By Mark Seavy
If there is a path to narrowing the wealth gap in Connecticut and addressing economic inequality it might as well start at birth.
The so-called Baby Bonds bill, introduced by State Treasurer Shawn Wooden earlier this year, would set up a trust controlled by the Office of State Treasurer and establish a $5,000 savings account for children born into families enrolled in the state’s HUSKY Medicaid program. When the child turns 18, the money is unfrozen and can only be used for education, housing, retirement security or investment purposes.
Assuming a 6.9% return, that savings account could grow to more than $16,000 by the time each youth is eligible to collect the funds and provide benefits to individuals that might not otherwise have access to them. It’s not a panacea for addressing the long-standing economic inequality in Connecticut. But it’s a start.
The proposed House legislation being sponsored by Geraldo Reyes, D-Waterbury; Anthony Nolan, D-New London; and Travis Simms, D-Norwalk, is not without precedent. U.S. Sen. Cory Booker, D-N.J., made a $1,000 savings account for every child a core policy of his 2020 presidential campaign, a promise similar to a bill he initially proposed in 2017. Earlier this year, Booker reintroduced a bill to promote the legislation on the federal level. Outside the U.S., Hungary and the United Kingdom have similar programs.
The Connecticut bill potentially helps bridge the economic gap existing between many Connecticut communities by creating a stronger and more resilient state and eliminating disparities that hurt the economy.
The need is there. As recently as 2018, 38% of Connecticut families could not afford basic needs and 11% lived below the federal poverty line. Black and brown families represent a disproportionate number of these families. But of the nearly one million Connecticut residents enrolled in the HUSKY program in 2020, 62% were white and live in every corner of the state.
Generational poverty is tied to an inability to access wealth and the ways build it and pass it on to the next generation. As a result, white households are twice as likely as Black households to receive an inheritance. And when black families to receive an inheritance, it is typically five times smaller than their white counterparts.
The Baby Bond bill is a step toward closing the wealth gap and ending the cycle of poverty. It allows individuals to accumulate wealth over the long term which in turn benefits families, their communities and the state economy.
The bill may not solve all of society’s problems and eradicate poverty overnight. But a 2019 Columbia University study showed that on a federal level, legislation could help in eliminating the racial wealth gap among young adults. And the New York Times reported that creating these types of savings accounts for newborns can change the behavior of account holders.
That change is a potential start for closing the wealth gap and one that is a long time in coming.
Mark Seavy is a 22-year resident of Ridgefield and serves on the Ridgefield Zoning Board of Appeals, to which he was elected to a 5-year term in 2017. The Ridgefield Democratic Town Committee provides this column.