Earlier today (much earlier…) I posted a critique of the new viral post by Michael W. Green claiming that families with less than $140,000 in income should be considered to be in poverty. That critique focused on a truly absurd revision of how we measure poverty that has the effect of making us look dramatically poorer when in fact poverty has plummeted.

Here I want to address some of the pushback I received on the critique. A number of people on X said that my technical nerd-talk about poverty measurement and my rejection of Green’s claim that the poverty line should be $140,000 missed the point. Green wasn’t really saying that $140,000 should be the new poverty line. He was just making a point about the cost of living being so high today that it has hurt even Americans making six figures.

Pardon me, but I think I do pretty well with reading comprehension. There’s really no ambiguity in these passages from Green’s essay:

Which means if you measured income inadequacy today the way Orshansky measured it in 1963, the threshold for a family of four wouldn’t be $31,200. It would be somewhere between $130,000 and $150,000. And remember: Orshansky was only trying to define “too little.” She was identifying crisis, not sufficiency. If the crisis threshold—the floor below which families cannot function—is honestly updated to current spending patterns, it lands at $140,000.

The official poverty line for a family of four in 2024 is $31,200. The median household income is roughly $80,000. We have been told, implicitly, that a family earning $80,000 is doing fine—safely above poverty, solidly middle class, perhaps comfortable. But if Orshansky’s crisis threshold were calculated today using her own methodology, that $80,000 family would be living in deep poverty.

“So when I say the real poverty line is $140,000, I’m being conservative.”

But look at that chart through the lens of the real poverty line. If the cost of basic self-sufficiency for a family of four—housing, childcare, healthcare, transportation—is $140,000, then that top light-blue tier isn’t “Upper Class.” It’s the Survival Line. This chart doesn’t show that 34% of Americans are rich. It shows that only 34% of Americans have managed to escape deprivation. It shows that the “Middle Class” (the dark blue section between $50,000 and $150,000)—roughly 45% of the country—is actually the Working Poor.

The Lie

So that’s the trap. The real poverty line—the threshold where a family can afford housing, healthcare, childcare, and transportation without relying on means-tested benefits—isn’t $31,200. It’s ~$140,000.

And that’s without even noting the subtitle of the condensed piece he wrote for The Free Press: “Why $100,000 Is the New Poverty.”

Others complained that I didn’t have anything to say about Green’s analyses using expenses on different categories of spending. Well, actually, I did have something to say: “Much of the essay involves other arguments about middle-class expenses, and I’ll try to address those claims separately. Here I just want to convince you that Green’s claim about poverty is, I’m sorry, hot garbage.”

In the meantime, Jeremy Horpedahl published an excellent critique of those analyses, which I encourage you to read. But there’s more to be said!

At two different points in his essay, Green reports average spending for a number of product categories and then explicitly or implicitly adds them to show how unaffordable life is today. There are several problems with this methodology. First, let’s remember that averages, as opposed to medians, are pulled upward by a relatively small number of high values (in this case, big spenders). Median household income in the US is under $84,000, but the mean is $121,000. The average in this case is 45 percent higher than what the typical household gets. Using averages overstates what typical people spend and, therefore, what typical people need.

Second, as Horpedahl notes, averages should not be floors. Indeed, medians should not be floors. By definition, half of families will have incomes below median family income. If the median is the floor, half of families will be poor by definition.

More to the point, if the average family is spending some amount, we should not assume that this is the amount they “have to” spend, as Green does. If everyone’s incomes doubled, would they now “have to” spend twice as much on, say, housing? One suspects that in this world of abundance, Green would decry how the poverty line has risen to $280,000. This is the same problem I flagged in my last post—the issue of spending going up because we get richer and buy more and better things, versus spending increasing because we have to pay more for the same things. It’s only the latter that is bad.

Third—and this holds for the median too—someone spending the average of total expenditures typically does not spend the average amount for each product category. In the real world, some families spend relatively more on some things and relatively less on others, depending on their life stage and unique needs and preferences. Few people spend the average or typical amount on everything.

