By Dedrick Asante-Muhammad / Inequality.org
Today we see Connecticut taking the next big step forward.
The idea for Baby Bonds came out of the wealth-building movement popularized by Michael Sherraden’s 1992 book Assets and the Poor: New American Welfare Policy. The book’s theme was the need to shift from simply supplementing people’s income to helping them build real assets — to help poor people get beyond day-to-day survival.
Child Savings Accounts under the Saving for Education, Entrepreneurship, and Downpayment (SEED) Initiative were one step in that direction.
By 2017, there were 54 of these programs serving 382,000 children in 32 states and Washington, D.C. At that time, the most common initial deposit for a Children’s Saving Account was $50 — not enough to make a significant difference in reducing poverty or the racial wealth divide.
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Connecticut’s Baby Bond program was inspired by a vision to address racial economic inequality first proposed in 2010 by economists William Darity and Darrick Hamilton.
Though the return of $10,000 to $24,000 for all babies born in poverty would not bridge the nearly $150,000 wealth divide between Blacks, Latinos, and whites, it would about double the median wealth of Black and Latino households in the state.
Hopefully this is the beginning of states nationwide creating similar wealth-building programs.
It could also build momentum for the national American Opportunity Accounts Act introduced by Senator Cory Booker (D-NJ) and Rep. Ayanna Pressley (D-MA). That law would provide a Baby Bond of $1,000 for every American child — with an annual addition of up to $2,000 for the lowest income Americans.
For generations, we’ve done little to bridge the racial wealth divide or get families out of multi-generational asset poverty. Connecticut’s Baby Bond program, which launches in July, and similar proposals across the country show that we may finally be willing to take the next step.
This op-ed was distributed by OtherWords.org.
Dedrick Asante-Muhammad is Chief of Membership, Policy, and Equity at the National Community Reinvestment Coalition and an Associate Fellow of the Institute for Policy Studies.