The Data is Right: Americans are Prospering Economically
The recent publication by Eugene Ludwig on Politico challenges the prevailing notion of a strong US economy in 2024. Despite presenting alternative data to support his argument, a closer look reveals that the economic situation may not be as dire as he suggests.
Labor Market Analysis
Ludwig introduces a novel measure of “true” unemployment, indicating that a significant portion of the workforce is either unemployed, underemployed, or living in poverty. However, this metric conflates poverty and employment, leading to a distorted representation of the labor market. Even by Ludwig’s measure, the data does not signal economic decline, with historical trends showing improvement rather than distress.
Income and Earnings Perspective
The critique on median weekly earnings by Ludwig overlooks the Bureau of Labor Statistics’ specific measures for part-time workers, essential for understanding labor market dynamics. While part-time wages may be lower than full-time wages, inflation-adjusted earnings for part-time workers have reached record highs, contradicting claims of systematic understatement of economic distress.
Inflation and Consumer Price Index Consideration
Ludwig challenges the accuracy of inflation data, but alternative measures do not significantly deviate from official figures. Real wage growth has been strongest for low-income workers since 2019, undermining the argument that inflation disproportionately affects lower-income segments of the workforce.
GDP and Income Distribution Evaluation
While GDP may not capture income distribution adequately, data from the Federal Reserve’s Survey of Consumer Finances indicates that wealth gains have been substantial for individuals without college degrees. Weekly earnings across the income distribution also show significant growth, particularly for lower-income workers.
Conclusion
Despite Ludwig’s call for shared prosperity, existing data suggests that America already experiences widespread economic growth. Incomes are rising across the distribution, poverty levels are at historic lows, and unemployment remains minimal. The key to addressing economic challenges lies in sustaining current growth trajectories rather than veering off course.
Jeremy Horpedahl, Associate Professor of Economics at the University of Central Arkansas, emphasizes the importance of continued economic growth in tackling societal issues. For more insights from Jeremy Horpedahl, visit Economist Writing Every Day.
This rewritten article maintains the original structure and key points while providing a fresh perspective on Ludwig’s arguments within a WordPress-friendly format.