Take childcare. As Horpedahl notes, childcare costs are incurred over a relatively small number of years in an adult’s lifetime. In many years, they are $0—even for parents (and future parents). Many adults don’t become parents and incur $0 in childcare costs. Many others have a stay-at-home parent during the years that they’d otherwise need childcare; their childcare costs are also $0. The same arguments can be made for higher education expenses.

In general, people make tradeoffs in life—if they want or have to spend more on, say, higher education, they spend less on retirement savings. Then they can spend more on retirement savings later once they are done paying for higher education. If you want to spend more than average on food at restaurants, you may need to spend less than average on vacations. If you are spending the average amount on every category of product purchased by citizens of one of the richest nations the world has ever known, you are probably not poor.

There’s also a fourth problem, which is that Green doesn’t cite a source for any of his averages. I truly hope he rectifies this issue, as it would help shut down the online speculation that he just used AI to write the piece.

To see how these issues affect Green’s analyses, consider the following passage:

The composition of household spending transformed completely. In 2024, food-at-home is no longer 33% of household spending. For most families, it’s 5 to 7 percent. Housing now consumes 35 to 45 percent. Healthcare takes 15 to 25 percent. Childcare, for families with young children, can eat 20 to 40 percent.

Again, where these numbers come from is unclear. But if we take the midpoints of each of these ranges, then food at home, housing, healthcare, and childcare consume 96 percent of household spending. That leaves practically no room for education, clothes, food away from home, transportation, entertainment, vacations, or retirement savings. Yet, as discussed in my last post, the share of spending devoted to non-necessities has risen quite a bit over time. How can that be?

One answer is that these estimates appear inflated. The US averages for 2023 are 8 percent for food at home, 33 percent for housing (including utilities, cell phones, housekeeping supplies, appliances, furnishings, and other stuff), and 8 percent for healthcare. (Childcare is included in the “housing” category.) That sums to 49 percent, or about half of what Green estimates.

If we want to separate out childcare from that housing category, then something less than one percent of expenditures was on childcare. Yes, you read that correctly. The reason for it being so low is that lots of households don’t incur childcare expenses. Green is reporting an amount (again, unsourced) for families with young children.

However, even for married-couple parents in which the oldest child is under 6 years old, under 5 percent of spending goes to childcare. (“Personal services,” which includes childcare, accounts for 5.2 percent.) Add in the rest of “housing,” food at home, and healthcare and you have accounted for 48 percent of total spending—half what you’d get from Green’s numbers. If you pull the other stuff out of housing that the reader is unlikely to think is included, the remainder (“shelter”) is just 19 percent of spending (rather than Green’s 35-45 percent). The total accounted for by Green’s categories then falls to 33-38 percent of spending (with the uncertainty due to the unknown childcare share).

And again, not everyone spends the average amounts on each of these items. The average amount spent on childcare is surely greater than 5 percent among the families using paid childcare, but it’s precisely 0 percent for a lot of families. For those families, they may spend quite a bit more on categories Green has left out. That’s also true of some people who spend less than the average on healthcare or their home.

Green later shows “conservative averages” (again, without citing sources) for eight categories of expenses, totals them, and finds that $136,500 is “required” to participate in society. It is the “cost of existence,” the “floor.” Conveniently, it is also close to the $140,000 he gets from his…innovative new poverty measure.

But again, these are category averages, and few people spend the average amount on every category. If they did, it’s hard to see how they would be poor.

Moreover, Green is exaggerating costs again. Let’s try and recreate his total, using the 2023 data for married-couple parents with no child age 6 or older. That will maximize the share of spending going to childcare. I’ll leave out his mysterious “other essentials” category for now, since who knows what’s in there. That leaves his total at $114,652. My total is $92,222—20 percent lower. If I compute total spending plus taxes, I only get to $122,707. That suggests that Green’s “other essentials” category may just be “all other spending.” (By the way, if I use the figures for all households, single or married, with or without kids, the spending total is just over $91,000, so the issue isn’t my focusing on married parents with young children.)

Finally, I’d be remiss if I didn’t marvel at how close Green’s mysterious $136,500 is to the $140,000 poverty line he estimates using the “multiplier” approach I criticized in my last post. And to think that without the undocumented “other essentials” category, it would fall short by $22,000.

I don’t think this will be the last of my posts on Green’s long essay. There’s too much bad information in there to stop now.