Meizhu Lui

Recent Posts by Meizhu Lui

America’s Housing Crisis: Turning a Raw Deal Into a New Deal
May 20, 2010Meizhu Lui
How making changes to public housing can improve the lives of the poor.
How making changes to public housing can improve the lives of the poor.

When we talk about "public housing," we're usually referring to those big decaying boxy buildings surrounded by asphalt located in neighborhoods of color where middle and upper class white folks are afraid to drive, let alone tread.

But in fact, most of our housing could be called "public" -- that is, subsidized by the government -- including those million dollar McMansions in the ‘burbs. Like the people in the projects, these homeowners get financial help from Uncle Sam, in the form of the Home Mortgage Interest Deduction (HMID) and property tax deductions from their federal income taxes.

Public housing development is rooted in the New Deal recognition that the private market cannot meet the housing needs of the country, particularly the needs of working class and low-income people. During the 1930's, many of the unemployed became homeless, and slums arose within cities where people crowded into makeshift shelters and deteriorating buildings, living in unsafe and unsanitary conditions. The housing division of the Public Works Administration began its work in 1933; its goal was to build modern and high quality housing for the poor. Loss of jobs and the failure of the banking system caused high rates of foreclosure, driving homeowners as well as renters into the streets. To bring back affordable homeownership, beginning in 1934 the Federal Housing Administration (FHA) insured and subsidized mortgages, making housing a safe investment. Later the Home Mortgage Interest Deduction was instituted, which helped ease mortgage burdens even more. Many who enjoy housing security today owe it to government programs of the past.

But all of this good will and good work was deformed by the usual American malady: racism. When the public housing program changed to put operational decisions into the hands of local politicians, cities could decide where to locate the projects, which virtually guaranteed that they would be racially segregated. In terms of homeownership, the FHA endorsed "red-lining," the targeting of people in communities of color as "poor financial risks," and encouraged lending to white families buying in suburbs. Over its 30 year history, only 2% of its loans were made to families of color. As for the HMID, low and middle income homeowners who do not itemize on their tax return get no benefit, and for those who do itemize, the bigger the mortgage the bigger the subsidy -- those with the highest income and wealth levels get the most. We have a two tier color-coded public housing policy: disinvestment in low-income communities of color, and increasing subsidies for middle and upper income whites. No wonder racial wealth inequality has been growing (the new report from the Institute for Assets and Social Policy at Brandeis University shows that the wealth gap between whites and blacks quadrupled over a generation.)

In 2005, the American people spent $70 billion to subsidize disproportionately white middle and upper income homeowners through the HMID. They invested only $6.2 billion -- under 10% as much -- on "public housing." A new report from the national non-profit Right to the City, We Call These Projects Home: Solving the Housing Crisis from the Ground Up, raises the voices of the residents themselves, who attest to the success of public housing developments. They are the most stable and secure housing for low-income families, and the people living there have created a culture of support and cooperation (is that what's meant by the "culture of poverty!?"). They make the common sense argument that our nation needs to strengthen these communities through linking residents to jobs and services, rather than dismantling and dispersing them to the winds.

Simply by eliminating or capping the HMID, we could free up enough money to pay for all the improvements recommended by Right to the City to preserve, improve, and construct new public housing developments. It's always astounding that we don't challenge socialized programs for the rich, but have no problem cutting public spending for the poor. Let's listen to the residents, invest in public housing, and turn a raw deal into a new -- I mean a really new! -- deal.

Roosevelt Institute Braintruster Meizhu Lui is Director of the Closing the Racial Wealth Gap Initiative.

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Feminomics: A Woman's Place - Still in the (Poor) House
Dec 21, 2009Meizhu Lui
Will 2010 be the year of the woman? We asked prominent thinkers to discuss women's changing roles in the economy. How has the crisis affected them? Are women the key to reform? What economic impact will they have going forward? We'll explore all this and more in a special ND20 12-part series.
Will 2010 be the year of the woman? We asked prominent thinkers to discuss women's changing roles in the economy. How has the crisis affected them? Are women the key to reform? What economic impact will they have going forward? We'll explore all this and more in a special ND20 12-part series. Meizhu Lui explains why the gender wealth gap is as important as the more familiar income gap.

They used to say things like "a woman's place is in the home." We thought we had that licked.

In the 60's, women fought to get out of the house and into the workforce. (White women that is; most women of color were already low-wage earners). Today, women have not yet achieved income parity, making about 76 cents on the man's dollar. And ironically, not only do women have the right to work, they must go to work. Married couples depend on two incomes, and about half of all households are unmarried, many of those headed by single moms.

We understand income. But little attention is paid to building wealth -- what you own minus what you owe. Savings, homes, businesses, retirement and investment accounts enable a person to weather economic storms, to generate further income and assets, and to give the children a head start.

According to recent research by Mariko Chang, the gender wealth gap far exceeds the income gap. Single women of working age between 18 and 64 have only 36 cents of wealth to the single man's dollar. And for women of color, economic security is non-existent. Single women of each race have less than half the wealth as men of their own race, but due to the racial wealth gap, women of color are at the bottom. In 2004, single white women had around $24,000 in wealth, while African-American women at the median had only $2000 dollars to fall back on. And for Latinas? Nada, zero.

The American myth is that hard work makes you rich. But the work of enslaved people didn't make African-Americans rich. Women's work never made women rich. It is still invisible, undervalued and un/under-paid. For example, dog walkers make a third more than child care workers. Does our society value dogs more than children? Or is it that "women's place" thinking continues to affect women's ability to achieve economic security? Women of color continue to be disproportionately employed doing "women's work," taking care of children and the elderly, working in food service and housekeeping -- occupations that are often without wealth-building benefits such as retirement pensions or health insurance.

