Building Community Wealth: How Can We Meet the Moment

Conversation Overview

• Host Margo Brandenburg (Ford Foundation) frames the discussion around community wealth building, noting the wealth gap between America's richest and poorest families doubled between 1989 and 2016 and has exacerbated during the K-shaped pandemic recovery.
• Participants Natalie Foster (Economic Security Project) and Treasurer Sean Wooden (Connecticut) analyze wealth inequality through specific policy interventions, investment strategies, and labor market shifts.

The Three-Legged Stool Framework (Natalie Foster)

• Foster defines community wealth as a three-legged stool consisting of:
  • Wages and Job Quality: Noting that while wages are rising due to a tight labor market, a single job is often insufficient without high quality.
  • Wealth: Highlighting the 10:1 median wealth gap between white and Black households as a critical policy failure.
  • Non-Labor Income: Identifying tax credits and direct cash transfers as essential buffers against labor market volatility.
• Foster cites the Child Tax Credit (via the American Rescue Plan) as a successful example of non-labor income, which:
  • Provided no-strings-attached monthly checks to nearly every American parent for six months.
  • Was used by families for essential needs such as car repairs, medical debt repayment, food security, and extracurricular expenses.
  • Cut child poverty by 40% while in effect.
• Foster warns that congressional gridlock has caused the Child Tax Credit to expire, removing a key mechanism for poverty reduction.

Connecticut's Baby Bonds Initiative (Sean Wooden)

• Connecticut passed the "Baby Bonds" program, the first in the nation, signed into law in July 2023.
  • Eligibility: Automatically established for every baby born to a mother enrolled in the state Medicaid program.
  • Structure: A trust fund is created and invested for 18 to 30 years.
  • Access Requirements: Beneficiaries must be Connecticut residents and complete a financial education course before claiming funds at ages 18–30.
  • Permitted Uses: Funds can be used for higher education, home ownership, business investment/startup, or retirement security.
• Wooden notes the program is inspired by federal proposals from Senators Cory Booker and Representative Ayanna Pressley, which have not yet moved at the federal level.
• Wooden advocates for federal expansion, having lobbied the Biden White House, based on a 2019 Columbia University study identifying the framework as a powerful tool for closing the racial wealth gap.

Public Sector Innovations in Guaranteed Income

• State and local governments are increasingly using tax credits and public funds to deliver guaranteed income:
  • Earned Income Tax Credit (EITC): Nearly 30 states and DC have expanded eligibility and amounts for this 40-year bipartisan credit.
  • State Child Tax Credits: California Governor Gavin Newsom announced continued expansion of the young child tax credit.
  • Mayor-Led Demonstrations: Approximately 60 mayors across the US are now testing guaranteed income programs, moving from private funding (starting with Stockton, CA) to public dollars.
• Stockton, CA results indicate that guaranteed income:
  • Significantly reduced participant stress levels.
  • Doubled the rate of participants finding meaningful, higher-paying employment compared to control groups.

Social Bonds and ESG Investment Trends

• Connecticut has become a leader in Social (S) Bonds, recently issuing $300 million for public good categories including education and new school construction in underserved areas.
• Wooden predicts pricing benefits for Social and Green bonds as the market matures, similar to the cost reduction seen in renewable energy investments.
  • Initial skepticism regarding pricing premiums has diminished as ESG-focused institutional and retail investor demand increases.
• Rating agencies (e.g., Moody's) now evaluate "Social" factors, creating a social score that influences state ratings and validates ESG as a component of value preservation and systemic risk reduction.
• The distinction between single materiality (investor focus) and double materiality (stakeholder focus) is converging; market viability increasingly depends on societal and environmental stability.

Labor Market Dynamics and Anti-Monopoly Concerns

• Foster characterizes the "Great Resignation" as a "Great Shuffling," where workers leave precarious, low-wage roles for better-paying positions.
  • The hospitality sector saw a 10% wage increase as employers competed for labor.
  • Increased cash reserves allow workers to take risks on jobs with better schedules and flexibility.
• Foster highlights corporate concentration ("Amazonification") as a barrier to wealth building, costing families thousands of dollars annually in inflated prices.
  • She supports the current administration's anti-monopoly appointees to restore market competition and support small business growth.

Leadership and Future Outlook

• Sean Wooden has assumed the presidency of the National Association of State Treasurers (NAST), emphasizing the value of bipartisan peer collaboration.
  • Key priorities include sharing best practices on liquidity crises and addressing the "silver tsunami" (aging workforce and pension funding challenges) in the public sector.
• Wooden cites the need for broader national innovation to address the racial wealth gap, leveraging Connecticut's model to push for federal action.