By: Max Vale
Virginia Woodruff, mother of 3, was worried. The cost of living in Travis Heights had become too much for her and her husband. She worried that by moving, she couldn’t send her children to a good school, that they would lack communication with wealthy successful people. She didn’t have much choice, She would have to move.
Plato once said in the book The Republic, that “Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich.” This is especially true in Austin, Texas. In 2015, it was rated the most economically segregated city in the country as of a report co-authored by Richard Florida, a member of the Martin Prosperity Institute. This was just one of many reports suggesting that Austin was one of or the most economically segregated cities in the US. Economic segregation is defined by an Austin American Statesman article ” as residential division by income.” These gaps are due to many causes, such as racial discrimination and natural human instincts. This can lead to people not having a fair chance at a good job, lower quality public services, and red-lining, or refusal of certain loans to neighborhoods deemed to be a poor investment.
It is not due to physical features. Some may expect that different neighborhoods may have better views, more parks, or other qualities that can drive up the price, which would only allow higher income families to afford living there. However why were parks built there instead of other places? The physical hills and valleys may differ slightly, however East and West Austin did not have inherently different views. One area in West Austin has a view of the bottom of a cliff and a cul de sac and another area in East Austin has a view of many trees. However they still have a difference in not only income but housing value that does not go along with views or parks. According to Back Reit Commercial Real Estate, East Austin has an average income of approximately 50,000 dollars a year, while West Austin has an average income of approximately 125,000 dollars a year. Clearly there are some more nuanced factors at play.
While looking at homes to move to, Virginia Woodruff was shocked at how different the neighborhoods incomes were. It seemed like they all made much more than her and she would be looked down upon, or they were so poor that she couldn’t trust them to provide good influences for her children or herself.
The economic segregation is not due to just a growth in income inequality either. According to an article from Pew Research Center for social and demographic trends, “Growing income inequality does not automatically lead to growing residential segregation by income. Conceivably we could still have a middle class hollowing out, but people still living in mixed neighborhoods.” These two do go in conjunction however, as while the income gap increases, people tend to move into their own groups of people with similar incomes. One of the authors of the article said that "We know over the whole entirety of human history that people have a tremendous tendency to cluster among themselves, whether in tribes, whether in nations," he continues to say, "Like attracts like. That’s not always the case for some people who value diversity. But it’s sort of hardwired into human nature." This is one natural cause for the groups of income we see in Austin, however there are many more.
Another factor is the abolishment of slavery. More specifically, in 1865, when slavery was abolished, there was suddenly a large population of previous slaves who had little to no money to their name. They needed to find a place to live. They would “rent” out parts of the land that they were enslaved on, paying by continuing to do slave labor. The rent was usually much higher than the pay, even if they worked 70-80 hours a week. This practice, generally known as sharecropping, allowed the slave owners to exploit the system and continue having slaves even after it was illegal. Sharecropping was worse for the owners and the “workers”. The work and pay was divided into many different workers, which decreased the benefit the owners had from economies of scale, or the advantage they obtain due to large groups of workers.
Judging from the difference in incomes and racial diversity, East Austin likely had much more sharecropping than west Austin as an Austin Justice Coalition article points out “rural communities of African-American landowners and land squatters that formed in the eastern half of Texas in the years after Emancipation.”. This would hurt the economy of east austin while West Austin stayed relatively the same. In a way, having more slaves ended up hurting East Austin in the long run.
Nevertheless Austin was a largely divided city based on race. The areas with a higher population of black people were generally poorer, due solely to them not having an education, or any money to their name, not due to their race. Banking companies, realtors, construction companies, and even the city saw this trend and identified these areas as a poor investment for housing developments, parks, etc.. This led to those areas becoming more deprived of quality of life services which would have increased the housing value.
Dialects occur naturally in most neighborhoods. Although usually very slight and almost unnoticeable, with such an economically segregated town as Austin, they can be much more dramatic. Certain dialects such as African-American Vernacular English, are associated with poor education. This can lead to white employers making assumptions about the quality of people. This can also lead to exaggeration and perpetuation of economic segregation by not allowing poorer neighborhoods fair chances of getting jobs that could diversify the incomes across different areas.
