Households with zero or negative net worth have no financial cushion to weather a crisis. While 10.3 percent of white households in Connecticut had zero or negative net worth in 2016 (the most recent year data are available), 34.6 percent of Black households and 51.4 percent of Latino/a/x households had zero or negative net worth. Said another way, the zero net worth rate for Black and Latino/a/x households in Connecticut was 3.4 times and 5 times greater, respectively, than that for white households.

There is a $15 trillion wealth gap between Black and white households in the country. The economic injustice of the U.S. and Connecticut’s growing racial income and racial wealth gaps can be traced to historic systemic racism as well as contributing factors, such as the lack of consistent access to banking services in Black and brown communities, that exacerbate these gaps. However, the Legislature took a giant step forward in 2021 when it chose to pass (and the Governor enacted) the CT Baby Bond Trust (PA 21-111).

CT Baby Bonds establishes a trust for the benefit of children whose births are covered by Connecticut’s Medicaid program. For each eligible baby, the state would deposit $3,200, which would grow to an estimated $11,000. Once the child turns 18 years, they could then use that money for several purposes center financial security, including asset ownership. These baby trusts would invest in the estimated 16,000 babies born into poverty each year in Connecticut—40 percent of births in the state, according to the State Treasurer’s office.

This watershed moment made Connecticut the first state in the country to develop a wealth equity policy that has the potential to break generational cycles of poverty as well as promotes long-term economic growth in our state.