The Data is Right: Americans are Prospering Economically

By Jeremy Horpedahl. Excerpts:

"A recent essay by Eugene Ludwig published by Politico argues that despite most economic data showing a healthy US economy in 2024, things are actually really bad."

"Ludwig presents a measure of “true” unemployment, developed by his own organization, which suggests that about one-fourth of the potential workforce is unemployed, underemployed, or poor. While this figure may seem alarming, it is primarily an expanded measure of poverty rather than a traditional unemployment metric. This measure sets a threshold of $25,000 per worker, rather than per household, which distorts its comparability to standard poverty measures. Measuring poverty is useful, but there is no need to merge a measure of poverty and a measure of employment. Doing so only adds confusion.

Even by the author’s own measure, however, the data does not support a narrative of economic decline. The January 2025 reading of 23.3 percent was the second-lowest January reading on record, with only January 2024 registering a slightly lower rate at 23.0 percent. Furthermore, this figure is 10 percentage points below its January 1995 level, which was the first year in their data series. If anything, this suggests a long-term improvement in economic conditions rather than the economic distress the author implies, even if the number is much larger than official U-3 rate, which is currently 4 percent.

Income and Earnings

Ludwig’s second critique of economic data focuses on the BLS’s reporting of median weekly earnings, arguing that the measure excludes part-time workers and thus presents an incomplete picture. However, this complaint ignores the fact that the BLS does produce a measure specifically for part-time workers, which is also included in their monthly report. The full-time measure is valuable because the majority of the workforce—over 80 percent—consists of full-time workers.

Furthermore, tracking separate measures for full-time and part-time workers is beneficial, not misleading, as it allows for a clearer understanding of labor market trends. Many part-time workers are students, caregivers, or individuals who voluntarily choose part-time work for lifestyle reasons. While their earnings are important, lumping them together with full-time workers would distort the overall picture of wage trends.

More importantly, inflation-adjusted median earnings for part-time workers have reached record highs, except for the anomalous quarters during the pandemic. While part-time wages remain lower than full-time wages, the trend does not support the claim that earnings data systematically understate economic distress."