Increasing poverty and residential segregation

INCREASING POVERTY AND RESIDENTIAL SEGREGATION Poverty in the United States has become more concentrated. In 2014, 13.7 million people lived in neighborhoods with poverty rates of 40 percent or higher, up from 6.5 million in 2000. This jump largely reflects widespread declines in incomes since the start of the last decade as well as increasing residential segrega- tion by income.

The location of assisted housing in low-income communities has contributed to this pattern. Public housing is most likely to be located in high-poverty neighborhoods, a legacy of develop- ments built in the 1940s and 1950s in economically and racially segregated neighborhoods. Decades later, 35 percent of public housing units are in census tracts with at least a 40 percent poverty rate, and another 42 percent are in tracts with 20–39 percent rates. By comparison, just 15–18 percent of rentals sub- sidized through the housing voucher and LIHTC programs are located in high-poverty census tracts.

The Supreme Court’s ruling on disparate-impact claims in 2015 may help to limit further concentration of affordable housing in high-poverty areas. In addition, HUD issued a final rule on Affirmatively Furthering Fair Housing requiring state and local recipients of HUD funds, as well as all PHAs, to identify patterns of segregation and develop concrete steps to foster greater inte- gration. Even before last year, however, several states—includ- ing Massachusetts, New Jersey, and Pennsylvania—had made progress in lifting the share of LIHTC units built in low-poverty communities by giving higher priority to projects in these loca- tions in their tax credit allocations.

These efforts, however, must be viewed within the context of increasing residential segregation by income. Research from the Stanford Center for Education Policy Analysis shows that, from 1970 to 2012, the share of families living in middle-income neighborhoods plummeted by 24 percentage points while the shares living in low- and high-income neighborhoods increased by 11 and 13 percentage points, respectively (Figure 36). Growing socioeconomic segregation has significant negative conse- quences for the families left in neighborhoods with limited pub- lic services and unsafe living conditions.

Exclusionary zoning in the form of density restrictions and complex municipal review processes help to reinforce the isolation of low-income households. While states and locali- ties have enacted legislation to eliminate exclusionary zoning practices and encourage inclusionary development, the scale of these efforts falls far short of the millions of affordable units produced through the LIHTC and HOME programs. Indeed, the Lincoln Institute of Land Policy estimates that inclusionary housing programs had produced just 129,000–150,000 afford- able units nationwide as of 2010.

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