THE MISMEASUREMENT OF AMERICA

Americans are underemployed, broke, and desperate far beyond what federal statistics suggest, according to Ludwig’s searching economic manifesto.

The author, who served as the comptroller of the currency in the U.S. Department of the Treasury during the Clinton administration and, in 2019, founded the Ludwig Institute for Shared Economic Prosperity, argues that measurements of unemployment, wages, and inflation understate the economic distress of middle- and working-class Americans. In this book, he proposes alternative metrics that, he says, paint a much clearer picture. He starts with the headline unemployment rate, called U-3, which excludes part-time workers seeking full-time employment and those earning less than poverty-line wages. Adding them, he asserts, would give a “True Rate of Unemployment”—people seeking full-time jobs with decent pay—of roughly 25 percent. Ludwig also criticizes the U.S. Bureau of Labor Statistics’ median weekly wage measurement, which doesn’t count unemployed workers or part-time employees; a True Weekly Earnings metric, he says, would peg median annual earnings at $9,778 less than the BLS numbers, he calculates. He goes on to condemn the Consumer Price Index for understating inflation for low-income Americans who spend most of their money on food, housing, and healthcare; these prices have climbed 35 percent faster than the CPI, according to his True Living Cost metric. These new measurements, the author argues, make clear that inequality has skyrocketed. In lucid, down-to-earth prose, Ludwig distills complex economic and statistical issues into easily digestible reasoning, illustrated with arresting examples of odd statistical assumptions that ignore kitchen-table realities; in CPI calculations, he notes insightfully, “the price for a second home has more weight than the prices charged for bread, pork, eggs, milk, chicken, and potatoes combined.” His writing takes on a sharp moral edge when he evokes the social repercussions of poverty and hopelessness in working-class America: “there are rows of unpainted, and in some cases burnt-out, row houses in once-thriving places like Baltimore, St. Louis, Cleveland, and Detroit—places where the American dream seemed plausible not long ago.” The result is an incisive, illuminating critique of the statistics of economic orthodoxy.

A hard-hitting indictment of the data underpinning federal economic policies.