Rationales for (and Challenges to) Addressing Residential Segregation

by David Luberoff, Deputy Director

The consequences of racial segregation, the rationales for public policies to address those consequences, and the priorities for action are the central focus of three papers we released today as part of a new series of papers and blogs on A Shared Future: Fostering Communities of Inclusion in an Era of Inequality.

The newly released papers are:

Sheryll Cashin
Georgetown University

Integration as a Means of Restoring Democracy and Opportunity, by Sheryll Cashin, examines the role physical segregation plays in undermining race relations, democracy, and opportunity in the United States. The paper argues that segregation and supremacy must be dismantled with the same level of concerted effort and intention with which they were cultivated. While Cashin notes that the enduring effectiveness of divide-and-conquer, dog-whistling politics makes it unlikely that this work will be carried out by class-based coalition of people of all colors, she is optimistic about the possibilities for creating ascending coalitions of culturally dexterous whites and progressive people of color that could fight together for integration and equity in the regions where they live.

Nancy McArdle &
Dolores Acevdo-Garcia,
Brandeis University

Consequences of Segregation for Children's Opportunity and Wellbeing, by Nancy McArdle and Dolores Acevedo-Garcia, notes that mounting research evidence increasingly reveals the cost of segregation in terms of children's health, education, and long-term economic success. The paper argues for concentrated efforts to promote integrated, diverse education, which has been shown to improve critical thinking and problem-solving skills, the development of cross-racial trust, and the ability to navigate cultural differences. Given the close connection between residential patterns and school assignments, the policies that encourage neighborhood integration, including affirmatively furthering fair housing, enforcing anti-discrimination laws, providing incentives for affordable housing construction in higher opportunity areas, and inclusionary zoning, would likely also reduce segregation in schools, as well as provide more equitable access to other neighborhood assets that are beneficial to child wellbeing. However, they warn that since new policy directions regarding taxes and entitlements, fair housing, and school choice, to name a few, all have great potential to exacerbate economic and racial/ethnic segregation, the present is an especially significant moment to understand the extent and costs of segregation for children.

       Jennifer Hochschild
    & Shanna Weitz
    Harvard University

Challenging Group-Based Segregation and Isolation: Whether and Why, by Jennifer Hochschild and Shanna Weitz, explores two fundamental contradictions in liberal norms that make it challenging to effectively intervene to reduce the disadvantages of isolated or segregated communities. The first challenge involves the tension between the desire to end segregation and isolation and the fact that, in some situations, liberal ideals permit, and in some circumstances encourage, group isolation and separation. The second is that, while there are well-established ways to address racial and ethnic isolation, the US lacks a parallel set of norms, laws, practices, and advocates for lessening class isolation. The authors conclude by noting that liberal polities have never sorted out the tension between individual rights and group autonomy and probably never will. However, they add, that is no excuse for failing to take the steps toward freedom of choice and exciting opportunities to flourish that any liberal should embrace.

In combination with a previously released framing paper, which summarized existing evidence on patterns, causes, and consequences of residential segregation in the United States, the three papers help set the stage for other papers from the project. Those papers, which will be released monthly over the next half year, will focus on the question of "what would it take" to create and carry out policies to address a range of housing-related issues including integration, gentrification, and education. The papers, which will also be collected into an edited volume to be published in 2018, initially were presented at a two-day symposium that was convened by the Joint Center in April 2017.

The New Urban Agenda, HABITAT III, and the Celebration of a Multinational Agreement on Cities

by Jessica Jean-Francois
Harvard Graduate
School of Design

A few weeks ago, I was one of the approximately 50,000 people who came to Quito, Ecuador for the third UN-HABITAT conference (HABITAT III). The conference served as a celebration of the adoption of the New Urban Agenda, a multinational agreement that aims to “help to end poverty and hunger in all its forms and dimensions, reduce inequalities, promote sustained, inclusive, and sustainable economic growth, achieve gender equality and the empowerment of all women and girls, in order to fully harness their vital contribution to sustainable development, improve human health and well-being, as well as foster resilience and protect the environment.”

