Racial income disparities are a significant driver of the wealth divide. In Atlanta, the median household income is $28,105 for a Black family and $83,722 for a white family.

Income generates less wealth for Black individuals because they are paid less and are more likely to work in jobs that do not offer benefits that can help buffer against financial shocks (like health insurance) or generate wealth (like retirement plans).

The earnings gap has a significant impact on the racial wealth divide for Black women. It drives two-thirds of the wealth divide for Black women, who are paid 35% less and hold 90% less wealth than white men.

Higher education can’t close the income divide or wealth divide. White households headed by someone with a high school degree make almost as much as Black households headed by someone with a college degree and college-educated Black people have less wealth than white adults with no high school diploma.

At scale, our guaranteed income program can significantly reduce racial income disparities by providing an income floor - and in doing so - significantly narrow the wealth divide.

Wealth is transferable across generations, helping young people invest in or buy assets at key points in their lives.

When an individual’s parents pay for their college, buy them a car, or help them put a downpayment on their first house - these are all large generational transfers of wealth. Large gifts and inheritance can explain 12% of the white-Black wealth divide.

Baby bonds level his playing field by making trust funds universal. Every child receives significant capital when they become adults - which experts say could reduce the total racial wealth divide by 25% and the divide for young people by as much as 50%.

Homeownership is one of the most common ways through which people build wealth, primarily through home equity. Many homeowners benefit from increasing home prices, which adds to the equity in their homes, and can borrow against the equity in their homes to build more wealth.

Due to a history of discrimination, building wealth through homeownership is harder for Black families. In Atlanta, Black households make up 44.3% of the city’s total but own 17.4% of the housing wealth. Their homeownership rate is 12.2% lower than the city average, and their average home value of $260,582 is $223,665 lower than the city average.

Baby Bonds can make the difference. A $40,000 Baby Bond is nearly enough to put a 10% down payment on the average home in Metro Atlanta. And a Baby Bond can reduce debt-to-income ratio, a common reason for home loan denials to Black borrowers.

Differences in capital gains - profits generated from selling a capital asset like stocks or mutual funds - are a significant driver of the wealth divide.

White households hold three times as much stock equity as Black households, who hold most of their wealth in housing equity. However, stock equity has appreciated five times as much as housing wealth.

Further, capital gains, like other forms of income derived from wealth, are taxed at a far lower rate than income derived from work.

Baby Bonds provides a significant sum that can be used to seed a retirement account, enabling more families to benefit from capital gains.

Even if wealth accumulation rates had been equal for Black and white people since the 1860s, white people would still have 3x as much wealth as Black people today.

This is because the vast majority of Black folks were enslaved for centuries prior to 1860 and thus had very little wealth post emancipation.