How government paved the way for Chicago's segregated poverty

Chicago is divided. With the decline of the city’s middle class, it is increasingly a city made up of the prosperous and the poor.

This fissure cracks along racial lines. Chicago is the most segregated city in America. Of the 25 largest metropolitan areas in the U.S., it is home to the highest proportion of black residents living in areas of concentrated poverty – 35 percent.

Decades of bad public policy played a large part in creating these areas in Chicago, which are mired in a vicious cycle of joblessness, hopelessness and violence.

The following are a couple of the worst policies with a direct hand in creating those areas where upward mobility has remained out of reach for generations. Both are meticulously detailed in Beryl Satter’s book, “Family Properties: How the Struggle Over Race and Real Estate Transformed Chicago and Urban America.”


The Federal Housing Administration, or FHA, was created in 1934 to insure loans for homebuyers, ushering in an unprecedented era of cheap credit across the country – but not for everyone.

An FHA policy known as “redlining” was devastating for black consumers.

A 1938 map from the Chicago Housing Authority, courtesy of the University of Chicago Map Collection, shows how redlining worked.


Neighborhoods containing black residents were marked as Class D (dark red), regardless of black residents’ income and no matter how small a proportion of the area’s total population was black. The FHA ensured no loans could be made for either purchasing or upgrading properties in these “redlined” areas.

Private, racially restrictive covenants also blanketed Chicago, preventing the sale of homes primarily to blacks, but to Jews and Asians as well. The FHA encouraged the use of these agreements in its Underwriting Manual, as they protected against “ingress of undesirable racial or nationality groups.”

These factors created two radically different housing economies in Chicago: highly limited and relatively costly housing options for blacks, and bountiful, cheap housing options for whites with similar incomes.

Eminent domain

The dual housing market for black and white consumers persisted for decades, but Chicago’s political class became frustrated with those policies’ effects on downtown business interests. The Loop was surrounded by slums on its south and west sides, some of the only areas in which blacks could live. Satter’s research showed how some business owners saw these neighborhoods as moats blocking white, middle-class consumers from shopping downtown.

The solution? Raze those neighborhoods, forcing black residents out of promising areas and into an increasingly limited housing market against their will.

The Illinois General Assembly passed the Illinois Blighted Areas Redevelopment Act in 1947 to this end. The act created a new agency called the Land Clearance Commission with the power to acquire “blighted” land by force and sell it to private developers.

The first redevelopment project completed under the new law, which took place in a black neighborhood near Bronzeville, was a case study in how eminent domain preys on the most vulnerable in the interest of the politically connected. The Land Clearance Commission demolished black housing on the city’s South Side to make way for a private developer to build “Lake Meadows,” a middle-class housing development out of reach for those its construction displaced.

Federal legislation mirroring Chicago’s foray into “urban renewal” subsidized projects destroying limited black housing stock and creating higher-income housing in its place across the country. President Harry Truman’s Housing Act of 1949 made federal funds available for slum clearance and also for public housing for displaced residents, both of which were used on the Lake Meadows project.

In many cases, this meant black Chicagoans witnessed the seizure and destruction of their homes only to be siphoned into public housing constructed in overcrowded black areas.

Where are we now?

Public policy played a major part in creating Chicago’s high-poverty neighborhoods. Now, it plays a part in perpetuating them.

Overly restrictive zoning laws are driving up the cost of home ownership, meaning a middle-class lifestyle is out of reach for large swaths of the city.

Entrepreneurship is also foundational to economic growth and social mobility. But would-be entrepreneurs in the Windy City are met with reams of paperwork, months of wait time, harsh penalties for minor slip-ups and politicians taking a bigger and bigger cut of their paychecks every year.

And to this day, eminent domain is used to kick Chicagoans without necessary political connections out of their homes and businesses.

The sickness of segregation remains in Chicago. Residents should welcome policymakers bold enough to tear down government-erected barriers to a better city.

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Tags: redlining, zoning

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