Excerpt from New Urban Agenda display

Having signed up for the newsletter over a year in advance, I had grown increasingly excited as I read about the research being done in anticipation of HABITAT III and the many meetings and events held to prepare for it as well. It was clear that this would be an incredible event and that I would have a unique opportunity to observe as key actors in city planning and urban policy came together, to hear about new approaches and practices, while also getting to know a new city.

HUD Secretary Julian Castro speaks 

Once there, I had plenty of activities to choose from. Main events included special sessions on public space, urban resilience and municipal finance. There were also networking and side events hosted by government agencies, nonprofit organizations and research institutions. There were roundtable discussions that brought together mayors, trade union leaders, businessmen and women, farmers and other key stakeholders. There were plenary meetings and many more events covering a wide range of topics, all happening simultaneously every day. On top of that, there was a six-hall exhibition zone with over 150 booths showcasing important ideas and activities related to urbanization.

For many people, all of this was overwhelming. Quito was completely transformed as much of the area surrounding the conference center could only be accessed via security checkpoints. Long lines, limited bathrooms and technical issues sometimes frustrated attendees.

Large lines formed at the event

Now that I’ve returned and debriefed with classmates, friends, and others who attended the gathering, I am left with many questions. What were the intended takeaways? What was the point of such a large expensive conference? Who benefited, who lost? Also, could the conference’s goals have been achieved in a better way? While we celebrate that HABITAT III was open and free to all those who wished to attend, people still had to travel to Quito and pay for accommodations, food, and, if they wanted to highlight their work, for exhibition booths that cost $4,000 or more. Moreover, the selection process for hosting a side or networking event seemed arbitrary. While the New Urban Agenda clearly indicated that issues such as energy and transportation, land tenure, safety and security, disaster risk management and inclusion in spatial planning were concerns, particularly for those living in informal settlements and slums, this was not clearly aligned with the schedule of events on informal settlements, which primarily focused on the UN Participatory Slum Upgrading Program (PSUP) and data collection tools.

Despite these questions and concerns, I still believe the conference was valuable. While in Quito, I primarily attended events addressing informal settlements, which was a focus of MIT’s Special Interest Group in Urban Settlement (SIGUS), the group that I traveled with to the conference. I also attended sessions that focused on Small Island Developing States, tourism, economic development and finance to inform my master’s thesis at Harvard’s Graduate School of Design. Scheduling conflicts and long lines were at times a barrier to my hopes, but even these offered some interesting surprises. The long lines became an unintended networking opportunity and equalizer where people with different backgrounds and positions were able to meet, share ideas and connect. The exhibition halls were a hotbed of activity as people who sought a place to rest often became consumed in unplanned conversations and experiences.

Jessica at MIT's SIGUS booth

That is how I got to know the Slum Dwellers International (SDI). Although I had previously been in contact with the group, on the last day of the conference, I heard an SDI celebration that featured singing and chanting. The participants were celebrating the launch of Know Your City a website featuring data collected by residents of informal settlements. SDI uses the data collection process to identify needs and encourage community-funded solutions. It also shares the data with policy members of their communities in an attempt to prevent evictions and prevent poor, top-down approaches to planning.

As I learned about this grassroots movement and about cases in Liberia, Zambia and South Africa, I thought about the many challenges that will hinder the effective implementation of the New Urban Agenda and the fact that many of the solutions to these barriers are present (but often hidden) in the communities it is supposed to serve. As we struggle to identify ways to make certain areas livable, it’s often forgotten that many people have already been forced to craft solutions in order to survive while only dreaming of gaining access to the resources needed to innovate on a larger scale. I am hopeful that many of the ideas and innovative approaches that were discussed and disseminated in Quito will help city dwellers take even more control of their own futures.

Jessica Jean-Francois, a second-year Master in Urban Planning student at the Harvard Graduate School of Design, was a Joint Center student research assistant in 2015-2016. Her trip was funded in part by Harvard’s David Rockefeller Center for Latin American Studies (DRCLAS) and the Joint Center for Housing Studies.

