The Social Security Act created the Social Security program and public assistance programs that became generally known as welfare. Social Security is still with us today but regularly under attack. The general plan was to create a dedicated tax that would fund pension benefits for all workers. However, the southern oligarchs saw this as a threat to their supply of cheap colored labor. They demanded that agricultural and domestic workers be excluded from the program. At the time that impacted a large majority of black workers in the south.
The National Labor Relations Act gave labor unions significant new rights to organize American workers for collective bargaining. It resulted in a major expansion of union membership in the industrialized sections of the country. Again the southern congressional delegations held the bill ransom until agricultural workers were excluded from its provisions. They were willing to vote for unions in northern factories as long as southern blacks were cut out of the arrangement. As the south became more industrialized during WW II they suddenly found themselves with industries that were covered under the Wagner Act. In 1947 the southern congressional bloc switched sides and voted with the Republicans to pass the Taft Hartley Act limiting the rights of organized labor.
By October 1946, The G.I. Bill had placed 6,500 former soldiers in nonfarm jobs in Mississippi; 86 percent of the skilled and semiskilled jobs were filled by whites, 92 percent of the unskilled ones by Blacks. In New York and northern New Jersey, fewer than 100 of the 67,000 mortgages insured by the G.I. Bill supported home purchases by nonwhites. Discrimination continued as well in elite Northern colleges. The University of Pennsylvania, along with Columbia the least discriminatory of the Ivy League colleges, enrolled only 46 Black students in its student body of 9,000 in 1946. The traditional Black colleges did not have space or funds for an estimated 70,000 Black veterans in 1947. At the same time, white universities were doubling their enrollments and prospering with the infusion of public and private funds, and of students with their G.I. benefits.
The Federal Housing Act created a role for the federal government in subsidizing and regulating real estate finance. During the 1920s under the patronage of Hubert Hoover, first as Sec, of Commerce and then as president, a public private partnership had emerged that supported the use of zoning regulations and restrictive covenants to promote racially segregated housing development. The housing finance agencies established under the new deal turned to many of the people who had been active in this movement. They adopted regulations that established the practice of redlining. People of color were effectively excluded from government subsidized mortgages.
When the U.S. housing market collapsed in the Great Depression, Washington took control and attempted to revive it through New Deal agencies, such as the Federal Housing Administration (FHA) and Home Owners Loan Corporation.
The segregation that President Franklin D. Roosevelt’s administration inherited reflected preexisting institutions, of which restrictive racial covenants may have been the most important. They were still relatively new, however. FDR might well have used his unprecedented leverage over housing finance to undo them.
Instead, the New Deal did the opposite. The FHA promoted racial covenants and other instruments of segregation through underwriting standards discouraging home loans in areas “infiltrat[ed]” by “inharmonious racial or nationality groups.” The rationale was the government’s need to protect its investment, and those of white homeowners, against the threat African American neighbors would pose to property values.
In 1948, the Supreme Court rendered restrictive covenants unenforceable. The postwar FHA eventually abandoned “redlining,” though not before underwriting new whites-only suburbs for returning veterans, including Long Island’s iconic Levittown.