Racial poverty in the United States has existed since the founding of the country, when only white families could legally purchase and own land. However, in the past century, we have seen an accelerated increase in the racial wealth gap due to discriminating laws that prevent families of color from building wealth. Every time there’s an economic crisis, people of color have disproportionately experienced worse outcomes than their white counterparts. This essay explores how major economic events in the modern 20th century have shaped the concentration of racial poverty in the United States.

The United States Second Industrial Revolution marked an insurgent of the increasing wealth gap in the United States. It was a period in which industry and technology exploded around the country, leading to massive growth of cities and factories. The country’s overall economic growth is undeniably one of the most significant moments in history and transformed the lives of millions. The country experienced mass production of steel, railroads, energy and consumer products; and a decline in agriculture farms. With Industrialization came with the rising upper class who controlled the production process and gained enormous wealth. Prominent figures at this time were John D. Rockefeller and Andrew Carnegie, who were the richest men in the world, controlling oil and steel. However, the poorest Americans did not experience the economic growth that the upper and middle class were experiencing. Instead, they were working at manufacturing factories with terrible working conditions, long hours and low pay. The poverty rate was projected to be between 60-70% during this time. “About one-fourth of the population in southern rural areas consisted of poor sharecroppers and tenant farmers. Over a third of these small farmers were African Americans.”

The Great Depression of 1929 was the great equalizer. This period marked the first time that many middle class Americans experienced extreme poverty. With unemployment skyrocketing at 25%, President Franklin Roosevelt implemented the New Deal, a series of programs that aim to restore economic prosperity among Americans. However, one of the agencies established under the New Deal, the Federal Housing Administration (FHA), can be traced back as the main reason why there is concentrated poverty in cities around the country. The Federal Housing Administration was established in 1934 under President Roosevelt; it subsidized mass production of housing in suburban neighborhoods, with the exclusionary clause that stated that none of these houses would be sold to African Americans. In other words, this subsidized middle class white families to move to suburbs while African Americans were not allowed to follow. The FHA’s reasoning was that having African Americans move into the suburbs would lower the property values, making their loans more risky. This has no empirical basis. When the GI Bill was passed to subsidize WWII veterans housing, it adopted the FHA exclusionary law as well, meaning many African American vets did not benefit from this program either. Racial restrictive covenants were another way to exclude American Americans from buying homes. Restrictive covenants were mutual agreement between sellers and buyers that prevent reselling of properties to certain races. On the other hand, minority families in America were offered public housing during the Great New Deal as a well-intended progressive solution to help the working poor. After the passage of the Housing Act of 1937, public housing was built with the goal of helping the unemployed work and to clear slums. However, mismanagement and bad policy decisions have isolated low-income families and further created concentration of poverty. Public housing in America was never implemented properly to help people living in poverty. Often, these units are characterized by “the rats, leaks, mold, and lead paint.” How can one succeed in their education and job when their homes lack the most essential amenities to support them? 

We still see the legacy of these exclusionary practices today. Owning a home is one of the main ways that Americans build equity. During the time when these exclusionary laws were implemented, home prices were twice the national median income, a down payment was affordable for most. However, African Americans were not allowed to buy the homes. After the Fair Housing Act passed, home values increased and they were 5 or 6 times the national median income, making it incredibly unaffordable for many African Americans. While their white counterparts have equity to send their kids to college and to take care of their senior parents, African Americans never had that opportunity to build wealth. While African Americans’ income is 61% of white folks, their wealth is 5% of whites’ wealth. 

After years of being excluded from building wealth, the 2008 Great Recession exposed many families of color were being exploited. Though the mortgage crisis happened in 2008, predatory lending had been going since the 1990s. In a research done by Professor Jacob Faber at NYU, he found that in the period between 2003 and 2006, Black and Latino families received over 20% of subprime loans, with them two times more likely to receive subprime loans than white counterparts. Interestingly enough, banks that once ignored these middle class minorities during the redlining period, provided risky loans to families who never received proper financial education to know what they were signing up for. As a result, Black and Latino families foreclosed their home, lost their wealth and contributed to that growing racial wealth gap. Foreclosure rates in these families of color doubled their white counterparts, with 56% of people who lost their homes were non-Hispanic and white. The mortgage crisis marked an era of continual exploitation of people of color, widening the wealth gap for many generations to come.

Though we have not seen the effects of the 2020 Covid-19 Pandemic on minority families, early findings have shown that COVID-19 has affected economically disadvantaged Black and Latino families more. History of marginalization and discrimination have put these families at higher risk. Black and Latino families have lower median incomes and are more likely to work in service jobs, forcing them to expose themselves to the virus. Adrianne Haggins, MD from University of Michigan stated, “Black Americans experience a disproportionate share of environmental risk factors, and are more likely to have limited economic and educational opportunities, food insecurity and poor access to health care.” With all these socioeconomic factors, it’s not surprising that families of color are experiencing higher rates of infection. The Payment Protection Program that was supposed to help small businesses and their employees, only 1 in 10 nonwhite businesses were able to receive it. Though more research needs to be done in order to determine the effect of the pandemic on the poverty rate of the United States, with our current unemployment rate, it would not be surprising for it to increase even further. 

In the past centuries, every major economic crisis has disproportionately affected people of color more. Our institutions have failed to support them in order to better their quality of life. From downpayment assistance program to proper financial education in our communities, we need to implement programs to further increase the access to wealth and economic opportunities that will help our communities to become more economically resilient in these trying times.

