Sunday Commentary II: The End of Fair Housing?

This week marked what would have been Martin Luther King’s 85^th birthday, had he not been shot and killed nearly 47 years ago. Locally that meant the Reverend Tim Malone delivering a heart-wrenching and emotional keynote speech at the Davis MLK Day event.

Rev. Malone recounted Martin Luther King’s sermon, where he foresaw his own death, in February 1968. He said that Dr. King wanted, when he died, for people to say that “I tried to feed the hungry. I tried to clothe the naked. I visited those that were sick and in prison. I tried to love and serve humanity. That’s all I want you to say.”

One of the great legacies of the civil rights movement was the Fair Housing Act of 1968, which remains a vital tool in combating the discrimination in housing and lending that continues to plague our country. In fact, the passage of that act came out of the tragedy that year in Memphis.

Rev. Malone reminded us that Dr. King fought not just for the political equality of African-Americans, but for the economic equality of all. In Memphis, he was organizing the poor man’s march.

As a brilliant piece in The Atlantic recounts this week, the notion of “disparate impact” came out of the 1964 Civil Rights Act. The article tells that in the south, in the post-segregation era, segregation could not long rule the day as Title VII forbade employers to discriminate by “race, color, religion, sex, or national origin.”

So, Duke Power, an energy company in North Carolina, had the antidote to that – a new policy. “New hires had to have a high school education and pass two standardized tests—unless, that is, they wanted to work as … laborers. If laborers wanted to transfer to other jobs, they either had to have a high school diploma or had to pass the tests.”

As The Atlantic reports, at this time only one-third of whites in North Carolina had finished high school, but 12 percent of blacks had done the same. “Federal agencies ran experiments using the tests; 58 percent of whites passed, but just 6 percent of blacks,” they report. “The company argued that tests would produce an educated, skilled workforce. It would also produce a new post-segregation plant that looked a lot like the old segregated one, but there was no evidence that this was its aim.”

Black employees would sue under Title VII of the Civil Rights Act, and in 1971 the US Supreme Court ruled in their favor, “finding that, even without intentionally using race, Duke Power had violated the Act. The use of job testing was permissible; but when the tests operated unequally, the Court held, the company had to show that the tests were “significantly related” to the jobs they were being used to fill.”

“[G]ood intent or absence of discriminatory intent,” Chief Justice Warren Burger wrote for eight members of the Court, “does not redeem employment procedures or testing mechanisms that act as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capacity.”

This is where the legal idea of “disparate-impact” emanates. And as The Atlantic notes, this very idea was under fire this week at the Supreme Court. In 1968, the Fair Housing Act was enacted to combat segregation in housing. There are two tests – one is that the individual has been intentionally discriminated against on the basis of race and the other is that the policy adopted will have a “disparate” impact on minorities.

The US Supreme Court has agreed to consider whether the time-tested method of looking at the effects of policies and practices should continue to be used going forward.

As Senator Elizabeth Warren wrote this week in an op-ed in The Washington Post, “The wrong decision would reduce economic opportunities for working families and raise the risk of another financial crisis.”

The Senator notes, “Intentional discrimination cases are notoriously hard to prove because they require evidence of a person’s state of mind.” As a result, she wrote, “most housing segregation cases are brought on the second basis: disparate impact.”

“Those cases are no easy lift either. To find a disparate-impact violation, a court must conclude that a challenged practice has a disproportionately negative effect on otherwise similar racial groups and that there is no nondiscriminatory explanation for the practice. Despite that high bar, disparate-impact claims have been the main tool for attacking some of the most persistent practices contributing to housing segregation,” she writes.

Most observers believe that the court will overturn the law even at a time when research continues to show that residential housing patterns are extremely segregated.

Texas Department of Housing and Community Affairs v. The Inclusive Community Project, Inc. is about a series of subsidized low-income housing developments in Dallas.

Plaintiffs in the case challenge that the Department “was concentrating them in predominantly minority areas—in effect, solidifying residential segregation of the races.” Basically “if the effect of the approvals is to ‘pack’ minorities, then these decisions have a disparate impact, and the Department must justify its policies to a court.”

As the ACLU Blog notes, Justice Antonin Scalia, generally the most reliable conservative vote on the court, challenged Texas’s case. Rachel Goodman writes, “Justice Scalia pointed out that when Congress amended the Fair Housing Act in 1988, it incorporated language that wouldn’t make any sense without the disparate impact standard, which prohibits policies that have a discriminatory impact, regardless of whether those practices were adopted with a discriminatory intent. He suggested that this language alone might ‘kill’ Texas’s case. And Justice Scalia did not seem at all convinced by the attorney general’s answers. In fact, he stated at one point that he found it ‘hard’ to read the statute ‘in any other way than there is such a thing as disparate impact.’”

Texas counted on that “the disparate impact standard would violate the Constitution’s guarantee of equal protection, by forcing landlords, banks, and governments to consider the racial impact of their policies.”

Without the ability to argue that a housing policy has a disparate impact, it would be hard to enforce the Fair Housing Act, as federal and state laws have largely eliminated outright segregation.

Senator Warren argues, “Housing segregation has a powerful impact on opportunities to build economic security. Data show that lower- and middle-income families living in more segregated communities have a harder time climbing the economic ladder.”

She argues, “Undercutting our fair housing laws also would increase the risk of another financial crisis. In the wake of the 2008 economic collapse, the Justice Department found that several big banks and other mortgage lenders had violated the Fair Housing Act’s disparate-impact standard by steering borrowers of color into more expensive mortgages than white borrowers with similar financial profiles. While lenders profited in the short term, these families were unable to keep up with their payments when housing prices fell, contributing to the chain reaction throughout the financial system. As the crisis demonstrated, we need stronger fair housing laws, not weaker ones that allow lenders to return to the risky — but lucrative — practices that set the stage for the last crash.”

The Fair Housing Act could be the next plank of the civil rights movement undone by the current Supreme Court – despite the fact that most of the country remains deeply segregated.

—David M. Greenwald reporting