neighborhoods could not be sold to Blacks, Hispanics, Jews, and other minorities.

"It effectively kept Black people out of the housing market for the vast majority of the 20th century," Shabazz said.

And while the Fair Housing Act of 1968 was meant to outlaw those practices, realtors still found a way to keep neighborhoods segregated, through policies like "steering" where they would steer minority families away from White neighborhoods and into lower-income housing areas, whether they could afford it or not.

"And this practice continues to this day," Shabazz said.

Shabazz said locally, Blacks were steered to areas like South Phoenix, and historically kept out of neighborhoods in Paradise Valley and Scottsdale.