Wealth is a safety net that keeps a life from being derailed by temporary setbacks and the loss of income. Wealth also opens doors of opportunity. Unfortunately, and yet also by design, wealth is distributed very unequally in our country, especially in Connecticut.
Connecticut is one of the most unequal states in the nation with the fifth-largest wealth gap. The disparities are most apparent along racial and geographic lines, but poverty affects residents in communities across the state. As Executive Director of The Connecticut Women’s Education and Legal Fund (CWEALF), I witness how gender also plays a role. Women of all backgrounds, but especially women of color, face unique obstacles to wealth creation.
At CWEALF, we advocate for legislation that advances women’s economic security, combats discrimination, and increases gender equity in Connecticut. We also lead a Legal Education program that serves over 1,000 people per year navigating the civil legal system. The majority of our clients are women who make under $29,000 per year and have at least one dependent. Had CT Baby Bonds been available to them at birth, the entire trajectory of their lives could have changed. Our state now has an opportunity to provide that chance for the next generation.
Women experience wealth inequality disproportionately. According to an analysis conducted in 2021 by the Federal Reserve Bank of St. Louis, the median household wealth of women was 55% that of men. This lack of wealth denies many women opportunities for economic advancement and the resulting lack of financial independence can also leave them trapped in unsafe relationships or harmful home and work environments. This, in turn, diminishes opportunities for their children.
When legislators passed CT Baby Bonds legislation in 2021, they took an important step toward closing the wealth gap by confronting the problem head-on, investing in our youth and providing them with the resources they need to become financially independent and secure.
The first group of babies eligible for the program will be born this July but funding for CT Baby Bonds is still not secured. Lawmakers must prioritize including funding for CT Baby Bonds in this year’s budget so that Connecticut can begin investing on behalf of our children, especially babies born into intergenerational poverty.
CT Baby Bonds provide participants with critical financial knowledge (a financial literacy course is a prerequisite to accessing funds) and a menu of wealth-building uses. Between the ages of 18 and 30, funds can be used to help pay for college or other education, start or invest in a Connecticut business, buy a home in our state, or be deposited into a retirement account. Data shows that each of those uses has a compounding effect that increases the overall odds of a financially stable adulthood. Without access to upfront capital, those outcomes would be unattainable for many.
CT Baby Bonds is a morally important policy that makes economic sense. CT Baby Bonds will help create wealth, expanding the world of possibilities for participants, and benefitting all others through decreased reliance on safety net programming and a more robust state economy. We must make this long-term investment now as an acknowledgment that the next generation deserves better.
CT Baby Bonds will support young parents now and encourage them to raise their families here in Connecticut, by presenting them with a clear vision of what their futures can look like. In 18 years, the women CWEALF will serve will have an economic foundation on which to build opportunity and independence.
Lawmakers should seize this rare opportunity where we get to decide what kind of future we want the next generation of Connecticut residents to inherit. If we value our children, especially our children who are born into poverty, then we are required to pursue the highest and best use of our resources to ensure the promise of their futures. Our legislators have both the ability and an obligation to build a state with more opportunity, economic security, and equity. They should start by fully funding the seed investment for CT Baby Bonds in this year’s budget