By Kayla Hui
Many businesses and institutions recognize the importance of diversity for their bottom line. Diversity captures an array of viewpoints, makes them more competitive in a global marketplace, and breaks them out of “groupthink” that can lead to bad decision-making. But many of us do not realize the extensive benefits of living, working, and learning in diverse communities for all racial and ethnic groups.
Our society, our economy, and our democracy are better off when everyone has a chance to live, work, and go to school together. Indeed, a growing body of research demonstrates that diversity improves individual and collective quality of life for people of all races and income levels, both in the short-term and far into the future.
Chicago is one of the most segregated cities in America. What would it look like if its levels of segregation decreased to the national average? Explore what would change in the interactive below.
Economic Growth for All
For example, diverse communities are positively linked to economic growth. Research shows that residents of inclusive communities are often more innovative, entrepreneurial, and economically-competitive — characteristics that spur economic development and productivity.
“Diversity leads to greater prosperity and opportunity across a wide spectrum of issues: jobs, education, and health,” Gregory Squires, Ph.D., professor of sociology and public policy at George Washington University, emphasizes to the Daily Beast. Diverse neighborhoods are associated with stronger economic indicators, including increased job opportunities and higher levels of homeownership.
By contrast, housing discrimination and segregation hamper economic growth for everyone. People of color have historically been blocked from accessing the intergenerational wealth that comes from homeownership — and also often have less access to neighborhoods with strong employment opportunities or high-performing schools due to segregation and discrimination. When people of color are blocked from attaining these economic, educational, and employment resources, the entire economy is held back — because individuals cannot achieve their full potential due to these structural barriers. This, in turn, hinders overall economic growth, reducing everyone’s standard of living and propensity for success. Indeed, as CNBC reported in November 2020, a recent Morgan Stanley analysis found that racial housing inequality has cost the U.S. economy 800,000 jobs and $400 billion in tax revenue.
A case study of the city of Chicago — one of the nation’s most segregated metropolises, according to CensusScope’s racial dissimilarity index — also lends insight into the substantial economic consequences of segregation. According to a Metropolitan Planning Council (MPC) and Urban Institute (Urban) analysis, if Chicago’s levels of African American-white segregation dropped to the national median, economic gains would skyrocket. $4.4 billion in income would go back into people’s wallets — and the region’s gross domestic product would rise by $8 billion.
In addition to improving economic outcomes, inclusive communities naturally foster racially and economically diverse classrooms that benefit all students. “Anybody who’s been on a diverse team or sat in a diverse classroom understands the critical thinking skills that develop when you are consistently asked to consider an issue from multiple perspectives and different lived experiences. So that dynamic is at the crux of academic benefits that flow from diverse schools,” Genevieve Siegel-Hawley, Ph.D., associate professor at the department of educational leadership at Virginia Commonwealth University, tells The Daily Beast.
Indeed, when students are exposed to other students with different ideas that challenge their thinking, their cognitive skills, including critical thinking and problem solving, improve. Moreover, research shows that children who attended inclusive schools have higher earnings as adults, are less likely to be incarcerated, and are more likely to attend college.
Diverse classrooms also provide a critical microcosm that lets students prepare for professional success in a diverse, multicultural world. Indeed, according to the Century Foundation, the ability to effectively work “with colleagues, customers, and/or clients from diverse cultural backgrounds” is viewed as “important” by 96% of major employers.
In Chicago, educational gains would abound if communities became more inclusive. The MPC/Urban study found a correlation between lower levels of segregation and a higher percentage of both African Americans and white people holding college degrees. In fact, if the level of segregation were reduced to the national median, 83,000 more people in Chicago region would have bachelor’s degrees. Notably, as the study pointed out, the lifetime earnings gap between a person with a high school diploma and a person with a four-year college degree is $1,078,446.
Improving Health Outcomes
Residents of diverse neighborhoods also typically experience improved physical and emotional health outcomes when compared with individuals living in more segregated communities, who — in stark contrast — often endure compounding negative health effects.
