Baby bonds program could reduce racial wealth gap in Atlanta, study says
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A new study says that state-funded savings accounts called baby bonds could give young Atlantans born into poverty a head start in adulthood to buy a home, pay for college or start a business.
Why it matters: Advocates and experts focused on reducing the wealth gap want Georgia to join other states and cities and roll out the programs that deposit money for newborns in individual trust accounts.
Zoom in: According to the Urban Institute's study, a baby bonds program would increase the median financial wealth for Hispanic families by roughly 40%, and 20% for Black families.
- The savings, which recipients withdraw when they reach adulthood, would also increase equity for homeowners in Atlanta, especially Black women.
- Recipients would take on less student debt and retire with more savings, according to the think tank.
How it works: The study's model uses a federal baby bond program proposed by U.S. Sen. Cory Booker (D-NJ) and U.S. Rep. Ayanna Pressley (D-Mass.) that would create a $1,000 trust account for every newborn in the country.
Context: The Georgia Resilience and Opportunity (GRO) Fund manages Atlanta's guaranteed-income pilot program and plans to launch a six-year, statewide baby bonds program using private funding in 2025.
- If fully funded, the nonprofit says, the six-year program would award $40,000 in "seed capital" to young adults to spend on "wealth building strategies."
- Those include buying a house, starting a small business or opening a retirement account.
What they're saying: Atlanta focus group participants told the Urban Institute's authors that they would use a $50,000 baby bond to buy a home.
Yes, but: Baby bonds are a tool, not a silver bullet. Advocates say the policy should complement programs that help people buy a home or pursue a diploma or certificate.
Reality check: Georgia is a Republican-led state where progressive policies face uphill battles.
- This past year, dual proposals by Georgia Democratic lawmakers to study a potential baby bond program in the state failed to advance.
What we're watching: GRO plans to return to the General Assembly to sway lawmakers on the program's benefits and build support.