Baby-bonds: Closing the Racial Wealth Gap

Many of the wealth and racial inequalities that Clarifi is committed to working against through our various programs, such as our Family Self Sufficiency program and the Restore, Repair, Renew program, could potentially be solved by a relatively inexpensive government policy. “What policy could do that?” you may be thinking, the answer is a baby-bond program. Now you may be thinking, “what are baby bonds?” or “why would we need a policy like that?” the answer lies within the wealth gaps that exist within this country. According to an article from The Atlantic, “the average white family is 10 times wealthier than he average black family. Black families with kids have a single penny in wealth for every dollar that white families with kids have.” This wealth gap is one that has been created over decades through various social inequities that have been carried out by state, local, and federal governments, such as the disastrous red lining policies of the 1940s that are still impacting hundreds of thousands of Americans today, and it is one that cannot be closed without some kind of policy or intervention from those governmental bodies. This is where baby-bonds come in. Baby-bonds are a government policy that would provide each child born within the United States with a publicly funded trust account that would scale depending on the wealth of the family to which the child was born. Estimates show that baby-bonds could reduce the wealth gap between young white Americans and young black Americans drastically. Currently, the average median net wealth among young white Americans stands at around $46,000, while the average median net wealth of young black Americans stands around $2,900, meaning that young white Americans are about 16 times as wealthy as their black peers. Baby-bonds have the potential to reduce this wealth gap to a 40% difference, rather than the 1600% difference in wealth that exists now. Some politicians, such as New Jersey Senator Cory Booker, are pushing for baby-bonds to be implemented in order to begin combating the racial wealth gap. In Booker’s proposal, every child born in the United States would be provided with a $1,000 savings account which would get further deposits up to $2,000  from the government each year depending on family income. These bonds would not be accessible until the individual reaches the age of 18, and the uses of the money would be limited to things like paying for education, housing, or retirement savings. Baby-bonds have the potential to considerably narrow the wealth inequalities that exist by race in the United States, do you think they could work?