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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
CARDIFF GARCIA, HOST:
And I'm Cardiff Garcia. Over the weekend, protests raged on all across the country, and the Minneapolis City Council has been calling to defund the police department after George Floyd was killed by a Minneapolis police officer while in police custody.
VANEK SMITH: George Floyd's death and the global protests it sparked have put a spotlight on racial disparities across the U.S. and in Minnesota itself.
GARCIA: Yeah. See, in economics, there is something known as the Minnesota paradox.
VANEK SMITH: The Minnesota paradox looks at the fact the Twin Cities, St. Paul and Minneapolis, have some of the best statistics in the country when it comes to quality of life. It's always ranked as one of the best places to live - high homeownership rates, high education rates, high life expectancy, high income.
GARCIA: But in spite of that, Minnesota's cities have some of the worst racial disparities in the country.
SAMUEL MYERS JR: And so the Minnesota paradox kind of captures the fact - this is not Mississippi, OK? This is not Alabama. This state didn't have slavery.
GARCIA: That is Dr. Samuel Myers Jr. He's an economist and a professor of human relations and social justice at the University of Minnesota, and he coined the term Minnesota paradox.
VANEK SMITH: Samuel is deaf. We spoke to him using a closed-caption software. And Samuel moved to Minnesota over 20 years ago, and he was immediately struck by this paradox. Why the big racial disparities? After all, Minnesota has a history of progressive laws and institutions. And Samuel points out that the University of Minnesota, where he works, was graduating black physicians and chemists and nurses in the early 1900s.
MYERS: In fact, where did Dred Scott flee to when the slaves came to Minnesota?
GARCIA: Yet black Minnesotans' unemployment rates have been more than double that of white Minnesotans. Income, education levels, life expectancy, health statistics - they all reflect some of the worst racial disparities in the U.S.
VANEK SMITH: So what is going on in Minnesota? Why this paradox? Samuel says the answer is complicated and deeply rooted. He says one powerful illustration is a federal highway that was built in Minnesota in the 1950s, connecting the Twin Cities.
MYERS: I-94 - this is the federal highway that connects Minneapolis and St. Paul.
GARCIA: The most direct route between the Twin Cities cuts through one of the wealthiest, fanciest neighborhoods in the area. So that wasn't going to happen. Instead, they moved the highway north just a bit.
MYERS: It puts you through the most vibrant black neighborhood in the entire Midwest, where homeownership rates was higher in 1930 than the average homeownership rates for whites in the entire United States. I mean, tell me - this was a vibrant neighborhood.
VANEK SMITH: And even though it was so vibrant and relatively wealthy, that neighborhood did not have the political clout or the money to block the highway project.
MYERS: And so they built the highway, and it just go straight through the middle of this stable black community. It destroys families. It destroys community.
VANEK SMITH: And home values in the area plummeted.
GARCIA: Samuel says that at the time, moving to a predominantly white neighborhood wasn't really an option for black families because of segregation and because of racism, so many black families were stuck in an area that had been decimated by this highway.
VANEK SMITH: As a result, black homeowners did not see their houses grow in value very much. And if they wanted to buy a home in that area, they had trouble getting a loan, even if the loan officer was just looking at numbers.
MYERS: It's not you that I'm discriminating against. But the problem is the neighborhood because I'm concerned that the housing price is going down in that neighborhood. OK. So in those particular instances, everybody's acting rationally. There are a lot of racial disparities that occur that are not meant to be racial disparities, that were not intentional to be racial disparity. But they happen.
GARCIA: So black families can't get home loans because home values in their neighborhoods are so low. And so black homeownership plummets in Minnesota. Today, about 24% of black households own their own home in Minnesota, compared to 76% of white households.
VANEK SMITH: And homeownership is really important in all kinds of ways. In the U.S., one of the main ways to build wealth has traditionally been through buying a house. So this hit to homeownership had a domino effect of lower incomes for black families, less savings, less education, health problems, lower life expectancy.
GARCIA: A big part of the reason, says Samuel - a federal highway that ripped through a thriving black neighborhood back in the 1950s.
VANEK SMITH: And Samuel says he's been thinking about that highway a lot as he has watched the protests unfold in his state and across the country.
MYERS: I don't want to sound unnecessarily negative or disappointing, but we're almost in the same place we were 50 years ago. There have been improvements, but police brutality is still there. The issue of differences in access to homeownership is still there.
VANEK SMITH: After a quick break, we take a look at why change hasn't happened and what Samuel says needs to happen for things to actually change.
GARCIA: Economist Samuel Myers says that after the massive protests of 1968, a lot of things changed. For example, citizen review boards were put in place for police departments. And those incremental changes worked for a while.
MYERS: Here's the lesson from history that we should be worried about. Incremental changes often give us the false sense of accomplishment. And then we can quickly sink back to where we were before.
VANEK SMITH: And the reason incremental change often doesn't work, says Samuel, comes back to the Minnesota paradox. Take home loans. So in the last few decades, Samuel says, banks and other lenders have taken incremental steps to make lending more equal. They've created training programs for bankers and lending officers to make sure that they're not discriminating on the basis of race.
GARCIA: But loans to black families were still getting denied based on things like the value of a family's current home, how much of a down payment the family could make and the home values in the neighborhoods where the family wanted to buy, all things that had been affected by events like the building of a highway back in the 1950s. So in spite of all the training, black families still could not get loans.
MYERS: In fact, the homeownership gap bigger now than it was in 1968.
VANEK SMITH: Samuel says escaping the Minnesota paradox is incredibly complicated. It means completely changing the structure of things - of lending institutions, of police departments, of universities. He says he is not surprised to see this big movement happening to dismantle police departments.
GARCIA: But, he says, this solution can come at a great price. Those structures create stability.
MYERS: And so I have this very interesting conflict here between wanting to see these structures stable and stabilized and recognizing that these structures don't always contribute to improvement in racial economic outcomes.
VANEK SMITH: Still, Samuel says, until the structure does change, the inequities that are baked into it will surface again and again in different forms, just like with the highway.
GARCIA: But, he adds, when one structure goes away, it can create an opening. In fact, Samuel thinks we are going to see a boom in female- and minority-owned businesses grow out of the current economic crisis because some of the institutional barriers that have made it harder for minorities and women to start businesses have been shaken.
MYERS: What I'm anticipating is going to happen is that there'll be women-, minority-owned business enterprises that emerge from this rubble of a disastrous economy. And they'll do good things, new things. So those are the numbers that I've been looking for. And I would like to be able to document it. I'd like to celebrate it because those diverse forces will bring forth new and better products.
VANEK SMITH: This episode of THE INDICATOR was produced by Camille Petersen, fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.
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