Were Democrats Really Tricked by the Statistics?
No. They are simply seeing what they want to see.
An article by Eugene Ludwig in Politico raises some interesting points. The title is Voters Were Right About the Economy. The Data Was Wrong. The subtitle is Here’s why unemployment is higher, wages are lower and growth less robust than government statistics suggest. The article was published February 11, 2025.
Ludwig was U. S. Comptroller of the Currency in the 1990’s and is currently chair of his own institute, Ludwig Institute for Shared Economic Prosperity. He makes the case that Democrats were trusting government statistics and Republicans were trusting what they were seeing. The disparity becomes apparent when the statistics are looked at from the lower end of the economic ladder. Ludwig looks at unemployment, weekly earnings, inflation, and Gross Domestic Product (GDP).
Unemployment (U-3 counts people who can only find part time or low paying jobs as employed) was 4.2% in November. “If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent.” That criticism is nothing new.
The median wage for those working full time was $61,000. “But if you track everyone in the workforce — that is, if you include part-time workers and unemployed job seekers — the results are remarkably different. Our research reveals that the median wage is actually little more than $52,300 per year.” Ludwig argues that the average wage is 16% less than the government statistics. Is it appropriate to count unemployed people and part-time workers to determine median wage? I think not.
Ludwig does something similar with inflation. The Consumer Price Index tracks 80,000 goods and services. Many of those goods and services will only be purchased by those at the higher rungs of the economic ladder. Ludwig has developed an alternative indicator for basic necessities. “Our alternative indicator reveals that, since 2001, the cost of living for Americans with modest incomes has risen 35 percent faster than the CPI.” Comparing the alternative cost of living to Ludwig’s computation of median wage, he states, “it immediately becomes clear that purchasing power fell at the median by 4.3 percent in 2023.”
Looking at GDP, Ludwig finds something similar. GDP is growing and that is good. “Since 2013, Americans with bachelor’s or more advanced degrees have, in the aggregate, seen their material well-being improve — by the Federal Reserve’s estimate, an additional tenth of adults have risen to comfort.” Those without a high school education have not participated and there are similar discrepancies geographically.
I like Ludwig’s conclusion, “It’s that, for the most part, those living in more modest circumstances have endured at least 20 years of setbacks, and the last four years did not turn things around enough for the lower 60 percent of American income earners.”
So, what are we to make of that? First, I’d like to point out that the title “The Data Was Wrong” is incorrect. Unless recorded or sampled incorrectly, data is never wrong. What was wrong was the analysis. I doubt that Ludwig wrote the title.
Second, notice the date of the article was February 11, 2025. Ludwig put together his group and reported on their findings in a book titled, The Vanishing American Dream, published in 2019. Why now? Why haven’t policy makers been heeding his advice for the last four years? I hope Democrats are really looking to improve their game. The cynic wonders if Democrats want to claim that the economy is now in tough shape and needs even more government intervention.
We see what we want to see. Before the election, Democrats pointed to the statistics and said the economy is great. After the election, Democrats point to the same statistics with a different slant and say the economy is bad.
My trust in government hasn’t improved.