For example, as an April 2018 New York Times article outlined, research has found that American cities that are more racially divided often have higher levels of pollution than less segregated cities. As a result, both people of color and white people who live in segregated communities are exposed to higher levels of pollution than those who live in integrated areas, which also means they are more likely to experience the negative health outcomes that can stem from increased pollution exposure. This includes a variety of potential heart and lung problems, among other acute and chronic health issues.
In addition to increased air pollution, segregation also exposes people to additional environmental, social, and psychological stressors that result in poorer health outcomes, particularly for people of color. “Greater exposure to and clustering of stressors [stemming from segregation] contributes to the earlier onset of multiple chronic conditions, greater severity of disease, and poorer survival for African American individuals than white persons,”David Williams, Ph.D. and Lisa Cooper, M.D., wrote in a May 2020 article for JAMA.
Racial health disparities are costly for individuals, as well as society as a whole. For example, as John Z. Ayanian, M.D. , described in a 2015 Harvard Business Review article, “Racial health disparities are associated with substantial annual economic losses nationally, including an estimated $35 billion in excess health care expenditures, $10 billion in illness-related lost productivity, and nearly $200 billion in premature deaths.”
In highly-segregated Chicago, the health consequences of non-inclusive living are readily apparent. According to a recent NYU School of Medicine Study, the city has the country’s worst overall life expectancy gap between neighborhoods, at 30.1 years. For example, residents living in the city’s predominantly white Streeterville community live to an average age of 90, but, just nine miles away in predominantly Black Englewood, residents only live to be 60, on average.
Dismantling Discrimination and Building a Stronger Democracy
Promoting community inclusivity not only safeguards lives and health and protects against health care-related economic loses; it also diminishes discrimination. A 2014 psychology study found that people who live in ethnically diverse communities are less prejudiced toward other ethnic groups. This diminished discrimination allows for higher levels of civic cohesion, productivity, and engagement that can have long-lasting positive ramifications — including building a stronger, more inclusive democracy.
Ryan Muldoon, Ph.D, an associate professor of philosophy at the University of Buffalo and an expert in social political philosophy, explained in a 2018 research paper that evidence shows that segregation is harmful for democracy because it encourages lower levels of social trust, which leads to lower-quality governance and diminished civic participation both nationally and locally. However, in contrast, diversity is key to building strong democratic institutions.
“Complex social problems are often so complex in part because they touch on a wide variety of important values. A more diverse society can help bring out better arguments, better ideas and better policies [that improve everyone’s lives], even if the process is contentious,” Muldoon noted. He added that diverse communities are essentially robust marketplaces of ideas that allow the best solutions to societal problems to flourish – and protect against threats to democratic values.
Just as “one-industry towns are more vulnerable to economic shocks,” communities that are more politically-similar are “more vulnerable to political failures. ‘Invasion’ of bad ideas is harder when there are already lots of conflicting ideas vying for attention,” Muldoon emphasized. “[Therefore], diverse environments are more robust environments, simply because they embed more possibilities for the future. Diverse environments are more adaptable because different aspects of them already have to adapt to each other.”
If we want to safeguard democratic institutions, “a more diverse society is the best way of doing it,” Muldoon added. “While society may change through time, it is less likely to fail.”
Squires echoed similar thoughts when speaking with the Daily Beast, underscoring that a lack of diversity is costly for society as a whole. “All residents have paid a price for inequality …,” he explained. “Diversity leads to a better environment for all groups, not just those traditionally subject to unfair treatment.”
Unequal Access: How Did Our Neighborhoods Become Divided?
America’s neighborhoods did not become segregated by accident. Housing segregation has been intentionally perpetuated throughout American history by all levels of government and by the private sector. Individuals who want to live in diverse communities and reap their benefits — particularly people of color — have often been pushed out, historically and in present times.
Federal and private policies, including redlining, the discriminatory denial of mortgages to Black Americans, racial steering by real estate agents, and the development of all-white suburbs after World War II, readily contributed to our segregated society. Although the Fair Housing Act (FHA) of 1968 made all of these discriminatory practices illegal, their legacies live on. And, indeed, many of these practices still persist in more covert ways.
