NerdWallet's Smart Money Podcast
Marriage and Money Myths — and Why the Economy Feels 'Off'
Thu, 20 Feb 2025
Understand the financial pros and cons of marriage, from taxes to credit scores, and how it impacts your future. Is the economy as bad as people think it is? How does your spouse’s credit and debt affect your finances? Hosts Sean Pyles and Elizabeth Ayoola discuss marriage and money to help you understand the financial implications of tying the knot. But first, NerdWallet Senior News Writer Anna Helhoski interviews Eugene Ludwig, chair of the Ludwig Institute for Shared Economic Prosperity, about why traditional economic data may not accurately reflect the financial struggles of middle- and low-income Americans. They explore how unemployment statistics overlook underemployment, why inflation feels worse for lower-income earners, and how policymakers could improve economic measurement tools. Then, NerdWallet Personal Finance Writer Lauren Schwahn joins Sean and Elizabeth to break down the financial side of marriage. They discuss how taxes work for married couples, whether getting married affects your credit score, and how to protect your finances when one partner has significant debt. They also cover estate planning advantages, health care decision-making, and strategies for managing money as a couple with different financial backgrounds. How to dispute credit report errors to get mistakes or outdated information off your credit history: https://www.nerdwallet.com/article/finance/dispute-credit-report In their conversation, the Nerds discuss: marriage and money, financial benefits of marriage, marriage tax penalties, combining finances, marriage effect on credit score, debt and marriage, should I get married for financial reasons, estate planning for couples, joint bank accounts pros and cons, student loans and marriage, how to protect finances in marriage, marrying someone with bad credit, mortgage and marriage, how to talk about money before marriage, economic perception vs reality, cost of living vs wages, how inflation affects real wages, and CPI accuracy. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend.
Chapter 1: What are the financial implications of marriage?
And I'm Elizabeth Iola.
This episode, we're talking about some of the more nuanced financial implications and benefits of marriage. But first, our weekly Money News Roundup, where we break down the latest in the world of finance to help you be smarter with your money.
Listeners may remember way back last fall when there was a lot of talk about economic vibes and how they didn't seem to match up with what national statistics were telling us about the economy. I am a listener and I will say I was also confused by the mismatch between musing shared in my social networks and the economic data that we were presented with.
Chapter 2: Why does the economy feel 'off' despite positive statistics?
Yeah, lots of economic indicators were indicating that things were going pretty swimmingly. But polls kept showing that the public did not agree. Our news colleague Anna Hilhoski is here with more. And Anna, there really has been this huge disconnect between perception and reality when it comes to the economy.
There has, Sean. And that's why an article that I read last week in Politico grabbed my attention. The author argues that people's negative feelings about the economy were actually spot on. and that the government's stats on unemployment, wages, and growth were wrong.
So for today's episode, I spoke with that very author, Eugene Ludwig, chair of the Ludwig Institute for Shared Economic Prosperity, who also served as the U.S. Comptroller of the Currency during the Clinton administration. Eugene Ludwig, welcome to Smart Money.
Chapter 3: How do traditional economic measurements fail today?
Anna, it's nice to be with you.
In your article for Politico, you say that you're skeptical that the government's measurements of things like unemployment and wage growth are capturing the realities of the economy. So before we get into what your team of researchers found, I'm curious what led you to dig into the divide between what stats show and what the economic, for lack of a better word, vibe seemed to be.
Well, it's really a two-part, Anna. I've either walked by ridden my bicycle by or been in a car passing by the Federal Reserve since I came to town here in Washington over 40 years ago. And the buildings are just as pretty as they were when I arrived. The only thing that's changed is the increasing homeless city of tents, which didn't even exist when I first came.
And there were some people sleeping on grates, maybe, occasionally but now it's a it's like a tent village around the federal reserve so you see that and you say hey what's so good about these numbers tell you everything ought to be better and things aren't better when you when you actually physically see them and touch them
So all that led you to assemble a team of researchers who found that for some 20 years, voter perception was, quote, more reflective of reality than the incumbent statistics. That's quite a statement to make. Can you explain what your team found was accurate and inaccurate in the data?
The Bureau of Labor Statistics, which comes out with most of these statistics that are used by the Fed and others, is a hardworking bunch of folks that capture data more or less accurately. They do a good job of collecting information. But in creating these headline statistics, They take the raw data and they put it together on the basis of definitions that were locked in in the 1930s.
And they were based on concepts of the 1890s. So that you have definitions that made sense in the 1930s that don't make as much sense today. For example, virtually everybody had a full-time job or no job. Today, there's a lot of part-time. That really influences the data. We found that in all the headline statistic areas.
So you wrote in your piece that, quote, 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, end quote.
So if public opinion is a reliable gauge of objective economic conditions and most of the public has suffered 20 years of setbacks, then I was curious why Gallup's economic index was much higher during the first Trump administration than that is after the Great Recession and before the pandemic, than it had been in 2004.
