The Poverty Line is Not $140,000

By Jeremy Horpedahl.

A recent essay by Michael W. Green makes a very bold claim that the poverty line should not be where it is currently set — about $31,200 for a family of four — but should be much higher. He suggests somewhere around $140,000. The essay was originally posted on his Substack, but has now gone somewhat viral and has been reposted at the Free Press. (Note: that actual poverty threshold for a family of four with two kids is $31,812 — a minor difference from Mr. Green’s figure, so not worth dwelling on much, but this is a constant frustration in his essay: he rarely tells us where his numbers come from.)

I think there are at least three major errors Mr. Green makes in the essay:

1. He drastically underestimates how much income American families have.
2. He drastically overstates how much spending is necessary to support a family, because he uses average spending figures and treats them as minimum amounts.
3. He obsesses over the Official Poverty Measure, since it was originally based on the cost of food in the 1960s, and ignores that Census already has a new poverty measure which takes into account food, shelter, clothing, and utility costs: the Supplement Poverty Measure.

I won’t go into great detail about the Official Poverty Measure, as I would recommend you read Scott Winship on this topic. Needless to say, today the OPM (or some multiple of it) is primarily used today for anti-poverty program qualification, not to actually measure how well families are doing today. If we really bumped the Poverty Line about to $140,000, tons of Americans would now qualify for things like Medicaid, SNAP, and federal housing assistance. Does Mr. Green really want 2/3 of Americans to qualify for these programs? I doubt it. Instead, he seems to be interested in measuring how well-off American families are today. So am I.

Let’s dive into the numbers.

1. Measuring Income

Mr. Green’s essay is about income and spending. He mentions income 26 times in the essay. But he never (so far as I can tell) links to any measure of income. The only hard number he references from any data source is median household income, which he mentions several times as $80,000 (note: again this number isn’t quite right: it was $83,730 in 2024). But median household income probably isn’t the best number for his analysis. Households include people living alone, elderly couples, and various non-family structures. His essay primarily focuses on a “family of four (two earners, two kids),” and we have some measures of income that come more closely to approximating this type of family. And they are all much greater than $80,000.

For example, a very readily available number he could have used is median family income, which was a much higher $105,800 in 2024. But that’s all families, regardless of whether they have kids or how many earners they have. For married couples with children (regardless of number of earners), it is a much higher figure: $132,959 in 2024. For families with two earners, median income is even higher: $142,200 in 2024. I can’t find in the publicly calculated Census tables a number for married-couple-dual-earner families with children, but it would likely be in this ~$140,000 range if not higher.

So already we can see that ~$140,000 is not some mythical number that is unattainable by American families. For the type of family Mr. Green is interested in, half of the families are already at this income level. True, that does mean that half are also below it, but the $80,000 figure he keeps using as a baseline isn’t anywhere near the right number. When he says things like “If one parent stays home, the income drops to $40,000 or $50,000” (from the supposed $80,000 baseline), he is drastically understating the financial situation of a typical family.

Again, Mr. Green: “To reach the median household income of $80,000, most families require two earners.” No. The median income for a male that works full-time in the US was $75,440 in 2024. So many narratives about American decline claim that one male income isn’t enough to get by these days. But remember any time you see that median household income figure, this is basically what the median male earns, not what a dual-income family earns. For the median female working full-time, median income is $61,020. If the median male and female full-time worker are married, they earn $136,460 (just adding those two medians together), once again, right in the range that Mr. Green thinks is necessary to support a family of four.

Mr. Green has understated typical family income by something like 70 percent. Knowing this fact alone would, I think, cause him to reconsider his entire essay. But it’s worse than that: he also overstates the amount of spending required to support a family!

2. Family Spending

Mr. Green uses what he calls “conservative, national-average data” to construct a “Basic Needs budget” for our family of four. He lists spending data for childcare, housing, food, transportation, healthcare, and “other essentials” (undefined, but actually his third largest category), then throws in an income tax estimate, to get to a figure of $136,500 as the Basic Needs budget (he also then just refers to this number as $140,000 throughout most of the rest of the essay).

Again, he lists no sources for any of these numbers. I could probably track most of them down, but that would actually miss the main error he makes: he is using average spending levels as minimum spending levels needed to support a family. But the average spending levels probably represent a lot of spending that is not necessary to support a family, but is merely a reflection of how wealthy we are today!