Asset building is a woman's issue. And government actions and inactions are what create the mal-distribution of wealth by race and gender we see today. New policies can help poor women build wealth, such as removing asset limits for public benefits, refundable tax credits for dependents, matched savings and retirement accounts, and access to credit for micro-business development. Programs can also be targeted toward those who have worked the hardest and remained the poorest, by creating programs in the communities that were left behind by previous policies that favored white suburbs.

Women don't just need to get what men get. We also need recognition of the personal and social value of women's work. A woman's place should be wherever she wants and needs to be, and that should not put her in the poor house.

Roosevelt Institute Braintruster Meizhu Lui is Director of the Closing the Racial Wealth Gap Initiative.

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For Families of Color, New Deal--or Same Old Shuffle?
Jun 11, 2009Meizhu Lui
When Franklin D. Roosevelt first used the term “new deal” in 1932, his metaphor was a game of poker: the American people had been dealt a bad hand.
When Franklin D. Roosevelt first used the term “new deal” in 1932, his metaphor was a game of poker: the American people had been dealt a bad hand.

He enumerated the problems that we see repeated today: “Our ability to pay has fallen….The savings of many years in thousands of families are gone….A host of unemployed citizens face a grim problem of existence, and an equally great number toil with little return.” And it is true again today that paradoxically, “plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.” For example, foreclosed homes stand empty aplenty, while the rising ranks of the homeless can see them but not go in.

Who were the card sharks causing the financial ruin of so many? "The rulers of the exchange of mankind's goods"--the bankers and investors in the private marketplace--“...failed, through their own stubbornness and their own incompetence,” FDR told the nation in his first inaugural speech. They needed to be replaced with a new and honest dealer, one with the interests of the people at heart: the federal government. Much has been made of FDR’s use of federal dollars to assist ordinary citizens, actions that helped restore confidence in the economy and that pulled families from the brink of disaster.

But wait, all American families? As is often true in American history, there is another less visible story line. The truth of the matter is that the New Deal era programs pulled many white families up from the Depression, while pitifully few families of color received such aid.

In 1933, the Home Owners Loan Corporation (HOLC) was formed to help families whose homes were at risk of foreclosure. A federal investment of $200 million gave the HOLC the capacity to raise $2 billion in tax-exempt bonds, from which they made loans on favorable terms to more than a million families. However, minority borrowers were largely excluded on the grounds that homogeneous white neighborhoods had the lowest credit risk. During its three-year life span, only 1 percent of HOLC loans went to African Americans; the black half of Detroit was excluded outright.

The Federal Housing Administration was created to expand home ownership opportunities after the Depression by making down payments and interest on mortgages more affordable.Following the general racial guidelines set by HOLC, the Federal Housing Administration (FHA) again prioritized lending in white suburbs, encouraged white flight from inner cities, and left people of color in declining inner cities. During its existence from 1934 to 1965, the FHA gave out $120 billion in affordable home loans; less then 2 percent of that went to non-whites.

The Social Security Act of 1935 guaranteed that people who had worked for at least ten years would not die in poverty; they would receive an income in retirement paid for by taxing workers and employers. For the first time, the elderly would not be a burden on their children. However, in a compromise with Southern politicians, two occupations were excluded: farm workers and domestic workers, the two main jobs performed by African-Americans. Those jobs were also excluded from the Fair Labor Standards Act of 1938 that established a minimum wage.

In program after program, white workers and families were prioritized. The Works Progress Administration put over three million people on the federal payroll, but administration of the program was left to the states. In the South, of more than 10,000 WPA supervisors, only 11 were black. The National Labor Relations Act of 1935 protected industrial workers’ right to organize unions, but did not deal with the fact that many unions excluded non-whites in their Constitutions. The Agricultural Adjustment Administration’said went almost entirely to white farmers.

The New Deal did indeed help get the nation’s economy moving again. Millions of families got back on their feet, became homeowners, joined unions, and counted on social security checks for retirement. These were good policies, policies that built the middle class.

But the exclusion of people of color exacerbated the racial economic divide and deepened the wound in our body politic. For non-whites, the Depression lasted much longer. Social Security benefits were not extended to domestic and farm workers until the 1950s, and it took the Civil Rights movement to win programs designed to give people of color a “new deal” too.

The racial bias of New Deal policies has had lasting effects. With parents on Social Security, white children could inherit wealth, while families of color had to use their own incomes to support their elderly parents. Owning a home and growing home equity from the 1930s forward allowed white families to accumulate assets that enabled them to give their kids a financial head start for such things as college tuition or a down payment on a home. Without such assets, families of color stayed in survival mode generation after generation. Today, according to the latest data in the Survey of Consumer Finance released by the Federal Reserve in 2007, for every dollar of wealth held by the typical white family, the African-American family has only one dime. Families of color overall have sixteen cents to the white dollar.

Building wealth is essential to the American promise of economic mobility and security regardless of the accident of one's birth. Yes, we do need a new “new deal.” But this time, dollars need to be targeted where few went before – to inner cities, for better jobs for minority workers, in the programs to stem foreclosures, and in the new green sector initiatives. This time, people of color need to be dealt a new hand with some good cards, rather than the same old shuffle.

Braintruster Meizhu Lui is director of the Closing the Racial Wealth Gap Initiative at the Insight Center for Community Economic Development in Oakland, California and a co-author of The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide.

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