NBER WORKING PAPER SERIES THE POLITICAL ECONOMY OF FAIR HOUSING LAWS PRIOR TO 1968 William J. Collins Working Paper 10610 http://www.nber.org/papers/w10610 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 June 2004 Collins is Associate Professor of Economics at Vanderbilt University, Research Associate of the National Bureau of Economic Research (NBER), and Model-Okun Fellow of Brookings Institution (2003-2004). Robert Driskill, Thomas Haskell, Robert Margo, Jacob Vigdor, John Wallis, Gavin Wright, and economics seminar participants at the University of Maryland and UCLA provided numerous helpful suggestions. Kathleen Albers, David Rivers, and Daniel Ramsey provided timely research assistance. Support from the Oak Ridge Associated Universities (Ralph E. Powe Award), NBER (National Fellowship), National Science Foundation (SES 0095943), and Harvard’s Du Bois Institute (Non-Resident Fellowship) is gratefully acknowledged. All views expressed in the paper are those of the author and not necessarily those of the individuals or institutions mentioned. The views expressed herein are those of the author(s) and not necessarily those of the National Bureau of Economic Research. ©2004 by William J. Collins. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Political Economy of Fair Housing Laws Prior to 1968 William J. Collins NBER Working Paper No. 10610 June 2004 JEL No. N0, R0 ABSTRACT The confluence of the Great Migration and the Civil Rights Movement propelled the drive for "fair- housing" legislation which attempted to curb overt discrimination in housing markets. This drive culminated in the passage of the federal Civil Rights Act of 1968. By that time, 57 percent of the U.S. population and 41 percent of the African-American population already resided in states with a fair-housing law. Despite laying the political and administrative groundwork for the federal Fair Housing Act of 1968, the origins and diffusion of these state laws have not received much attention from scholars, let alone been subject to statistical efforts to disentangle multiple influences. This paper uses hazard models to analyze the diffusion of fair-housing legislation to shed new light on the combination of economic and political forces that facilitated the laws' adoption. Ceteris paribus, outside the South, states with larger union memberships, more Jewish residents, and more NAACP members passed fair-housing laws sooner than others. The estimated effects are not undermined by including controls for a variety of competing factors and are supported by historical accounts of the legislative campaigns. William J. Collins Department of Economics Vanderbilt University Nashville, TN 37235 and NBER [email protected] 1. Introduction Between 1910 and 1970, millions of African Americans moved from rural areas in the South to urban neighborhoods throughout the United States (Gill 1979, Marks 1989). Consequently, although blacks were only half as likely as whites to live in central cities in 1910 (14 percent compared to 28), they were twice as likely as whites to reside in central cities by 1970 (58 percent compared to 28). Within these metropolitan areas, the scope of residential choices faced by African Americans was constrained not only by their income and wealth, but also by a variety of discriminatory practices: informal but strong norms against selling or renting property to blacks, racially restrictive covenants embedded in property deeds, barriers to mortgage finance, and outright violence against and intimidation of blacks attempting to move into white neighborhoods (Myrdal 1944, Abrams 1955, Meyer 2000, Brooks 2002). Eventually, the confluence of the Great Migration and the Civil Rights Movement propelled a drive for “fair-housing” legislation which attempted to curb overt discrimination in housing markets. The drive culminated in the passage of the federal Fair Housing Act in 1968, the impact of which has been discussed in numerous studies (Bianchi, Farley, and Spain 1982; Goering 1986; Leigh 1988, 1991; Denton 1999; Yinger 1999). Several states implemented fair-housing legislation long before the federal government did. In fact, by the time Congress passed the Fair Housing Act, 22 states had already passed fair-housing legislation, implying that approximately 57 percent of the U.S. population and 41 percent of the African- American population resided in states with some form of fair-housing law applied to private housing. The adoption of fair-housing laws dramatically reoriented race-related housing policy in the United States, which until the early 1950s had explicitly promoted the use of racially restrictive covenants to maintain “neighborhood stability”. Despite their clear influence on the form of and campaign for the federal Fair Housing Act, scholars have devoted comparatively little attention to the diffusion of the state laws. Notable contributions include Eley and Casstevens (1968), a volume of case studies of local and state fair- housing initiatives, and Lockard (1968), which devotes a chapter to discussing the politics and operation of sub-federal fair-housing policies. Additional detail may be extracted from the bi-monthly newsletter of the National Committee Against Discrimination in Housing. But to date, although the descriptive accounts teem with testable hypotheses, statistical evidence rarely informs the story of the origins and impacts of fair- housing laws. This paper studies the laws’ geographic diffusion to shed new light on the combination of economic 1 and political forces that promoted the policy reversal. The state laws provide visible markers of the Civil Rights Movement’s legislative progress. A careful empirical examination of those landmarks can clarify and reshape the existing view of the ascendancy of anti-discrimination policy. This paper’s analysis cannot encompass the full range of the Civil Rights Movement’s goals and efforts, but the fair-housing laws are one of the Movement’s central legislative legacies, and the paper’s exploration is firmly situated in the Movement’s broader context. This story should interest social scientists and historians for three reasons. First, the Civil Rights Movement was arguably the most important American social movement of the 20th century. An economic perspective may yield important insights into what made its legislative successes possible (Alston and Ferrie 1999, Wright 1999). Second, scholars should be fully cognizant of the origins of the policies they study, even if primarily concerned with policy effects (Stigler 1973, Heckman 1976). Third, urban policymakers continue to grapple with problems rooted in the history of residential segregation and racial discrimination. Current policy debates should be informed by the interplay of policy, race, and housing markets over the past several decades. The idea of applying anti-discrimination policy to private housing markets was among the least popular initiatives of the Civil Rights Movement (in both the South and elsewhere), and yet, nearly two dozen states enacted laws prior to the federal legislation. Using hazard model estimates, the paper finds strong empirical evidence that activism by black civil rights groups was complemented by legislative support from Jewish groups and from organized labor. This complementary support was quantitatively important in determining the timing of adoption of fair-housing laws. It also squares well with contemporary descriptions of the grass-roots campaigns for fair-housing, though it tends to be overlooked in broader histories of the Civil Rights Movement. 2. The History and Character of Fair-Housing Laws The legislative disputes over housing-market discrimination sprang from a tension between competing American ideals: the freedom of individuals to dispose of their property and conduct their business freely versus the promise of equal opportunity and “fair” treatment regardless of race, religion, and national origin. Although the notion that the government itself ought not discriminate was embedded in many state constitutions and sometimes applied to public housing (owned and operated by the government), 2 it was a leap from there to the enactment and enforcement of anti-discrimination policy in private housing. For example, New York State enacted the first law upholding a non-discriminatory standard for public housing in 1939 but did not extend anti-discrimination legislation to private housing until 1961. More generally, fair-housing laws usually lagged years behind those pertaining to employment and public accommodations (Lockard 1968, p. 24). In December 1957, New York City adopted the nation’s first fair-housing ordinance which, according to Lockard (1968, p. 118), became a model for several of the state laws and municipal ordinances that followed.1 Initially, the ordinance covered only buildings with multiple units and housing developments (Robison 1968). By 1964, the range of coverage had been extended to all housing except the rental of rooms in owner-occupied units and housing operated by religious organizations. The ordinance stated that, “no owner, ... real estate broker, ... or other person having the right to sell, rent, lease, ... or otherwise dispose of a housing accommodation ... shall refuse to sell, rent, lease ... or otherwise deny or withhold from any person or group of persons such housing