Philly’s coronavirus response

Stimulus could heighten racial economic inequality, historians warn

Like the New Deal and G.I. Bill before it, the latest federal attempt to juice the economy will play out unevenly.

Homes on the 3700 block of North 15th Street in Nicetown

Homes on the 3700 block of North 15th Street in Nicetown

Emma Lee / WHYY
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As Americans across the country peeked at their federally stimulated bank accounts last week, Dr. David R. Williams of Harvard University issued an urgent call to action.

As chair of the Department of Social and Behavioral Sciences in Harvard’s public health school, Williams focuses on the effects of discrimination and social influences on health.

“The striking disparities we are seeing are not a result of the families who are experiencing them,” Williams said in a national press briefing. “Instead they are a result of longstanding policies. Coronavirus is highlighting this for us.”

That concept was echoed over and over by historians speaking to Billy Penn about what the federal stimulus funds could mean for communities of color in Philadelphia.

The upshot: unless governments institute specific policies that direct resources to already-disadvantaged communities, they said, the so-called “Trump checks” distributed to mitigate the economic slam of the pandemic will increase already staggering inequality — in the city, across Pennsylvania, and throughout the U.S.

It wouldn’t be the first time federal stimulus policy has helped create inequality, especially in Philadelphia.

Coming out of the Great Depression, the New Deal introduced redlining, which allowed banks to treat white and nonwhite homeowners differently. This had long-lasting effects on the makeup of the city’s neighborhoods. Nicetown in North Philly is considered one of the most redlined communities in the nation.

And the G.I. Bill, intended to help soldiers returning from World War II return to stable lives, exacerbated the segregation by creating suburbs where only whites were allowed to get home loans.

How the New Deal helped create redlining

The federal government in the 1930s established the housing policies that keep cities segregated even today, said author and historian Richard Rothstein.

Those policies were an outgrowth of an early stimulus package designed to drag the nation out of the Great Depression. In his book “The Color of Law,” Rothestein highlights how redlining was created not just during, but specifically by the New Deal.

“What [President Franklin] Roosevelt did in the New Deal was segregate their housing programs,” Rothestein said in an interview. “These were the first federal housing programs.”

When Roosevelt’s Public Works Administration built the first ever housing projects, they separated tenants by race. The white working class went to one neighborhood and the Black working class to another. Back then, Rothstein said, everyone paid full rent.

“There is an incredible lack of knowledge about how this has created huge gaps in wealth,” said Tayyib Smith of Philly-based firm Little Giant Creative.

Little Giant Creative recently explored damage caused by the practice in Philly with a multimedia exhibit called “A Dream Deferred – Redlining: Past, Present, Future.” This year, the company released a documentary that zoomed into how redlining specifically shaped West Philly, Chinatown and Kensington.

Roosevelt’s administration may not have realized its federal housing program would lead to separate and unequal neighborhoods, where banks systemically prohibited people of color from owning or repairing homes.

“The long term consequences of doing this on a segregated basis were far more harmful than the short term benefits of providing housing on a segregated basis,” Rothestein said. “But that’s not how it was looked at at the time.”

The G.I. Bill and ‘explicit’ racism built into suburbs

The G.I. Bill was another government-backed housing policy from World War II that helped create the modern-day climate where white families possess on average 10 times the wealth of Black families.

Soldiers returning from war were granted a list of perks including low-interest mortgages, tuition expenses and business loans. But Black veterans were systematically denied the provisions outlined in the bill.

In perhaps the most blatant example, the feds worked with development company Levitt & Sons to build tens of thousands of white-only Levittown suburbs around the country, including one in Bucks County. In these communities, Black people who wanted to use G.I.-backed mortgages to buy homes were flat-out denied.

“This was an explicit racial policy,” said Rothstein, the author. “”In the 1940s and 50s, the federal government embarked on a racially explicit program to move white working class families out of urban areas, into single family homes in all white suburbs.”

The Federal Housing Authority and the Veteran Affairs Administration backed Levitt’s developments only after the builder made “an explicit commitment never to sell a home to an African American in Levittown,” Rothstein said.

Coupled with redlining, this ability to build wealth through suburban homeownership helped birth the socioeconomic divide that persists more than 70 years later.

Experts: If you don’t like it, make your voice heard

It’s too soon to say exactly what impact the historic $2 trillion COVID-19 stimulus package will have on the most vulnerable families, but if we’re not careful, Williams, Rothstein and Smith all warn, today’s stimulus will follow the uneven legacy of initiatives past.

“Inequality in all forms is going to be increased as a result of the Coronavirus shutdown,” Rothstein said. “If…the first series of stimulus bills, as well as state policies don’t explicitly act to reduce that growing inequality, it’s going to be much much worse.”

Is there anything you can do about it?

Smith recommended that Philadelphians get involved in their neighborhood associations or RCOs to push their electeds to legislate “across the socioeconomic strata.”

Williams agreed, pushing for engagement on a national scale.

“I think if we get a crescendo of Americans saying we need to address these inequities that are hurting all of us, I think it would make a difference,” the professor said. ‘”This is a moment for us to be energized, to take the COVID virus as a moment of truth.”

Want some more? Explore other Philly’s coronavirus response stories.

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