For many young Black Americans, affording a home or college can feel like an impossible dream. But in the US capital, local officials think they may have an answer: “baby bonds”.
The programme – which will deposit up to $1,000 per year into eligible children’s bank accounts – is among a number of baby bond and savings schemes aiming to ensure poorer children start out their adult lives with a nest egg.
Backers say they can help tackle growing racial divides in wealth – defined as the total net value of a household’s assets including savings and property – which in turn fuel wider economic inequality.
“Wealth really translates into opportunity,” said Signe-Mary McKernan, a vice president at the Urban Institute think-tank that focuses on inclusive economic growth and has carried out research on baby bonds.
“Wealth is insurance against tough times – tuition to get a better education or a better job, capital for a small business or to buy a home.”
Although baby bonds and similar schemes are typically open to anyone who falls below an income threshold, they help to combat racial economic inequalities as Black and other racial minority families are disproportionately likely to be poor.
In Washington, the typical white family has 81 times more wealth than a Black…