Dialects can also lead to redlining. The term redlining, first coined in the 1960s by sociologist John Mcknight, comes from how neighborhoods would be circled in red ink by banks to show that they should deny loans to people from those areas. To redline is to “refuse(a loan, insurance, or mortgage) to someone because they live in an area deemed to be a poor financial risk” - google dictionary. Often times those deemed to be a poor financial risk were mostly decided by race, location, or income. Which sometimes were correlated. It was first backed by the US government in the 1930s, and has since then been outlawed in the Fair Housing Act of 1968. It is still prevalent today, however much more discreetly. Many banks will deny mortgages or loans to certain groups, stopping them from buying houses in certain neighborhoods and causing a lot of economic and racial segregation. They will never directly state that the reason for such denial is due to race, making it very difficult to catch, thus nullifying the outlaw of it. Though not all banks are subject to redlining, a series of articles published by investigative journalist Bill Dedman titled the color of money, shows that loans were almost always denied to black neighborhoods, and almost always granted to white neighborhoods even in recent times. This makes it very hard for someone from a lower income neighborhood to move out. This perpetuates the problem
The people living in lower income neighborhoods also suffer from poor return from housing equity investments. If confined to a less desired neighborhood, they would receive a much lower average rate of return on their property investment. This goes hand in hand with redlining, and the area being identified as a poorer area, as they may not be able to get a loan for a new home, forcing them to sell before they buy rushing their purchase. Even if they got a loan, they would also suffer from higher mortgage interest rates on average.
The children in these environments lack diversity of influences. This could cause the upper class neighborhoods to become lazy, assuming that they will be in the upper class no matter what because they lack the knowledge that they can become poor. The lower can be very hard working, often more than wealthier people, however they can lack the right areas to apply that work, causing them to possibly take lower paying jobs than they otherwise could have. Had they been exposed to a more diverse range of jobs, they may have found something that could pay better and stop the cycle of poverty.
Another problem with economic segregation is that it can cause the poorer regions to lack the social group or connections in order to land a good job. According to an article published by the University of Michigan, “60% of all job openings are advertised through informal social networks, such as word of mouth by firm employees.” This means that if the surrounding community has relatively low income jobs, it is much harder to get a high paying job if you live in a lower income neighborhood. This exaggerates and perpetuates economic segregation, as then the higher income neighborhoods have a higher chance of finding a high income job, because they do not have to compete with the poorer population.
Differences in wealth can also lead to a worse academic life. If the whole neighborhood is lower class, role models can be difficult or even impossible to find. Not to mention impoverished families cannot afford colleges, and sometimes the next generation will even stay in the same house or neighborhood because they cannot get a loan or afford to move because they will be redlined. This led to the problem getting exponentially worse.
East Austin missed the population boom. When Austin began to really expand as a city around the early 2000s, many developments passed over East Austin because according to them, it hadn’t changed much. The incomes were still low, and thus the area was identified as a perpetual poor investment for housing. Thus the problem continues.
However a little bit later, once the costs of living in those areas began to rise, people needed a cheaper place to live. Some developments moved to East Austin, however they were still cheap living spaces.
Economic segregation does not occur in just Austin. It is present all around the United States. One analysis by the Pew Research Center of the American Census tract found that
It was most present in Texas cities however.
So what can be done about this? We can encourage people to become more aware of this problem. If more know about it and the effects it has, it is more likely to reach people that rent out buildings, who could try to increase the diversity of income in their building. We can encourage cheaper loan rates for different areas. Schools will more often now try to diversify their student population by accepting more minority and low income children. Business or restaurant chains could diversify their locations to be spread more to different income neighborhoods, thus driving up the pricing of different neighborhoods. This could lead to gentrification though, which means that poorer people can no longer afford to live there, making it very hard for them because they will have to move, and without mortgages this could be hard. It is important to leave them an affordable living space. Economic segregation will always in some way be present, we will always be, “two, one the city of the poor, the other of the rich.”
Virginia Woodruff settled on living in South Austin in a neighborhood with many retired airline pilots. She knew pilots were very trustworthy and knew they would provide a good influence
on her children, regardless of how much they made.
Bibliography
Massy, Douglas and Denton, Nancy. “Economic consequences of Segregation.” University of Michigan. <http://www.umich.edu/~lawrace/consequences.htm#>
Mayer, Susan. “Executive Summary: How Economic Segregation Affects Educational Attainment.” Russell Sage Foundation.<https://www.russellsage.org/research/social-inequality/working-papers/mayer-segregation>
Plato. The Republic Paris, Bibliothèque Nationale
W. Gardner Selby. “Austin Among Most Economically Segregated Cities.” Statesman. <https://www.statesman.com/news/20180601/politifact-austin-among-most-economically-segregated-cities>
Becker, Delea. “Slow Drives and Side Streets: URban Geography and Commercial Market Analysis.” Back-reit Commercial Real Estate <https://www.beckreitcre.com/realestateblog/2017/9/9/what-is-a-market>
“Austin’s Freedmen Communities.” Austin Justice Coalition Feb 20, 2018 <https://www.austinjustice.org/post/2018-02-22-atxblackhistory-austins-freedmen-communities>
Taylor, Paul and Fry, Richard. “The Rise of Residential Segregation by income.” Pew Research Center <https://www.pewsocialtrends.org/2012/08/01/the-rise-of-residential-segregation-by-income/>
Woodruff, Virginia. Interview by Author. February 25, 2020
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