Is $140,000 the real poverty line?

Customers shop the produce department at Tropical Foods grocery store in Boston, Massachusetts

(Image credit: Lane Turner / The Boston Globe / Getty Images)

A “viral” essay on household income has sparked debate over a polarizing question, said Julie Zauzmer Weil in The Washington Post: Just how many Americans are living in poverty? Michael Green, a Wall Street portfolio manager, argues in a Substack article that the federal poverty line— calculated for decades at three times the cost of a “minimum food diet,” and currently $32,150 for a family of four—is an egregious “lie.” That calculation made sense in the 1960s, writes Green, when “housing was relatively cheap,” health care was employer-provided, and “college tuition could be covered with a summer job.” But such expenses have skyrocketed, and a second income is now essential for many families, which means they must also pay out for child care. A household income of $136,500 is now the real “break-even point” for a family of four, Green calculates, which would mean most Americans are impoverished. While many economists slammed Green’s argument, it met with “effusive” praise online. “The most important thing most of us will read all year,” wrote one commenter.

Green’s treatise is “silly,” said Noah Smith in his Substack newsletter. There are serious issues with his calculations—for example, he uses average spending figures and treats them as minimum amounts. But on a more basic level, his claims are just “out of touch with reality.” Given that the median income for a family of four is $125,700, he’s claiming “more than half of American families are poor,” at a time when our middle class enjoys unprecedented “material luxury.” Americans today live in bigger houses, eat out more often, and have more leisure time than they did in the 1960s. In the real world, official measures show poverty fell from 19.5% in 1963 to 10.5% in 2019, said Michael R. Strain in National Review. And over the past 30 years, inflation-adjusted wages for “typical workers” have risen by 40%.

Putting the poverty line at $136,500 may be “absurd,” said Jacob Weindling in Jezebel, but there’s a reason Green’s essay resonated. Record housing prices have put homeownership out of reach for many young people, who feel “priced out of the so-called American dream.” An estimated 100 million Americans have medical debts, while college graduates’ salaries increasingly don’t “cover student debt servicing.” In short, people whose incomes look decent on paper are feeling a new “kind of precarity.” That may not technically constitute poverty, but the financial hardship grinding them down “is very real.”