By Niels Planel | March 18, 2025
Baby Bonds are an increasingly popular bipartisan government policy in which every child born into poverty receives a publicly funded trust account at birth. This “start-up capital” allows young adults to access education, home ownership, and entrepreneurship, enabling them to build wealth and lead lives that are hopeful, fulfilling, productive, prosperous, and self-directed. Follow our Baby Blogs series to learn about the vision, politics, and people behind Baby Bonds and their transformative impact on the lives of young people, their families, communities, and our economy.
In this installment of Baby Blogs, academic, author, and entrepreneur Niels Planel outlines three groundbreaking innovations working to close the income gap and combat intergenerational poverty, including Baby Bonds.
For decades now, under the pressures of globalization and technological change, advanced economies have been confronted with many social shocks. Among them are the emergence and the persistence of the working poor’s misfortunes and long-term unemployment, job insecurity for disconnected youth, a fractured middle class, vulnerability for single mothers and their children, as well as the influx of migrants and refugees trapped into precariousness, anxiety, and depression. Meanwhile, close to 12 million Americans and Europeans live on less than 4 dollars a day. These challenges are exacerbated by inequality, in an era when wealth is increasingly accumulated through inheritance rather than entrepreneurship — a trend that will be magnified when some baby boomers leave dozens of trillions to their heirs while others, if not most, get close to nothing.
In pursuit of social innovation over the last 18 years, I have observed how people of good will are developing solutions that, if scaled, could offer a new path out of poverty among advanced economies. In particular, I witnessed three groundbreaking innovations that, combined together, could radically realign the stars for the truly disadvantaged—from cradle until retirement.
Harlem Children’s Zone
First, start with education, from birth to college. This is exactly the approach taken by Harlem Children’s Zone (HCZ). In 2023, I visited the school located in a neighborhood where the poverty rate was 28.4 percent in 2021 (compared with 18 percent on average in New York). HCZ promotes educational excellence through its tuition-free Promise Academy Charter Schools, as well as its early-childhood-education program, and offers parenting courses, after-school support, and free breakfasts. Guidance to its students is provided all the way to university, including assistance in obtaining scholarships, internships, or summer jobs. High schoolers can also prepare themselves for careers in science, technology, engineering and math (STEM), and technical arts. HCZ works to prevent delinquency, offers support with health and wellbeing issues, and even promotes healthy eating, nutrition, and physical activity to tackle the risk of obesity facing the impoverished.
Judge for yourself: In 2019, HCZ’s students outperformed more privileged white students on New York state mathematics and English tests — an impact observed early on. And recently, all of the HCZ high schools’ seniors from the first cohorts to join the program from kindergarten were accepted to at least one college. Importantly, while HCZ is mainly supported by donors and financiers, to operate this initiative, a team of 2,000 people serves 34,590 beneficiaries (about one-third students and two-thirds parents) across 97 blocks in central Harlem. Annually, HCZ spends around $3,000 per beneficiary. By comparison, each New York prison inmate costs the city over $500,000.
This, however, may not suffice to thrive. In an article for The New York Times, HCZ Chief Executive Kwame Owusu-Kesse says, “What good is financial education, if you don’t have the assets to apply said education to?” This is where the next innovation comes in.
Connecticut’s Baby Bonds
You are now 18. You have an education and want to start your life. You may want to pursue a college degree, launch your company, or even buy a property, but you originate from a poor family and cannot pay for any of this. I have argued that every youth should get a significant grant at age 18 to kickstart their life (including here and here). You may believe this is just a dream. Yet, the State of Connecticut was the first in the United States to pass legislation in 2021 effectively enacting a Baby Bonds program to endow the poorest with some capital to start adulthood.
Since July 1, 2023, Connecticut Baby Bonds eligibility is automatic if a newborn is covered by HUSKY, the state’s Medicaid program, which invests $3,200 in the Connecticut Baby Bonds Trust on behalf of each child born in poverty. This now encompasses around 15,000 babies every year. The endowments will range between $11,000 – 24,000. The initial grant will be invested in the financial markets, and the later it is claimed the more it is likely to yield. The individual can then cash their Baby Bond anytime between the ages of 18 and 30 to fund projects such as the launch of a business, the acquisition of a post-secondary degree, the purchase of a home, or to save for retirement. To claim their benefits, citizens must be Connecticut residents and pass a financial literacy test.
Meanwhile, California has also come up with a version of a youth endowment, and by mid 2024, a quarter of U.S. States were considering Baby Bonds initiatives. A similar initiative in the U.K.—the Child Trust Fund—initiated by the Labour Party in the early 2000s, started delivering its first grants in 2020. In France, some Departments have recently initiated experiments with a similar, maximum €6,000 in grants for impoverished youth to kickstart a project to free themselves from their precarious conditions.
Lessons are being learned already from those bold initiatives.
France’s “Territories with zero long-term unemployment”
Equipped with a quality education and an endowment to start your life, you nonetheless end up being unemployed, with no end in sight. Your factory was outsourced, your startup paid a deadly tribute to an economic crisis or a pandemic, or a divorce or the loss of a child has left you unable to rebound. Your skills are no longer up to date and health or disability challenges are preventing you from embracing opportunities. Meanwhile, buying and maintaining a car and filling the gas tank are increasingly expensive, public transport is limited, or the birth of a child and the absence of daycare around you is making your life impossible. You want a second chance and you believe in the dignity of work.
France is experimenting with a way of tackling long-term unemployment with Territoires zéro chômeur de longue durée (Territories with zero long-term unemployment). This national program’s concept is simple: Municipalities of up to 10,000 inhabitants identify those who are permanently out of the labor market. Their skills are cross-referenced with the town’s needs and appropriate activities — which do not compete with existing service providers — are developed. These are organized through an entreprise à but d’emploi (job-creation company), a special social enterprise which converts beneficiaries’ unemployment benefits into the minimum wage. This is not charity: Turnover generated by the social enterprise, supplementing unemployment benefits, covers the cost of the initiative.
The long-term unemployed participate fully in the development of the project in their town, along with other local actors (inhabitants, companies, elected officials, and so on). A permanent job contract is offered to individuals who, on average, had been out of work for almost five years. While many are close to retirement, on average, close to 25 percent had some sort of disability. Contradicting the stereotype of the “lazy poor,” a large majority of the eligible unemployed volunteer to work for these companies.
Across France, thousands of hopeless men and women have already found jobs in about 90 companies accredited by this pilot, which may be generalized as early as 2026.
The West can free individuals from poverty in the 21st century
The costs of these programs remain modest: HCZ stands at around $3,000 per beneficiary yearly; the State of Connecticut delivers its Baby Bonds by investing $3,200 per child at birth; and the French program taps into the unemployment budget without requiring much additional resources, relying instead on the income generated by private sector activities.From the 1820s to the 1960s, the West led the way in wiping out extreme poverty. It can now decide to invest political will to free individuals from relative poverty throughout their lives. This is within our reach in this century.
Niels Planel is a founder of a job-creation company and the author of Pour en finir avec la pauvreté dans les pays riches (L’Aube publishing, February 2025), from which this post is adapted. He has also published numerous essays and books in defense of a capital endowment for youth for nearly a decade.
If you missed previous installments of our Baby Blogs series, read them here.
To share feedback on this blog, or for questions about Baby Bonds, email David Radcliffe at [email protected].
To learn more, explore our Baby Bonds resources.