New Data: Segregation costs the Chicago region billions of dollars each year

March 28 18:30 2017

CHICAGO, IL – 28 Mar, 2017 – Data released today by the Metropolitan Planning Council and the Urban Institute reveal that economic and racial segregation cost the Chicago region billions of dollars each year, constraining the area’s economy and potential. It’s the first study of its kind to show the economic impact of segregation to the region. In the next phase, the study’s partners will identify policy interventions that can accelerate metropolitan Chicago toward a more integrated and economically prosperous future.

The study projected three key outcomes if the region’s African American-white segregation were reduced to the median of the nation’s largest 100 metro areas, including $4.4 billion in additional income in our region each year, 30 percent lower homicide rate and 83,000 more bachelor’s degrees.

The economic impact of the findings illustrates that a more robust regional economy can be created by reducing both economic and racial segregation.

Here’s how the findings break down if the region were at the median level of segregation:

$2,982 increase in African American incomes per person per year, which means an additional $4.4 billion in income and an $8 billion boost to the Chicago region’s gross domestic product.

Thirty percent lower homicide rate, resulting in 167 fewer lives lost across the region in 2010. In the city of Chicago alone, that would mean 229 fewer lives lost in 2016.

83,000 more bachelor’s degrees, resulting in $90 billion in total lifetime earnings.

“For over a century, segregation has taken its toll in very concrete ways on people and communities,” said Marisa Novara, Vice President at the Metropolitan Planning Council. “This study illustrates that segregation’s negative impacts are felt by all people in the Chicago region, and that we could all be doing better if we didn’t live so separately from each other by race and income.”

The analysis uses census data and other information for the 100 most populous regions and ranks metropolitan areas on levels of racial and economic segregation. Chicago ranks as the 5th most racially and economically segregated region in the nation.  

Overall, larger metropolitan areas tend to be more economically and racially segregated than less populous regions. Between 1990 and 2010, two-thirds of the nation’s largest regions reduced their economic segregation more than Chicago did.

“Our study documents the relationships between segregation and the incomes, educations, and safety of a metropolitan region’s residents,” said Greg Acs, director of the Income and Benefits Policy Center at the Urban Institute. “Our findings suggest that efforts to reduce economic and racial segregation could deliver benefits all across metropolitan areas. Given the high levels of segregation in Chicago, the region’s potential gains from reducing segregation are substantial.”

Data also reveals that while the Chicago region’s segregation has decreased overall, more significant drops are needed to reach the nation’s median level. Between 1990 and 2010, Chicago’s economic and racial segregation declined by 10 percent. However, to match the nation’s median level, Chicagoland’s segregation would need to drop by 19 percent (economic), 28 percent (Latino-white), and most strikingly, 36 percent for African American-white segregation.

If we simply continue at our current pace of desegregation—and no interactions are introduced to accelerate our desegregation—it would take an estimated 30 years to reach the median level of Latino-white segregation and we would not reach the median level of African American-white segregation until 2070.

“Race and segregation are not only the two biggest issues facing our region, but they are limiting our ability to grow and thrive” said Terry Mazany, President & Chief Executive Officer of The Chicago Community Trust and co-funder of this research. “We can no longer afford to wait for these deeply entrenched issues to resolve themselves. The time for action is now.”

For decades, segregation has been one of the most intractable issues facing Chicago, which, while diverse, consistently ranks among the top segregated regions in the nation. While many studies have calculated the disadvantages to those living in predominately low-income minority communities, researchers rarely consider that segregation hampers economic growth and the quality of life for entire cities and regions. This study is the first of its kind to quantify the financial costs of segregation for entire regions, and it does so by demonstrating that a reduction in Chicago’s segregation would result in higher incomes, greater educational attainment, and reduced homicides.

“This study is an urgent call to all of us that more can and should be done to address the significant and shared costs of segregation in the Chicago region,” said Julia Stasch, President of the John D. and Catherine T. MacArthur Foundation. “We look forward to the next phase of this effort that will identify policies and actions leaders can take to make our region at once more just and more economically successful.”

The second phase of this initiative will identify what we can do to accelerate our rate of desegregation and create a more inclusive, prosperous path forward for everyone in Chicago’s region. The Metropolitan Planning Council is working with both local and national advisors to identify targeted policies focused on housing, economic development, transportation, public safety, public health and public education.

About MPC

For more than 80 years, the Metropolitan Planning Council (MPC) has made the Chicago region a better place to live and work by partnering with businesses, communities and governments to address the area’s toughest planning and development challenges. MPC works to solve today’s urgent problems while consistently thinking ahead to prepare the region for the needs of tomorrow.

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