Financial strategist Michael Green’s recent viral post sparked a heated debate about the poverty line in America. He claims that the current threshold of $31,200 is no longer sufficient, and the new poverty line should be around $140,000. This idea has resonated with many Americans who feel they’re “making good money” but still struggling to make ends meet.
Green’s argument is based on outdated logic. The original poverty threshold was set in 1963 and used a food cost multiplier of three. However, current spending patterns have changed significantly. Housing costs have increased, healthcare expenses have grown, and childcare has become expensive. Green estimates that the new poverty line should be around $140,000 to avoid what economist Mollie Orshansky called “crisis.”
Green’s post also highlights the challenges faced by two-earner households. Childcare alone can cost over $30,000 in some states, and a second income may not provide enough benefits to offset the costs of housing, healthcare, and other expenses. This creates a “Valley of Death,” where families lose advantages faster than their wages rise.
Critics argue that Green’s calculations are flawed, citing incorrect median income figures and cherry-picking data from an expensive county in New Jersey. They also point out that childcare costs can be lower in other areas and that smartphones and home internet are conveniences rather than necessities.
Despite the controversy, Green’s post has struck a nerve with many Americans who feel financially strained. The MIT Living Wage Calculator and the Economic Policy Institute show that a comfortable lifestyle for a family of four can easily top $100,000 in many states. A recent Harris Poll found that 64% of six-figure earners say their income merely keeps them afloat.
In conclusion, while Green’s claim may not be universally accepted, it has highlighted an important issue: the lived experience of financial precarity. Many Americans feel that traditional economic indicators don’t fully reflect their financial struggles, and the real argument is how much it costs to participate in modern life, not just to eat.
Source: https://qz.com/real-poverty-line-140k-michael-green-substack