For example, in a recent three-year investigation conducted by Newsday on racial disparities in real estate interactions, investigators discovered that, in 40% of the tests they conducted, agents “subjected minority testers to disparate treatment when compared with white testers, with inequalities rising to almost half the time for Black potential buyers.”
A 2012 study conducted by the Department of Housing and Urban Development also found that, while blatant discrimination has largely declined over time, more subtle forms of discrimination — such as showing and informing minority home seekers and apartment hunters about fewer available units than whites – continue. According to HUD, these practices unjustly “raise the costs of housing search for minorities and restrict their housing options.”
There are long-lasting ramifications from historic and present-day housing discrimination, which is evidenced by a substantial racial homeownership gap. Jarringly, according to U.S. Census data, there is a 30 percentage-point gap in homeownership between Blacks and whites — larger than it was in the 1960s, prior to when the Fair Housing Act was passed.
“Our past has a long legacy. The federal government discriminated in the provision of mortgages, in the placement of housing, and we still have that legacy with us,” John Yinger, Ph.D., trustee professor of economics, public administration, and international affairs at Syracuse University tells the Daily Beast.
Policies for Advancing Community Diversity and Inclusivity
Everyone should be able to live in a diverse, inclusive community, if they so choose – and reap all of its substantial benefits. Achieving this aim will require comprehensive commitments by public policymakers and the private sector to dismantle the legacy of discriminatory housing policies and practices and to make diverse communities more accessible to all.
At the public policy level, closing the homeownership gap will require the strengthening of down payment assistance, safer and more transparent access to credit and mortgage loans, free to low-cost housing counseling, and flexible underwriting that increases the likelihood of homeownership, according to the Urban Institute.
Notably, the National Association of REALTORS® (NAR)’s five point plan for increasing African American homeownership reflects many of these priorities. The organization’s plan outlines action items for reducing the homeownership gap, including building more homes to increase housing supply; building homes in opportunity zones that will help promote the revitalization of economically-distressed areas; increasing down payment assistance access; strengthening the FHA’s loan program to help support homeownership access for first-time and minority buyers; and expanding credit scoring models to include rent and utility payments.
It is also critical to re-institute or strengthen federal initiatives designed to promote fair housing in order to build more inclusive communities. In addition to outlawing discrimination in housing — which Congress recognized the federal government played an active role in perpetuating — the Fair Housing Act, through its provision that the government “affirmatively further fair housing,” directed federal agencies and recipients of federal funds to take active steps to undo this historic legacy of discrimination. The Biden Administration can strengthen these efforts, which have been weakened in recent years.
Private sector interventions are also critical for bolstering fair housing. For example, in 2020, the National Association of REALTORS® (NAR) debuted its Fair Housing Action Plan (ACT!), which establishes a robust plan for REALTORS® (REALTORS® are members of the National Association of REALTORS®) to promote fair housing and protect housing rights. ACT! confronts discrimination in real estate through a variety of initiatives. For example, its voluntary self-testing program gives brokerages a chance to assess agent compliance with fair housing laws so they can remedy any fair housing issues. As part of ACT!, NAR will also provide recommendations on strengthening state real estate licensing laws to include robust fair housing enforcement and training requirements.
NAR has also launched a training that offers strategies on overriding implicit bias, improving business relationships, and ensuring fairness in housing transactions. Furthermore, in November 2020, the organization released “Fairhaven,” an immersive simulation in which agents must confront discrimination in realistic scenarios to hone their skills in dealing with discrimination in the real estate transaction process. The training is available at no cost to NAR members and REALTOR® associations throughout the country.
Neighborhood diversity and inclusion benefits all of us, no matter our race or ethnicity. From improved health to educational benefits, to enhanced economic growth and stronger democratic institutions, diverse communities are intrinsically tied to better outcomes for everyone.
The possibilities for making positive changes that promote community inclusivity are endless — if diversity is truly prioritized by individuals, businesses, and governments and recognized as a critical end goal. When society collectively decides to work toward inclusion, a stronger future will exist for all.
REALTORS® are members of the National Association of REALTORS®