Tag: Morgan Cephas

Michelle “MiMi” Gravley changed addresses frequently during her childhood in the 1990s, but rarely with a moving truck.

With her belongings in boxes and plastic bags, she would often find herself lodging at others’ houses in rooms her single mother could afford to rent. So it meant the world to Gravley, herself a single mother, last fall when she bought her first house, a rowhouse in North Philadelphia.

Gravley, 38, is no longer battling housing instability. But she has spent much of her adult life poor, including nearly two decades straight of government assistance, and wants a different fate for her three children. So she’s looking at wealth — specifically her house and her high-yield savings accounts — as something that can help her children avoid poverty as adults.

“I just want them to be OK,” Gravley told me, referring to her daughter, Buttons, 17, and her sons, Chippy, 14, and Boots, 11. “And when they have their kids, their kids is OK. And just, just breaking up generational curses.”

Gravley is one of the parents I spoke with recently in the Philadelphia area who wants to help their children build wealth to break the cycle of poverty in their families. Their goal is to bequeath something — whether it be modest savings or a piece of real estate — to help counter the pull of intergenerational poverty.

They face long odds: Only 16% of children who spend at least half their childhood poor go on to be economically successful, one study found. But there are emerging ideas and policies designed for children that some believe could improve those odds.

I’ve been a business reporter for more than a decade, with a keen interest in how wealth is built and deployed. I’ve had conversations with people from across the economic spectrum, from workers earning minimum wage to C-suite executives and billionaires. I closely follow developments about wealth and personal finance. And lately, I’ve been noticing growing momentum and innovation around wealth-building policies for children — some of which could impact the children or grandchildren of people like Gravley.

In my reporting, two relatively new wealth-building programs stand out. The first is baby bonds, which are government-run trust funds designed to benefit poor children. The other program is Trump Accounts, which are private investment accounts available to all children that allow nonprofits, philanthropic groups, and other entities to target contributions at low-income zip codes. Each has its pros and cons.

Because the creation of baby bonds and Trump Accounts are relatively recent developments (Connecticut approved the first statewide baby bond program in 2021; Trump Accounts were launched this year), there aren’t yet any long-term studies that directly assess their impact on poor populations. But advocates of early wealth accounts, as they are often called, point to supporting evidence from similar initiatives, including Education Savings Accounts. They also argue that structural changes in the economy necessitate a new kind of social contract with America’s young people.

“Younger generations face economic headwinds that older generations have not — student loans, unaffordability of housing, starting a family, probably declining Social Security benefits,” said Ray Boshara, a senior policy adviser with the Aspen Institute and Washington University in St. Louis who helped design the framing for Trump Accounts and a similar precursor plan by former Sen. Bob Casey, 401Kids.

He added: “They face a transformed economy. So part of the real purpose of Trump Accounts, I think, is … to give them start-up capital at age 18 to counter these economic headwinds.”

Gaining steam

Across the country, efforts rooted in baby bonds or Trump Accounts are either active, forthcoming, or undergoing serious consideration.

Twenty-two states and the District of Columbia have enacted or are considering some kind of legislation related to baby bonds. Only three jurisdictions have passed them (Connecticut, California, and Washington, D.C.). There are even private-sector baby bonds pilot programs underway.

The framework for baby bonds was proposed in a 2010 paper by Darrick Hamilton, founding director of the Institute of Race, Power and the Political Economy at the New School, and William Darity Jr., an economist and social scientist at Howard University and Duke University.

Connecticut launched its CT Baby Bonds program in 2023. It automatically enrolls children whose births are covered by Medicaid. The idea is straightforward enough: When participants turn 18 and complete a financial literacy course, they can claim at least a five-figure sum that can only be used for specified wealth-building activities, such as buying a home or starting a business.

Trump Accounts, also known as 530A accounts, were signed into law last year and took effect this month. Children who are enrolled in the program by their parents could potentially receive $1,000 from the U.S. government. When the enrollee turns 18, the account becomes a traditional IRA and can be used for a variety of purposes, though the tax consequences are lower if used for postsecondary education, a first home, or retirement.

Unlike baby bonds, Trump Accounts were not specifically designed for poor children. And one criticism is that wealthier families will likely contribute more than poor families, which would worsen wealth inequality. But what’s notable about them is that they allow third parties such as employers or philanthropists to contribute cash or stock directly to children in low-income neighborhoods.

For instance, the Dell family pledged funds for every American child in specific zip codes, while the Dalio family and financier Brad Gerstner pledged funds to children in Connecticut and in Indiana, respectively.

Attention in the Keystone State

It’s still early, but for now, the idea of helping poor children build a foundation of capital for the future appears to be drawing bipartisan interest. And in Pennsylvania, policymakers have started paying attention.

“Baby bonds have been a topic of a lot of focus because we all want to make sure that we are creating long-term economic mobility and really breaking the cycles of financial insecurity early,” said State Rep. Morgan Cephas, a Democrat whose district covers West Philadelphia. “So these are some models that we’ve been looking at … and are absolutely looking to do more.”

State Rep. Martina White, a Republican whose district covers Northeast Philadelphia, said Trump Accounts can be a “great tool for working families” and planned to look further into the concept of baby bonds.

Her initial preference, she said, would be to model baby bonds like a college endowment, in which the funding source for the program would come from interest or investment earnings, as opposed to directly from taxpayer dollars.

“I think that the fact that more legislative bodies and governments are looking into ways that we can provide the tools for working families to build their wealth — I think that’s phenomenal, and we should be doing more of that,” White said. “But also helping make sure that government is getting out of the way, too.”

