What Does an Inclusive Economy Look Like?

Inclusive policies—including baby bonds and a guaranteed income—can restore the economic rights of people regardless of race, class, gender or other factors.

New York City in the 1980s looked one way if you grew up, as I did, in the mostly Black neighborhood of Bedford Stuyvesant, Brooklyn. And it looked quite different if you attended—as I also did—Brooklyn Friends, an elite Quaker private school.

My early experiences gave me an up-close glimpse of both realities. Surprisingly, despite their differences, they had a lot in common. I was surrounded in both places by loving adults who wanted the best for the young ones under their care. But economic circumstances, not personal attributes, separated them. I have spent most of my career learning what creates those limits and advancing ideas to overcome them.

Economic Rights are Human Rights

My work builds on a core moral belief that as human beings we are all entitled to basic economic rights. A just society, includes everyone, regardless of their background. And history teaches us that inclusion is possible only when we pursue an intentionally anti-racist, anti-sexist agenda. That agenda guides my life’s work as an economist and scholar.

I launched the Institute on Race, Power and Political Economy (the Institute) at the New School in New York City to take on the structural inequities that are deliberately built into numerous systems in this country by people in power. Whether it is higher minimum balance banking requirements in communities of color, tax credits that favor White populations, or inequitable access to the capital needed to launch a business, countless public sector and private sector policies are exclusionary by design. Yet many scholars and policymakers ignore these unfair financial structures. Instead, they base their analyses on deficit-based thinking—for example that poor people would have more money if they were financially literate.

Our research focuses instead on the enduring consequences of historical and systemic injustice and inherited privilege. The findings help us understand social stratification—the hierarchies organized by race, ethnicity, gender, class, and education, among other categories. These hierarchies determine who has access to the resources, influence, and opportunities and produce income and asset disparities. The result? Widening inequity, environmental vulnerability, and political discord. That is a clear signal that our current economic, political, and social structures aren’t working—not the way they should, nor the way they could.

At the Institute, we are advancing an affirmative vision: one where everyone has the resources they need to be healthy and thrive. We believe that economic rights—including the right to a job, housing, education, and health care—must be available to all. Our goal is an economy that promotes human flourishing, innovation, and self-determination in peaceful, sustainable, and equitable environments.

How do we make all of that happen?

Shifting the Paradigm

The Institute is in the business of shifting paradigms—valuing people over markets, rejecting narratives of blame en masse, and pushing for guaranteed access to basic resources. In collaboration with action-oriented partners, we work on multiple fronts to catalyze transformative investments that drive economic inclusion, social equity, and civic engagement.

We have been a leading architect of “baby bonds” as an economic policy tool. The concept is simple. The government seeds and manages a trust account for every child born into poverty, allowing the account to grow over time. At age 18, the accumulated funds become available to pay for education, put a down payment on a home, start a business, or fund retirement. By providing the kind of “start-up capital” that is routinely available in families with more resources, baby bonds help disrupt the cycle of inherited wealth that contributes to the vast asset gap between Black and White Americans.

Baby bonds are gaining momentum. California, Connecticut, Rhode Island and Washington, DC have already passed and funded baby bond initiatives and some 20 other states are seriously considering doing so. Programs can be structured in many different ways, with the government making either a sizable one-time investment or additional contributions every year.

While there is no one-size-fits-all model, it is important to call out a recent idea passed into law—a classic example of a bad idea co-opting a good one. So-called “Trump Accounts,” a one-time federal contribution of $1,000 per child under age eight, won’t close the racial wealth gap or advance economic justice because they aren’t intended to. Indeed, certain features could deepen disparities by allowing anyone, regardless of their wealth, to make tax-free annual contributions. That’s the danger. When powerful people design policies, they often deliberately shape them to reinforce their privilege. They are no substitute for intentional measures that actually transform systems and economic support for families.

Another priority policy for the Institute is some form of guaranteed income. During the COVID pandemic, the swift disbursement of cash payments to help with essential expenses like rent, food and healthcare had a dramatic effect on child poverty rates and most likely staved off a recession. Building on that success, we understand that monthly federal payments, funded through a progressive tax code, would lift every American household above the poverty line. Dozens of state and local governments are already testing guaranteed income models and recent evaluations show striking success: these programs reduce economic insecurity, improve educational outcomes, and enhance wellbeing.

With such positive findings, it would seem that cash transfer programs should enjoy broad support. But building a durable national policy means confronting deeply embedded narratives about race, poverty, and who is “deserving,” and there is significant resistance to that. That’s why our job is not only to formulate and test promising approaches, but also to communicate their benefits effectively to key stakeholders so they can be scaled.

The Institute is engaged in many other research and advocacy projects aimed at changing systems to secure economic rights for all. Our Color of Wealth series looks at history, policy, market conditions, race, ethnicity, and immigration patterns in specific metropolitan regions to measure their impact on wealth inequities. Our Budget Equity Project tracks federal recovery funds from the American Rescue Plan Act to assess whether local governments are using them to advance equity. And my recent appointment as chief economist of the AFL-CIO gives us another platform to promote equitable distribution of economic power to working people and their families.

All of this attempts to answer a question society doesn’t ask often enough: What is the purpose of an economy?

We believe its purpose is to allow everyone to share in collective prosperity, not to concentrate wealth among a privileged few. As a strategic partner of RWJF’s Healthy Children and Families portfolio, which is working to advance economic inclusion, we want to remove the barriers that hold people back. Designing a political economy that lifts up all human beings across generations is a moral obligation that each one of us can help fulfill.

Darrick Hamilton in his Own Words

About the Author

Darrick Hamilton is the chief economist for the AFL-CIO, and he is a university professor and founding director for the Institute on Race, Power and Political Economy at The New School.