Connecticut has one of the widest wealth gaps in the country, ranking fifth, and the wealth gap has continued to grow, not shrink, despite national attention over decades.
To address the state’s widening inequality, Gov. Ned Lamont, State Treasurer Erich Russell, and legislators successfully secured funding for Connecticut Baby Bonds. The concept of baby bonds has been widely studied and supported by scholars and economists as an effective tool to fight generational poverty and address the racial wealth gap.
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We are excited to see this landmark legislation, originally put forward by economists Darrick Hamilton and William Darity, that shows Connecticut’s leadership in critical efforts toward more equitable and just economic opportunity in the state. With the championing of the governor, state treasurer, and legislators, Connecticut has become the first state to pass and fund baby bonds, paving the way for at least nine other states considering the transformative adoption of Baby Bonds including Massachusetts, California, Washington D.C., Washington, Nevada, Wisconsin, North Carolina, New Jersey, Georgia, and Maryland to systemically address wealth inequality.
Researchers developing the concept wanted to understand the rootedness of wealth inequality in our racist history that put up structural and legal barriers that prohibited Black, Hispanic, Indigenous people and people of color from accumulating and keeping wealth. The Baby Bonds concept was developed to address the inequality children face from birth.
Recent national research by Columbia University’s Naomi Zewde found that “White young people were nearly 16 times richer than their black counterparts,” and that had a Baby Bonds policy been implemented at their birth the wealth gap would have been narrowed, significantly to a gap of just 1.4.
Providing an 18-year runway from birth for wealth to accumulate allows Connecticut to continue to creatively invest in how the young adults receiving this asset can leverage their investment by providing better and more affordable housing, entrepreneurship opportunities and support, as well as education and workforce development. Connecticut’s Baby Bonds will be an initial investment at birth of $3,200 to an estimated 15,000 children born each year in Connecticut to a family covered by the HUSKY, the state’s (Medicaid and Children’s Health Insurance Program (SCHIP) health insurance program.
Addressing the racial wealth gap at the root through systems and policy change is a commitment to racial equity and shared opportunity. It is a commitment to strengthening the economy of the state.
Leah Mayor is Senior Director of the Connecticut and Greater New York Asset Funders Network.