Take food spending. The essay says the family needs to spend $14,717 on food as a minimum. This number probably comes from the Consumer Expenditure Survey, which shows a family of four spent $14,325 on food in 2023, and maybe adjusted it up by food inflation since then. But that’s how much a family actually spent, which will include, for example, at least some discretionary dining out experiences: groceries are just 60% of this total!

What’s a better number? Thankfully, the USDA puts out regular estimates of the cost of a “thrifty food plan,” and their reference family is two adults with two kids. Perfect for our purposes. Unfortunately, in 2021 the Biden administration increased the cost of this thrifty food plan by about 21% — that is, above the cost of food inflation — so I’m not totally confident in this number anymore. Nonetheless, the figure can be useful: USDA says it is currently $1,002.20 per month, or about $12,000 per year, for our family of four. Prior to the Biden revision, the figure was $687.40 per month in May 2021, which if we adjust for grocery inflation since then comes to $850 per month or about $10,200 per year.

So $10,000-$12,000 per year is probably a better number, rather than almost $15,000 in Green’s essay. You might say this is only a few thousand dollars, but notice he is overstating food costs by 22-47 percent! If all of the costs are being overstated by 1/3 or so, it no longer takes $118,000 of post-tax income to support the family, but closer to $90,000, already putting us well below median family income.

Are all of the costs as overstated as the food costs? I won’t dive into each category. I can’t even begin to dive into the big $22,000 “other essentials” category, because we don’t know what it is! But let’s talk about housing for a moment. He puts that annual housing costs at $23,267, or $1,938 per month. Is it possible to house a family of four for less than that?

Again, clearly it is. First, we can note that median gross rent in the US was $1,487 in 2024. Of course, most Americans aren’t renters, but rent is a useful figure to use because it generally resets annually at market rates (whereas homeowners are somewhat insulated, so averages including long-term homeowners aren’t especially useful), and we don’t need to add in things like property taxes or maintenance. The rent already reflects those. If that number is reasonable, then housing costs have been overstated by 30 percent.

Can a family of four house themselves for under $1,500 per month? Probably not in NYC. Probably not in LA. But if we look in Chicago, the central city of America’s third largest MSA, we see almost 200 homes for rent that are at least 3 bedrooms and under $1,500. If we look in Dallas-Fort Worth (without going to the outer suburbs), America’s fourth largest MSA, we can find there are currently 350 homes for rent under $1,500 with at least 3 bedrooms on Zillow.

Are all of these rentals perfect? No. Is Zillow a comprehensive listing of rentals? Also, no. So the fact that there are currently hundreds of rentals available in two of America’s largest metro areas that could house a four-person family for less than $1,500, clearly the $1,900 figure is too high (if we expand the search filter to $1,900, we get 760 rentals in Chicago and whopping 2,000 rentals in DFW). The housing figure is probably also 30-40% overstated.

Before leaving the discussion of housing prices, I should emphasize that I am not trying to minimize the housing affordability question. As I have written about numerous times in the past, housing has become much less affordable in recent years. But at the same time, we need not overstate how much it costs. You can certainly pay $2,000 per month if you want, but in most of America you could house a family of four for much less than that.

One final cost I will discuss is childcare. I won’t quibble too much with the number he uses, about $16,000 per child per year, other than to say that childcare costs vary significantly by state, and only a handful of states have an average of $16,000 or more. But the most important thing about childcare costs is that these are temporary costs, thank goodness. Most kids will only be in full-time daycare for a maximum of 5 years, so for a 2-child household this is 10 years of full-time daycare costs, or about $160,000 total over the kids’ younger years.

A median-income female makes that much income in just three calendar years. It doesn’t make sense to put $32,773 into the permanent basic needs budget of a 2-child family, since it is a temporary expense. And it’s also wrong to say, as Green does, that the “second earner is working to pay the stranger watching their children so they can go to work and clear $1-2K extra a month.” The median female is making double the cost of daycare — and yes, while she pays taxes, there are also tax credits. And they are only bearing that full cost for 5 full calendar years, compared with a working career of perhaps 40 years of the second earner’s salary. I’m not saying everyone should choose daycare and two earners! But as with housing, Mr. Green is radically overstating the full impact of this choice on the household budget.

