Net Worth at Birth (Revised)

Achieving security in today’s economy requires not just a job and growing income, but increasingly on the ability to accumulate a wide range of assets. Yet many Americans have low asset holdings and many children are disadvantaged from the start of their lives relative to those children born into affluence. Regrettably, the asset-building system already in place that facilitates wealth creation disproportionately benefits those households with higher incomes, better job benefits, and larger income tax liabilities. Lower-income families are offered fewer—and less attractive—ways to build wealth. Enabling all Americans the opportunity to take full advantage of our prosperous society will require the development of more inclusive asset building policies.

One promising idea to expand opportunity and broaden asset ownership is to endow every newborn with a Children’s Savings Account (CSA).[1] This “accounts-at-birth” approach represents a social investment in every child at the same time as it gives the child a stake in broader society. Each child will grow up knowing they will have a modest pool of resources at their disposal to help them succeed. For low-income Americans, CSAs will provide a means to develop savings and assets—an opportunity not offered by existing public policy. Over time, these accounts could evolve into a universal system through which all Americans would meet their lifelong asset needs, helping them accumulate the resources necessary to make productive investments. Beyond the individual benefits, investing in children can have large multiplier effects, especially when it is linked to increasing social engagement and expanding opportunity. In the long run, building wealth through CSAs and other means has the potential to help break the vicious cycle of intergenerational poverty.