The Changing Profile of Student Loan Debt: Who Has It, How Big is Their Burden, and How Much Education Did They Receive?

by Irene Lew
Research Assistant

In recent years, the Federal Reserve Bank of New York’s Consumer Credit Panel (FRBNY CCP), which provides quarterly data on outstanding loans using individual consumer credit report data acquired from Equifax, has been utilized extensively to highlight the dramatic growth in student loan debt. Indeed, according to the FRBNY CCP, the increase in student loan debt over the past decade is alarming: aggregate balances averaged $1 trillion in 2013, $775 billion higher than the annual average in 2003, and accounted for over a third (36 percent) of non-housing debt held in aggregate in 2013, up from just 12 percent in 2003.

Since data is released quarterly, the FRBNY CCP is useful for providing up-to-date numbers on current federal and private student loan debt levels. However, the CCP data does have several drawbacks: historical data on student loan debt is not available before 2003, the CCP’s sample is limited to households in which at least one adult has a credit report, only aggregate numbers on outstanding student loan balances are released quarterly to the public, and public information on the demographic characteristics of student loan debtors is limited.

In contrast, the newly released triennial Survey of Consumer Finances (SCF) from the Federal Reserve Board dates back to the 1980s, includes households without credit reports, and is publicly available as a micro-dataset with detailed information on student loan debt balances, as well as a variety of demographic and financial characteristics, including age, income, tenure, education level, race, assets, and other types of outstanding debt.

Both the CCP and the SCF indicate continued growth in aggregate student loan debt, but the SCF shows much slower growth in recent years than data from the FRBNY CCP. In 2013, the SCF’s estimate of $710 billion of aggregate student loan debt was 44 percent lower than the $1 trillion estimate of student loan debt cited by the FRBNY Consumer Credit Panel. The gap between the aggregate estimates of student loan debt from these two sources may be attributed to several factors. As this FRBNY paper points out, the SCF’s sample excludes those in institutions, which may lead to underreporting of debt held by students living in dorms and other institutional housing. Secondly, the SCF’s use of a single survey respondent as a proxy for household finances could result in underreporting of student debt held by adult children or other household members of which the respondent is unaware. However, given that only a decade’s worth of data on student loan debt is available through the CCP, the SCF is still a better dataset for analyzing education-related debt trends because researchers can track changes in student loan debt over a longer period of time under various economic conditions. As many borrowers in the SCF sample are interviewed ten years or more after taking on student loans, researchers are able to analyze the long-term impact of carrying student loan debt. Furthermore, given the greater availability of variables on demographic characteristics and other financial information, one can create a more robust profile of households with student loan debt.

Despite its overall lower estimate of student debt, the SCF still shows that over the past decade, it has become increasingly common for households across all age groups to carry student loan debt (Figure 1). Among households aged 20-29, 43 percent are carrying outstanding student debt, a slight uptick from the 41 percent share in 2010 and 14 percentage points higher than the share in 2001. At the other end of the age spectrum, 23 percent of households aged 40 to 49 and nine percent of those aged 50 and over, have student loan debt, more than double the shares of same-aged households in 2001.

Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

On the whole, hefty student loan balances are not common, but the share shouldering a substantial amount of debt has climbed steadily over the past two decades: in 2013, 17 percent of households with student loans had a balance of $50,000 or more, more than double the share in 2001 (7 percent) and nearly five times higher than the share in 1989 (Figure 2). And both younger and older households are saddled with higher student loan debt balances. In 2013, 15 percent of households aged 20 to 29 carried a balance of $50,000 or more, up from just 2 percent in 2001, and 14 percent of households aged 50 and over had a similar debt burden, double the share of same-aged households in 2001.

Note: Excludes households without student loan debt. Shares are based on values that have been adjusted to 2013 dollars using the CPI-U for All Items. 
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

While recent reports, including this one from New America, have attributed the growth in student debt levels to those who are obtaining graduate and professional degrees, the SCF shows that households headed by a recipient of a graduate degree or higher made up 35 percent of those with $50,000 or more in outstanding student loans in 2013, down from 72 percent in 2001 (Figure 3). In fact, the most indebted households are now more likely to be headed by an adult who earned a bachelor’s degree or less. Among the most indebted households headed by an adult without a bachelor’s degree, those who started but did not complete college represented more than a third (37 percent) of this group. Furthermore, those under the age of 40 accounted for 57 percent of the most indebted households headed by an adult without a bachelor’s degree in 2013, though nearly a quarter of this group is aged 50 or over.

