Banning background checks increases racial discrimination

Abundant housing and strong labor markets help everyone

If you rent out a basement apartment or an ADU and two different applicants for the space seem pretty similar, except one of them was recently released from prison, you’re probably going to rent to the other person.

On one level, that’s perfectly understandable. But formerly incarcerated people need stable employment and housing so that they can live normal lives rather than involve themselves in new rounds of criminal activity.

Recently, activists have begun attempting to remedy this by pushing cities to adopt what they are calling “Fair Chance” ordinances, which limit or prohibit landlords’ use of background checks or similar screening for tenants. Various forms have been adopted in a number of cities, including Minneapolis. The “twin cities” structure of Minneapolis and St. Paul makes it a good place to study the impact of local policy choices. In this case, Marina Mileo Gorzig and Deborah Rho did an audit study for a Minneapolis Federal Reserve Working Paper series, submitting fake email inquiries for rental properties in both Minneapolis and St. Paul. They used names that were stereotypically white, stereotypically African American, or stereotypically Somali (there’s a large Somali population in the Twin Cities area). They did this both before and after the Minneapolis City Council passed a Fair Chance ordinance in 2019.