Baby bonds could help close the racial wealth gap

Baby bonds could help close the racial wealth gap

Legislation that asks the Department of Children and Family Services to study the potential effects of a publicly guaranteed trust fund created at a child’s birth advanced out of the state House of Representatives on Wednesday with bipartisan support. House Concurrent Resolution 94 by Rep. Royce Duplessis focuses on a policy tool that has gained national popularity in recent years: baby bonds. LBP’s Jackson Voss, in a new blog, explains how this program would work:

Each time an eligible baby is born, Louisiana would create a “baby bond” account for them and make an initial contribution. From that point, the design of the program can vary. Some proposals would have the state making additional annual contributions, while others just vary the size of the initial investment based on family income at the time of birth. In either case, the state would invest the baby bond funds in low-risk instruments, similar to public employee pension funds. The bonds would mature when a child reaches adulthood, and the money could be used to pay for higher education, home ownership, or to start a business. 

While baby bonds would benefit anyone who qualifies, they would have a particularly positive impact in reducing racial wealth gaps

Economic researchers at the Urban Institute have found that the median American white family has 10 times more wealth than the median Black family, and eight times the wealth of the median Latino family. Baby bonds would help to close these gaps by providing families with no wealth, and often very low incomes that do not allow for saving, with direct financial support to their children when they need it most: when they reach young adulthood. Depending on how the baby bond program is designed, the payouts could be quite substantial

Delaware passes paid family and medical leave
America remains the world’s only major industrialized country where working parents are not guaranteed paid leave in connection with the birth or adoption of a child or a major medical emergency. Fewer than a quarter of private sector workers in the United States have access to paid family and medical leave through their employer. The number is much lower for people in low-wage jobs, forcing those who can least afford it to choose between economic security and their own health or the health of those they love. But 10 states and the District of Columbia have implemented their own laws guaranteeing paid family and medical leave. On July 1, Delaware will become the 11th state to offer this critical support for working people. Delaware Public Media’s Rachel Sawicki reports

In front of a cheering crowd, Gov. John Carney signed a paid leave bill into law, providing 12 weeks of paid family and medical leave to every Delawarean, in nearly every line of work. … Seasonal businesses and businesses with 10 or fewer employees are not covered under the legislation. … The law also creates a Family and Medical Leave Insurance Account Fund, which will be kickstarted with nearly $18 million in one-time funding in the state’s 2023 budget. Ongoing funding will come from a payroll tax split 50-50 between employers and employees.

Invest in child-care workforce
The people who care for our youngest learners – children from birth through age 3, the time when most brain development occurs – are typically paid far below what other teachers make and are offered few opportunities for career advancement. But raising wages and benefits is hard without government funding, since the cost otherwise would be passed on to families that already are struggling to afford quality child care. A new study by Jessica Milli of the Center for Law and Social Policy (CLASP) says the best path forward is for Congress to make meaningful new investments in the child care workforce. 

Increasing compensation is key to attracting and retaining qualified educators and alleviating the current shortage of affordable and reliable child care options for families. Significant, long-term investments in child care and preschool through the Congressional budget reconciliation process would provide funding so that all families can access affordable child care, so that we can develop high-quality child care infrastructure, and so that workers can be paid higher wages without passing on the cost to families.  

Corporal punishment endures
Staff of public schools in Louisiana will continue to be allowed to beat children after an attempt to outlaw the practice fell one vote short of passing the state House of Representatives. Rep. Stephanie Hilferty’s House Bill 649 would have banned corporal punishment such as spanking and paddling, which is still allowed in at least 19 of Louisiana’s 69 school districts despite being banned in major cities. The Advocate’s Will Sentell reports:

State Rep. Stephanie Hilferty, R-Metairie, sponsor of the plan, noted that the state bans juveniles in detention centers from being struck as well as inmates in state prisons. However, state law allows officials in local school districts to do so and the practice remains alive in some rural districts. … A total of 31 states ban corporal punishment in public schools, according to the National Conference of State Legislatures. Backers of the ban have said striking children causes emotional and other problems.

Number of the Day
– Amount that a Louisianan would collect today from a $3,500 “baby bond” created in 2004 if it had been invested in a way that matched the performance of the S&P 500 Index over the last 18 years. (Source: LBP)