Note: Excludes households without student loan debt. Shares are based on values that have been adjusted to 2013 dollars using the CPI-U for All Items. Education level is for highest degree earned by head of household. Less than a bachelor’s degree includes households with a head who started but did not complete college, who earned an associate degree, or those whose highest educational attainment was a high school diploma, GED or less. Graduate degree or higher refers to households headed by a recipient of a graduate degree, doctorate or other professional degree. 
Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

Much of the discussion around student loan debt is around the idea that it is a major stumbling block in the housing recovery, inhibiting young households’ access to homeownership. However, other groups with rising student loan burdens—older households and those without a bachelor’s degree—have not garnered as much attention. The growing share of less-educated households with a significant amount of student loan debt is especially worrisome, given that this group is much less likely to earn sufficient income to meet their monthly debt obligations. We’ll be doing a more thorough analysis to address these issues over the coming months. 

New Data Shows a Growing Wealth Divide in the U.S.

by Dan McCue
Research Manager

Last week, the Federal Reserve released its 2013 Survey of Consumer Finances, a triennial survey which gives a rare, detailed look at the assets and debts as well as incomes of households across the nation. In the months to come, the Joint Center will delve into these data to assess the financial status of households with a particular emphasis on the association between homeownership and household wealth and the implications of consumer debt for future trends in the housing market. But in the meantime, the following are some early findings on household wealth pulled from a quick look at the Federal Reserve’s summary of net worth by various household characteristics.

Low-Income Households Lost Wealth, While High-Income Households Held Their Ground Between 2010 and 2013, low-income households had substantial declines in real net worth, while higher income households reported modest gains. The greatest declines were felt by households in the bottom income quintile, where the average net worth dropped by 21 percent.  Meanwhile, the average net wealth for the top 10 percent income group increased by 2 percent.

The Typical Renter Still Has Very Little Net Wealth

Median net worth for all renters remained unchanged in 2013 relative to 2010, at just $5,400.  This is just a fraction of the median net worth of the typical homeowner, of $195,400, which increased by 4 percent in 2010-13.  In fact, the real increase in median net wealth of owners alone between 2010 and 2013 ($8,400) exceeded the total median net wealth of renters in 2013 by over 55 percent. 

The White/Minority Wealth Gap Expanded

The net worth of the typical white household increased by 2 percent over the past three years, while that of the typical minority household (non-white or Hispanic) dropped fully 17 percent.  This extended the gap in median net wealth between the two groups ($142,000 vs. $18,100).

It Helps to Have a College Education

Looking at the changes in wealth by education level, we see that the median net worth for a household headed by a person with a college degree increased 5 percent in 2010-13.  Meanwhile, the median net wealth of those with only a high school diploma or just some college fell by 14 percent.

Overall, Households Have Lowered Debt Costs

Median debt, including mortgages and all forms of consumer debt, declined 20 percent between 2010 and 2013.  Fewer families have high debt payment to income ratios (above 40%) than at any time since 2001.

Fewer Families Held Home Mortgages, and the Average Mortgage Level Declined

Exceeding the decline in homeownership rates during the period, the share of owners with mortgages declined from 47.0 percent in 2010 to 42.9 percent in 2013.  Furthermore, the average amount of mortgage debt also dropped by 5 percent. 

Higher Shares of Young Households have Student Loan Debt and the Typical Level of Student Debt Held is Rising

The share of households with student loan debt rose again in 2013 to reach an even 20.0% of all households.  Over a longer span of time, the increase in share has been significant – particularly for the young.  For those under age 40, the share with student loan debt is up from 22.4% in 2001 to 38.8% in 2013. During that same time period, the average level of student debt held by younger households also grew from $16,900 in 2001 to $29,800 in 2013 – while the median amount that the typical young household owed rose from $10,500 to $16,800.   

All told, the portrait that emerges from these data point to a continued widening of the wealth divide in the country by income, race/ethnicity, and education. And while there has been some improvement in the overall consumer debt load, the sharp rise in student loans is a real cause for concern for the ability of young adults to be able to afford to buy homes in the future.  Stay tuned for further analysis of this rich data source.