Although baby bonds haven’t been proposed in Pennsylvania’s legislature, the state does have an early wealth initiative through its Keystone Scholars program, which puts $100 into an account that Pennsylvania students can use toward their education costs.

Pennsylvania also passed a law, effective next school year, requiring high school students to take a personal finance course.

In Philadelphia, there aren’t any initiatives specifically targeting wealth building for children. But there are programs that aim to advance overall wealth access and accumulation. One of the latest is Philly Saves, which, upon implementation, would give workers a way to save for retirement if their current jobs don’t offer retirement plans.

Last month, Sens. John Fetterman and Dave McCormick made a joint appearance in Nicetown, where they urged parents to sign up for Trump Accounts. Fetterman seemed to anticipate that some listeners might be dubious about the program and presume it is politically partisan because of its name.

“Do not fall into that political trap,” Fetterman said. “This isn’t some radical thing. … Do this for your child.”

Even if early wealth initiatives arrive soon in Pennsylvania, it may be too late to have a big impact on older children because the accounts need time to grow.

For Gravley, that means early wealth policies could impact her children but will likely yield larger sums for her future grandchildren. Gravley said she welcomes them as long as there’s some kind of financial literacy involved.

“If you give these children … $10,000 with no instructions, good luck with that,” she said. “It has to be instructions with it, but I think it could be a big stepping stone.”

The case for early wealth building

Darity, the social scientist who helped conceive the idea for baby bonds, said early wealth accounts will have different maximum outcomes based on their design, even if they each grew at 1% above the inflation rate.

For instance, the baby bonds plan he coauthored would turn $60,000 into $72,000 over 18 years at that growth rate (no annual contributions allowed). A federal baby bonds plan proposed by New Jersey Sen. Cory Booker ($1,000 deposit; maximum yearly government contributions of $2,000) would grow to about $41,000 at those terms. For Trump Accounts, a $1,000 deposit and maximum yearly private contributions of $5,000 would grow to $100,000 in 18 years.

While Trump Accounts have the highest growth potential, low-income families who don’t have thousands to contribute annually won’t have “a transformative sum of money at the end of the 18 years,” Darity said.

Because both programs are still so new, we’re decades away from seeing the results of any long-term studies on the efficacy of baby bonds or Trump Accounts once participants reach adulthood. But research into other programs suggests that external interventions in wealth building can have positive outcomes.

For instance, a long-term study of Oklahoma’s SEED OK program found that newborns who randomly received $1,000 in state funds had, by age 14, higher educational expectations, greater social-emotional development, and more family-contributed savings for college compared with those who didn’t.

A 2015 global study of roughly 10,000 households found that asset interventions — like giving impoverished families an income-producing asset, cash assistance, and skills training — had positive economic outcomes well after the program stopped.

Those findings are part of a growing body of evidence from other asset-building experiments that “already points in a consistent direction,” said William Elliott, founding director of the Center on Assets, Education, and Inclusion at the University of Michigan.

That direction, Elliott said, indicates that early wealth accounts should be a pillar of a new social contract with Americans — especially in an age when higher education debt can stall wealth creation.

“The current policy setup strongly favors those who already have wealth,” Elliott said. “And so you don’t have meritocracy happening. To get there, you can’t just give [people] a job anymore, because there’s a gap between wages and productivity. You also have to give them some wealth to make their effort and ability pay off.”

The landscape in Philadelphia

There are more than 300,000 Philadelphians living below the poverty line, according to Pew Charitable Trusts — that translates to about $33,000 annually for a family of four. While the poverty rate here has declined to 19.7% from 26% over the past decade, Philadelphia still has the second-highest poverty rate among large U.S. cities.

Other figures show the prevalence of low-income households in our city.

About 44% of full-time workers in the Philadelphia region earned enough for a living wage for their family size in 2025, down from nearly 55% in 2021. The living wage for a single adult with no children in Philadelphia is $23.34 per hour, or about $48,500 a year, according to the Living Wage Institute.

Gravley, the only worker in her household of four, makes about $40,000 annually.

Raising Pennsylvania’s minimum wage above $7.25 may help workers locally; all of the commonwealth’s neighboring states have higher wage floors. But it could also be untenable for some small businesses.

For Gravley, her home is an asset that could help her family long term, but there’s little it can do to improve her economic prospects today. Despite holding three degrees — an associate in culinary arts, an associate in early childhood education, and a bachelor’s degree in leadership and organizational change — she still regularly grapples with the challenge of making ends meet.

As a program coordinator at Strawberry Mansion High School, Gravley said her expenses are usually about $2,200 per month, which means she typically has about $100 per month for the high-yield savings accounts she manages for herself and her children.

At one point she invested in the stock market but pulled out because she didn’t understand it.

It’s been this way for more than a decade for Gravley. As a recipient of Supplemental Nutrition Assistance Program and Medicaid benefits, she is making enough to cover needs, but financial security and financial growth for her family appear largely out of reach.

“[Welfare] helps, but it’s nothing programmed to get me out of the food stamp thing. Because you tell me to get the degrees and get the better job, and I’m trying to do that, or I did that, and it’s still not enough money. So where is the money?”

Jared Council is a business journalist based in Philadelphia. He was part of a team at the Wall Street Journal recognized as a finalist for the 2022 Pulitzer Prize in explanatory reporting for a series about the 1921 Tulsa Massacre. He is currently a program manager at Every Voice, Every Vote, a civic information and engagement program at the Lenfest Institute for Journalism.

The Inquirer is one of two dozen news organizations powering the Philadelphia Journalism Collaborative. Follow us at @PHLJournoCollab. This article is part of a national initiative exploring how geography, policy, and local conditions influence access to opportunity. Find more stories at economicopportunitylab.com.