3. Other Poverty Thresholds Exist

Finally, Mr. Green seems to take a lot of issue with the Official Poverty Measure. He is certainly not the first person. Again, read Winship’s essay on this topic for more on the history of this measure. But since Mr. Green is not the first to complain about the OPM, it will not surprise you to learn that there are many alternative measures of poverty that have been developed over the years. A very well-known one, also produced by the Census Bureau, and even included in all of the same reports as the OPM is a newer measure called the Supplemental Poverty Measure.

The SPM overcomes most of the criticisms of the OPM. First, it is not merely linked to a historical cost of food. It is based on, and annually updated with, a budget that includes all of the essential spending categories: food, but also housing, clothing, and utilities. True, it does not include healthcare and childcare, but a low-income family will almost certainly qualify for government healthcare, and a low-income family in the range of these thresholds (as we will see) likely has one primary earner (if they are in the middle of the distribution).

Another way that the SPM is better than the OPM is that it has those housing costs vary by geographic area, unlike the OPM which is a single number for the entire nation (technically, Alaska and Hawaii have different thresholds, but they aren’t radically different). This does mean that for the SPM we can not state one single number for the nation, which makes sense! But it is problematic for this kind of essay. Are the SPMs generally close to the OPM of about $32,000 for a family of four? Or closer to Mr. Green’s $140,000?

The answer is they are much closer to the OPM than Mr. Green’s figures. For research purposes, BLS has created a representative national number for a family of four under the SPM: it’s about $40,000 for renters and homeowners with mortgages. Of course, the nice thing about the SPM is that it takes account of different housing costs, so these numbers vary by location. But the highest is in the San Jose MSA, at almost $60,000 for renters. The NYC MSA is $45,000. Chicago is just $40,000. Little Rock, Arkansas, the MSA that I live in, is $35,000. All of these are higher — in some cases much higher — than the national Official Poverty Measure, however none of them are anywhere near $140,000!

Are the SPM thresholds to be believed? Can you really live in San Jose for $60,000 per year? It would be hard, and you would certainly be living in poverty. But I have no doubt you can find some families in that MSA living on that little. It is a challenging financial situation. It is probably exactly what you think of when you hear the word poverty. But it is not impossible.

Minimum wage in San Jose is about $18/hour, so two workers working not quite full time would hit about $60,000. Average rent there is about $3,000, which would be hard to afford on $60K — it’s half of your income! But keep in mind that the average rent is not something that everyone pays. According to the Harvard’s Joint Center for Housing Studies, 45 percent of renters in the San Jose MSA are “cost burdened,” meaning they spent at least 30 percent of their income on housing costs (JCHS says median housing costs for renters, including utilities, are about $2,600 per month). That’s a very high number. But people are doing it right now, and it is probably accurate to describe these folks as living in poverty. However, this is a far cry from $140,000, which even in San Jose would mean less than one-quarter of your pre-tax income is going to housing, well below the “cost burden threshold” and rules-of-thumb about housing budgets.

I’ve gone into a bit of detail on San Jose, but keep in mind this is the most expensive MSA in the country. Even there $140,000 is a decent income, enough to get by. But by drilling too deeply into the most expensive MSA, we miss the forest of the rest of the country: in most of the nation, $140,000 is a very high income, but also an income that can very comfortably support a family. Perhaps not in the early years, when you face those high childcare costs, when you are trying to save for that first home, when you have not yet hit your peak earning years. Yes, life can be hard!

But it’s ridiculous to use $140,000 as a poverty measure. And there is no need to reinvent the poverty wheel: Census has already done so with the SPM, overcoming almost every objection to the OPM. Using the more realistic SPM does increase the poverty rate, from 10.6% all the way up to 12.9% in 2024. But it gets you nowhere near the 2/3 of families that Mr. Green identifies as being in poverty.

Finally, perhaps the SPM isn’t a perfect measure of poverty either! Researchers continue to come up with new methods, as in this 128-page summary report from the Interagency Technical Working Group on
Evaluating Alternative Measures of Poverty from 2021. Perhaps some day we will have an even better measure than the SPM (one of the recommendations from the working group is to account for healthcare costs), but if we do get such as measure it will be based on carefully calculating how much income is needed to support a family, not wildly adding together overinflation national spending averages."