Closing the Inequality Divide – A GPI Analysis

In 2009, Maryland Governor Martin O’Malley adopted the Genuine Progress Indicator (GPI) as a new measure of economic well being in the state. CSE and Refining Progress pioneered the GPI’s latest iteration, which Maryland now uses. Together with Institute for Policy Studies, CSE used Maryland’s GPI to address the issue of inequality. In Maryland, as elsewhere, inequality of wealth, income, and opportunity has been steadily increasing for decades and thwarting genuine economic progress in many ways. Our analysis asked the question: “If Maryland returned to a level of income equity achieved in 1968 – its historical best – how would that affect the GPI?” Our analysis found that a return to a level of income equity achieved in the late 1960s would have the effect of doubling the average household income of the lowest quintile from $15,000 to nearly $30,000 and generating nearly $49 billion in economic benefits to the state each year in terms of increases in the value of personal consumption expenditures. We also found that additional spending by low and middle-income families could add another $10 billion. Finally, depending on how many household livelihoods improve, another $7 billion in benefits could be generated through lowered costs of crime, family changes, underemployment, and vehicle accidents and increased benefits from consumer durables and higher education.