Michael W. Green did some math recently. For a family of four to afford housing, health care, child care and other necessities, he calculated that they would need at least $136,500 a year.
The U.S. poverty line, the number that the Department of Health and Human Services says is necessary to keep a family out of poverty, is $32,150 for a family of four. Green says it should be more than four times that — a figure that would mean the majority of American households are living “in poverty,” by his metric.
His idea, which he published in an essay on Substack this week, has made waves among economists and activists, with some praising Green’s approach to assessing the real cost of living, and others finding his claim that a six-figure income could be considered poverty wages to be ludicrous.
Green’s new fans are effusive: “The most important thing most of us will read all year.” “The best read of the year.” “Can’t unsee what you learned.”
So are his detractors: “It’s completely disconnected from reality,” American Enterprise Institute economist Kevin Corinth said. “It’s laughable to put a poverty line far above the median income in the United States.”
The median household income was $83,730 last year. For families with two or more children, the median income was $109,300, according to census data. Incomes vary greatly by state, but Green’s $136,500 budget — which he said is based on the cost of living in the middle-class suburb of Caldwell, New Jersey — is above the median for a four-person household in 37 states.
Some experts who said Green was mistaken to suggest that Americans are in a state of true poverty if they don’t make six figures still agreed that the questions he raised — about the level of income a family needs to feel secure in modern-day America — were good ones.
Green works on Wall Street as portfolio manager for a half-billion-dollar fund. Most of the readers of his Substack were fellow wealthy finance professionals before his post about the $140,000 poverty line went viral.
He said in an interview that he started calculating the cost of raising a family when thinking about the challenges faced by his three children, who are all working adults in their 20s, and their generational peers.
“This is unfortunately very much the lived experience for people who are trapped in that valley of death,” Green said, the term he applied for when people earn too much to qualify for benefits like food stamps and Medicaid, but too little in his view to afford necessities. He sees that “valley” as being inhabited by people earning between about $40,000 and $100,000, or even more in high-cost areas, he said.
“They are not making enough to really cover the cost of full participation in the economy. An increasing fraction of people are choosing not to get married,” he said. “We’re seeing household formation pushed later and later and later. … It’s telling you the cost of having a traditional [two-parent, two-child] family: That choice is being opted out.”
Green wrote that he “felt sick” when he recently learned how HHS calculates the poverty line: three times the cost of food for a family in 1963, adjusted for inflation every year.
“He is echoing some things that poverty scholars have talked about for quite a while — the official poverty measure being antiquated,” said Christopher Wimer, co-director of Columbia University’s Center on Poverty and Social Policy. “Food in budgets has become a much smaller piece. Housing has gotten much more expensive.”
An HHS spokesman did not respond to inquiries from The Washington Post. By the official measure, 10 percent of Americans were impoverished last year.
The Census Bureau’s Supplemental Poverty Measure takes into account the costs of clothing, housing, utilities and internet as well. Unlike the official poverty line, the SPM varies based on families’ circumstances — adding government benefits that they receive on top of their income, and subtracting costs they must pay for health care and child care. The threshold came out to an average of just over $39,000 for most two-parent, two-child households last year.
Green added up elements of what he views as essential household expenses today and got a far higher number.
Wimer pointed out that others have tried to make budgets like Green’s before. The Massachusetts Institute of Technology’s state-by-state Living Wage Calculator says that in Maryland, for instance, two working adults with two children need an income of $129,572 to afford food, child care, housing, transportation and other expenses. The left-leaning Economic Policy Institute says that for a “modest but adequate standard of living,” a family needs $139,524 to pay for housing, child care, health care, food and transportation in the D.C. metro area, or a little over $100,000 in Birmingham, Alabama, or Cleveland, or $84,019 in El Paso.
“They’re useful, but they are, to my mind, distinct from a poverty measure,” Wimer said. “A poverty measure is really about deprivation and the likelihood of suffering. … A lot of people up and down the economic spectrum are struggling with affordability issues. [But] how many people have incomes below this real deprivation or suffering threshold, that has declined over time.”
The share of Americans in poverty, by the official definition, has hovered between 10 and 15 percent every year for almost half a century. Wimer’s center analyzed historical data to suggest that if the Supplemental Poverty Measure had existed, it would have shown a downward trajectory as government benefits made people better off over time: from more than 1 in 4 Americans in poverty in 1967 to about 1 in 10 now.
Megan Curran, his co-director, said that different measures “try to get at the nuances of people living in different states of economic instability.” But she noted that even by the official poverty threshold, 35 million Americans live in poverty. The Census Bureau says about 1 in 4 Black children and Native American children and 1 in 5 Hispanic children meet the official definition of living in poverty.
Some of Green’s critics pointed out that he used the average cost of the items in his basket, including housing, health care and child care. People in poverty may be seeking out the cheapest version; a family doesn’t need to afford the average to avoid being impoverished.
Critics also noted that day care is the costliest item in Green’s imagined budget, at $32,773 for two children. But child care, a huge expense for families with young children, isn’t part of many households’ budgets at all after their children’s earliest years.
“He’s picking some things that have gotten more expensive over time like housing, like health care. He’s not including things that have gotten cheaper over time like clothing. That’s one thing he’s doing wrong,” said Scott Winship, director of the American Enterprise Institute’s Center on Opportunity and Social Mobility. “The fact of the matter is that incomes are higher than they have ever been, essentially. … We are buying different things and in a lot of cases we’re buying nicer and better things. The idea that it’s become harder to afford a middle-class lifestyle, there’s just no good evidence.”
In inflation-adjusted dollars, the real median household income in the U.S. climbed sharply from 2014 to 2019, before falling during the pandemic and then the inflation spike of 2022 before starting to rise again. Last year, it surpassed 2019, hitting an all-time high.
But Green believes incomes have failed to keep up with modern-day high costs. Today’s houses have indoor plumbing and air conditioning, and today’s cars are safer — but they cost more, and those expensive updates are the only houses and cars on the market. Families have no choice but to spend the money for the available shelter and transportation.
To that, George Mason University economist Alex Tabarrok said Green’s provocative statement that a number upward of $100,000 can be considered a poverty line mistakes what poverty means.
“He takes the poverty measure — and then turns it around and turns it into a middle-class measure,” Tabarrok said. “What do you need to be comfortable or thriving or middle class? Then, of course, you get a much bigger number. But to think that we today are living in some hellish landscape compared to our parents and even our grandparents is just a complete distortion of reality.”
In his essay, Green discussed not only the costs of raising a family but also the frustrations of people who are struggling but earn too much to qualify for government benefits that they would receive if their income were lower.
Green’s post didn’t venture much into solutions, though he labeled the essay “Part 1,” promising more to come. In an interview, he suggested a few policy fixes, including expanding the earned income tax credit — which currently offers benefits to a married couple with two children who earn up to $64,430 — to redistribute money to households with children higher up the income scale. To make housing more affordable, he favors stripping away government regulations that block construction.
“We need to make hard choices and refocus our public sector on making life easier, rather than throwing up barriers,” he said. “We need a new bureaucracy responsible for handing out money to families … to provide people with cash distributions for raising new citizens in the United States.”
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