Baby Bonds: A Universal Path to Ensure the Next Generation Has the Capital to Thrive

Bond certificate

Authors: Christa Cassidy, Rachel Heydemann, Anne Price, Nathaniel Unah and William Darity Jr.

Introduction: No ethos is more foundational to national reverence than “the American dream.” The deeply embedded “pick yourself up by your own bootstraps” narrative has fundamentally shaped perception, policy, and politics since the founding of the nation. This fabricated tale fuels the myth of meritocracy, suggesting that rewards directly follow achievement: individuals succeed through grit, perseverance and self-determination, or fail by not capitalizing on opportunities available to everyone equally. Thus, one of the most dangerous outcomes of the overemphasis on the individual is that it enables countless interlocking systems of inequality to grow and persist, obfuscating the deeper truth that opportunity is and has been hoarded by a select few for generations, and that it has been systematically constrained politically, legally, culturally, and socially based on race, gender, physical ability, class, and more. This individualistic myth is finally being interrogated, however, as the weakening societal fabric of our nation and its accompanied symptoms of breakdown signal cause for alarm. The burden on the individual to “make it” in America is increasingly strained in the face of America’s ascension to the most unequal developed nation in the world (Collins and Hoxie, 2018). The issues of today have brought sharp focus to the fact that success largely hinges on whether your family is able to transmit wealth and privilege across generations, not on false notions of individual “merit,” which have trapped a growing proportion of our population in debt and locked them out of opportunities for financial stability, let alone upward mobility. As the billionaire class skyrockets toward unfathomable levels of wealth, the rest of the population’s wealth is plummeting. For example, median household wealth has stagnated at just over $100,000, while the richest person in the United States (and the world), Jeff Bezos, has accumulated a fortune nearly 2 million times that amount (Collins and Hoxie, 2018).

Key Findings

  • If current trends continue, by 2020 the median white household will own 86 times more wealth than the median black household.
  • The Baby Bonds policy (as outlined by Cory Booker’s Opportunity Accounts program) would provide every child in America an account seeded with $1,000 to $3,000, an amount allocated in inverse proportions to that child’s family’s income. Each subsequent year, children would be eligible for additional payments based on family income until at age 18, when they would be able to access these accounts for specified uses including education, homeownership, and retirement.
  • The average Baby Bond account for black Americans is estimated to sum to roughly $29,000 at age 18; the equivalent white Baby Bond account would contain about $15,800. Overall, the proposal would cost approximately $82 billion annually, or less than 10 percent of the annual expenditure on social security.
  • Currently, black America has nine cents to every dollar of wealth that white America possesses: Booker’s proposal would increase that proportion to twenty-three cents on the dollar. (At the median, Black Americans would rise from possessing ten percent of the wealth of white Americans to having sixty percent.) Greater remedies would likely require a multi-pronged approach to addressing economic mobility for these long-marginalized communities.
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