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Joint Economic Committee Releases New Report on Economic Benefits of Baby Bonds

The U.S. Congress Joint Economic Committee (JEC)—led by Chairman Don Beyer (D-VA)—released a new report detailing how automatic child trust accounts, known as “Baby Bonds,” would improve economic opportunity and social mobility for children and families and strengthen the U.S. economy.

Baby Bonds would provide children at birth their own bank account with a specified amount of money. Each year, eligible children would also receive additional funding to help augment their savings. When a child reaches adulthood, these funds could be used to pay for further education, purchasing a home or starting a business—all of which facilitate greater access to wealth building.

More than 7 million families in the U.S. do not have access to a bank account, which leaves households vulnerable to predatory lenders and financial instability. Baby Bonds would also help children and families increase lifetime savings by facilitating connections to banks. This connection is particularly important as research has found that even seemingly small amounts of money in accounts dedicated for children can have an outsized impact on future outcomes. For example, one study found that having a school savings account containing less than $500 tripled the likelihood of attending college and increased the likelihood of graduating by 4.5 times over those that did not have a college savings account.  

With the release of the report, Chairman Beyer, released the following statement:

“The transition to adulthood is a challenging time for everyone. Ensuring that children can enter this defining stage of life with a nest egg would open up a world of possibilities and provide new pathways to building wealth,” said JEC Chairman Beyer. “And the positive effects of Baby Bonds are not limited to only the children and families who directly benefit from these accounts: When young adults can pursue education, start businesses and buy homes, it creates economy-wide benefits.”

“Baby Bonds are also powerful tools for reducing economic inequities by providing disadvantaged children with seed money to build a more promising future for themselves and future generations. These kinds of investments would be an important step toward promoting an economy that works for all—not just the wealthiest few.”

Dr. Darrick Hamilton, University Professor and Founding Director of the Institute on Race, Power and Political Economy at The New School, released the following statement:

“We often think of wealth as an outcome, but it’s true essence is functional. What it can do for you…wealth is as much the beginning as it is the end of an economically secure life. Baby Bonds guarantees a birthright to capital, a nest egg so to speak, for every child, to have a pathway to the prosperity that wealth provides. With Baby Bonds the privilege of wealth would no longer be an exclusive domain of the wealthy. 

“We applaud Chair Beyer and JEC’s leadership on building momentum to bring this to the American people.”

The JEC held a hearing this Congress to examine the U.S. racial wealth gap. Dr. Hamilton testified about the economic benefits of Baby Bonds as “a pathway to economic security, independent of the family financial position” in which a child is born. In the United States, where the typical white family has nearly eight times the wealth of the typical Black family, wealth serves as an enabler of opportunity. As a result, racial disparities in education, income, housing, retirement, and other outcomes can be traced, in part, to the persistence of the racial wealth gap.