Written by Hang Nguyen

We would like to thank you for your leadership and prompt and decisive action to protect our state and the county of Los Angeles from the COVID-19 pandemic. We applaud you for taking this threat seriously, and taking the necessary actions to prevent its rapid spread thereby reducing the impacts on our healthcare system, economy, and housing that are sure to come. It is in this spirit that we bring to your attention a regulation that we believe will dramatically impact the ability for many Californians, including millennials and communities of color in particular, to purchase a home – Vehicle Miles Traveled (VMT), and respectfully request the extension of the implementation date to July 1st, 2021. 

We have filed a lawsuit against the California Air Resources Board (CARB) because we find many aspects of their scoping plan, including the VMT fee, to be discriminatory against California’s most vulnerable populations. The first lawsuit we filed in April 2018  was due to their efforts to make it easier to block new housing and because of their aims to increase California housing prices. CARB’s anti-housing legislation would have a disproportionate impact on communities of color, as their proposed CEQA scoping plan would add $40,000 or more to the cost of each new house and make commutes longer for people of color who commute to housing that they can afford. CEQA is supposed to protect the environment but these longer commutes will actually increase air pollution by forcing longer commutes. 

We later filed a Civil Rights lawsuit on December 18, 2019 as regulations to implement CEQA are unlawful and unconstitutional; they exacerbate the housing crisis and the poverty and homelessness crisis. Vehicle use is a fundamental civil right and a basic necessity for these Americans who need to commute and it is unconstitutional to take that right away from them without any substantial evidence that these measures will limit greenhouse gases. The Two Hundred filed this lawsuit to advocate for the rights of American citizens to housing and mobility and to call out the unconstitutional restrictions being implemented by CEQA. 

In the middle of an economic and public health crisis, the government should not be imposing new laws that will increase the cost of housing and potentially endanger public health. Forcing residents and their families into expensive high-rise housing and onto crowded buses and trains is bad public policy and needs to be reconsidered. By ignoring the critical role that social distancing has played in slowing the spread of the Coronavirus, Vehicle Miles Traveled does not protect our aging population from future virus pandemics.

The VMT fee has been delayed in many Southern California counties with the exception of LA county and the city of Los Angeles. Given the racial injustice protests, it is particularly disturbing to us that LA county and the city of Los Angeles will not get on board with the delay of the implementation of the VMT fee. 

The ideological approach of VMT is to get people to abandon their individual vehicles and utilize multimodal transit opportunities such as walking, biking, and using public transit. The regulation views road congestion as a good thing, since it slows down traffic and incentivizes individuals to use alternative forms of transit. Improvements like road widening is considered a negative impact on greenhouse gas reductions because it increases commuter speeds which the regulation assumes will encourage people to drive longer distances. The new regulation advocates that California go on a “road diet” and calls into question whether the voters understood this when they approved an increase in the gas tax. Additionally, many residents of Los Angeles do not have adequate access to public transportation from their homes to their jobs. Until the transportation system is improved, it is very unfair to punish those who are already forced to live far from their work to pay extra in the fight against climate change. 

We hope you will support a resolution encouraging a one-year delay so that the numerous problems associated with Vehicle Miles Traveled can be adequately addressed.

These are difficult times for all of us. We appreciate your hard work and your continued efforts to strengthen our economy and protect public health.


John Gamboa

Vice Chair

The Two Hundred

To learn more about VMT and why we are suing CARB over it, check out these resources:

Jim Jakobs  

June 17, 2020

The Kern County Board of Supervisors voted unanimously to approve a resolution asking Gov. Gavin Newsom to delay implementation of a controversial state environmental law. The counties of Fresno, Kings, Tulare, and Merced have also called for a delay.

Related Story: Powerhouse SoCal Agency Urges Newsom: Delay VMT Law

Starting July 1st, housing construction projects will no longer be assessed a fee by how much traffic congestion they are expected to generate.

Instead, a Vehicle Miles Traveled, or VMT, calculation will be applied to new developments. For instance, if a person drives to multiple places a day — work, store, soccer practice, etc. — all of those miles are counted up. Then a fee is calculated for the development.

The goal, according to the law’s supporters, is promote the expansion of mass transit and other shared transportation services, thereby reducing greenhouse gas emissions. Some cities — Pasadena, San Luis Obispo, San Francisco, Los Angeles, and Oakland, for example — already are using VMT.

But the newly created fee is expected to add significantly to the cost of building new housing in many areas of California.

Related Story: VMT Law Could ‘Thwart’ Efforts to Finish Highway 99 Widening

Housing Affordability Concern

The California Building Industry Association estimates that 10,000 Californians are priced out of a home for each $1,000 added to the overall cost of a project.

An official with the Building Industry Association of Fresno-Madera Counties has estimated that the VMT fees for a 20-unit project in Clovis would be $460,000 over 30 years — or $23,000 a unit. And, while the developer bears the costs upfront, it is passed on to homebuyers and renters.

Critics of the law say that it discriminates against minorities and lower-income families, and will put homeownership out of reach for many Californians.

Kern County supervisors, in their resolution, state, “Considering the State of California is in the midst of a housing affordability crisis and is in desperate need of more affordable housing options, making new housing significantly more expensive by imposing VMT reduction requirements on new projects will only serve to exacerbate the state’s housing affordability crisis.

Read the full resolution and original story on GV Wire here.

City of Fresno Discusses VMT Thursday

The Fresno City Council is scheduled to hold a hearing Thursday, June 25th to consider adopting vehicle miles traveled thresholds for local projects. The law requires local jurisdictions in California to adopt the thresholds by July 1st.

Thursday’s discussion begins at 10:10 a.m. Thursday morning, according to the council’s meeting agenda.

Stay Connected & Join our Email List