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Chapter 4: What is the reality of part-time work in the current economy?
Well, the economics over a 20-year period obviously themselves fluctuate during that period somewhat. And of course, they vary depending on location in the United States. So there are some areas that have been hit even harder than the median.
I actually think that the decline has been going on for a longer period of time than 20, 25 years, but the reliable statistics we're able to find were really a 20, 25-year timeframe. And the weakness, as I say, is definitional, but the definitions tend to leave out the fact that middle and low-income Americans have been experiencing a different reality than upper-income Americans.
So in your article, you make another pretty startling claim. If you adjust the unemployment stats, about one in four are functionally unemployed in the U.S. Can you explain that a bit?
If you look at the unemployment statistics that the BLS puts out, what it doesn't do is have any reflection in those numbers really for the degree to which people are working part-time and want to work full-time. and whether or not they can earn a living wage. What we look at is, can people earn above a poverty wage? And if you filter the numbers for
I'm working, but I can't earn above a poverty wage. Or I'm working, but I'd love a full-time job, but I can't get it. So you basically create a bucket of what are really functionally unemployed. We call this the unemployed bucket. It's really dreadful. 23% of the American people are functionally unemployed. That is, those that we're told have only a 4-ish percent unemployment rate.
It's worse for black Americans and worse for women.
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Chapter 5: How does inflation affect lower-income earners more?
Aren't the measurements that you're talking about something kind of distinct from unemployment? Part-time workers have jobs, and so do full-time workers who earn low salaries.
It is fair to say, Ana, that, well, yes, I've got a, as one of my friends in York, Pennsylvania, used to say, a piece of a job. But in terms of what I think people think of as being, oh, they're employed, so they're kind of okay, they're on the ladder upwards, or at least a ladder they can put a roof over your head or have a decent meal, they're not on that ladder.
I think you explain why the American people have been so upset, that is middle- and low-income Americans, because their reality is, is not good and getting worse.
Now, let's dig in a little bit about part-time work. The number of Americans working part-time because they can't find full-time work is near historic lows, and that's despite the U.S. population being historically high. Census Bureau data allows for respondents to give a reason for their work status, and the majority of those who work part-time do so by choice. That's what they say.
So I'm looking at two recent periods. Federal data measuring involuntary part-time work show that there were more involuntary part-time workers in December 2019 than in November 2024. And yet public approval of the economy was higher in December 2019 than it was in November 2024. So what's the explanation for why voters like the economy in December 2019 versus November 2024?
The big influencer, I think, of public attitude had to do with the increase in prices so that the real wage they were earning was actually down. The nominal wage may have been up, but the real wage was down. And you say, well, how could that be?
Because if you look at government statistics and you use the CPI, which is a normal inflator that's used, you'd think wages would be up a little bit over that period of time. In fact, up about 3%.
But that's not reality because for the lower 60%, in fact, what's happening is that the basket of goods and services they buy that need to survive on food, housing, education, that has inflated more than the CPI. And so, in fact, they're not up 3%. They're down 3%. And that's painful. It's painful for people who barely have enough money to put a roof over their head to begin with.
And about wages, in your article, you say that data shows the median wage is just under $62,000 annually. But then if you include part-time workers and unemployed job seekers, the median wage is about $52,300 annually. So that would mean that the median worker actually earns 16% less than the stats would indicate.
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Chapter 6: What changes are needed for more accurate economic data?
What they're concerned about are the goods and services that really matter to them. And if you look at that basket of goods and services, it is inflated more than the CPI, and it's inflated so much so that there's a meaningful gap that creates a negative improvement for them. In other words, they're not an improvement. Things are going downhill for middle and low-income Americans economically.
So when it comes to perception, is the disconnect between stats and how people feel really more about inflation than anything else rather than the actual stats that the government is putting out there?
That was the big story over the last four years. But generally, it's more complex than that because in a sense, all the government stats have misleading implications when we're dealing with middle and low income Americans. GDP, which net net does give us a sense of whether the economy is growing or not,
Whether wealth is being created or not, we would think, for example, gross domestic product means product being produced domestically. That is production. But in fact, that's not what it means. It means really wealth creation, not whether things are actually being produced here shorthand for more jobs. Worse still, while it gives us a sense that there's an even-handed sharing that's going on,
In fact, that's also not what the GDP is when one digs into it. It doesn't necessarily mean that middle and low-income Americans' well-being is growing. It just means the economy's wealth is growing.
So in terms of how one looks at these headline statistics, if one's not going to dig into the details, one gets, I think, a misleading picture of how well things are developing for middle and low-income Americans.
Overall, you say something needs to change to give people a more realistic perception of the US economy. What does that change look like to you?
Well, there are a number of different ways one can make the change. One thing that you could do is basically take the statistics we've come up with and substitute them for the headline statistics. They could become the new headline statistics.
Or, alternatively, they could be published alongside the current headline statistics, which would give policymakers a better picture of what's really happening in the economy.
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