Is $140,000 really a poverty income?
Is $140,000 really a poverty income?
Clearly not, but the viral debate
Clearly not, but the viral debate
underscores the ‘affordability’ issue
underscores the ‘affordability’ issue
Treasury Secretary Scott Bessent is among President Trump’s Cabinet heads who try to smile away the economic reality facing American households, but the public isn’t buying it, L A Times columnist Michael Hiltzik writes.
Treasury Secretary Scott Bessent is among President Trump’s Cabinet heads who try to smile away the economic reality facing American households, but the public isn’t buying it, L A Times columnist Michael Hiltzik writes.
By Michael Hiltzik
By Michael Hiltzik
A wealth manager wrote that $140,000 a year means poverty in today’s America, sparking controversy. He’s wrong, but he made a good point.
A wealth manager wrote that $140,000 a year means poverty in today’s America, sparking controversy. He’s wrong, but he made a good point.
On the Sunday before Thanksgiving, a wealth
On the Sunday before Thanksgiving, a wealth
manager named Michael Green published a
manager named Michael Green published a
Substack post arguing that a $140,000 income is
Substack post arguing that a $140,000 income is
the new poverty level for a family of four in
the new poverty level for a family of four in
America, where the official poverty line is $32,150.
America, where the official poverty line is $32,150.
The post promptly went viral.
The post promptly went viral.
One would hope that economic commentators
One would hope that economic commentators
coast-to-coast mentioned Green as their “person
coast-to-coast mentioned Green as their “person
I’m most thankful for” at their family gatherings
I’m most thankful for” at their family gatherings
that week, because he gave them something to
that week, because he gave them something to
masticate ever since. On the spectrum from left to
masticate ever since. On the spectrum from left to
right, countless pundits have rerun Green’s numbers to deride or validate his argument.
right, countless pundits have rerun Green’s numbers to deride or validate his argument.
It is jarring that in one of the richest countries in the world, one-third of the middle class does not make enough to afford basic necessities.
It is jarring that in one of the richest countries in the world, one-third of the middle class does not make enough to afford basic necessities.
— Stephens and Perry, Brookings
— Stephens and Perry, Brookings
“The whole thing doesn’t pass the smell test,”
“The whole thing doesn’t pass the smell test,”
asserted centrist economist Noah Smith in a very
asserted centrist economist Noah Smith in a very
lengthy rebuttal. On the other side, Tom Levenson, who teaches science writing at MIT, gave us a Bluesky thread in which he noted that “$140,000 in many urban areas in the US is a family income that is at least precarious, and at
lengthy rebuttal. On the other side, Tom Levenson, who teaches science writing at MIT, gave us a Bluesky thread in which he noted that “$140,000 in many urban areas in the US is a family income that is at least precarious, and at
worst, one or two missed paychecks from having
worst, one or two missed paychecks from having
to make rent-or-food choice.”
to make rent-or-food choice.”
Green has asserted that the response to his post
Green has asserted that the response to his post
has been “massively favorable.” That isn’t my
has been “massively favorable.” That isn’t my
impression, but leave it aside.
impression, but leave it aside.
Here’s my quick take: Green made a category
Here’s my quick take: Green made a category
error (and a rhetorical blunder) by hanging his
error (and a rhetorical blunder) by hanging his
argument on the concept of “poverty”; that’s the
argument on the concept of “poverty”; that’s the
claim that most of his critics focus on. His real
claim that most of his critics focus on. His real
argument, however, concerns the concept of
argument, however, concerns the concept of
affordability. Indeed, in a follow-up post he
affordability. Indeed, in a follow-up post he
redefined his argument as applying to “the hidden
redefined his argument as applying to “the hidden
precarity for many American families.”We can
precarity for many American families.”We can
stipulate that making $140,000 a poverty
stipulate that making $140,000 a poverty
standard is absurd. Even in a high-cost economy
standard is absurd. Even in a high-cost economy
such as California’s, millions of families live
such as California’s, millions of families live
comfortable lives on much less. (The median
comfortable lives on much less. (The median
household income in Los Angeles County —
household income in Los Angeles County —
meaning half of all households earn less and half
meaning half of all households earn less and half
earn more — is about $86,500.)
earn more — is about $86,500.)
Plenty of working families are raising children
Plenty of working families are raising children
and having fruitful social lives on median incomes
and having fruitful social lives on median incomes
or even less: Living thriftily is not the same as
or even less: Living thriftily is not the same as
living penuriously or meanly. Much of what
living penuriously or meanly. Much of what
middle-class families give up are things that aren’t
middle-class families give up are things that aren’t
necessarily crucial. Green’s image of families
necessarily crucial. Green’s image of families
stripped to the bones with mid-six-figure or even
stripped to the bones with mid-six-figure or even
high five-figure incomes feels like something
high five-figure incomes feels like something
conjured up by an asset manager with a distinctly
conjured up by an asset manager with a distinctly
affluent clientele, which is what he is.
affluent clientele, which is what he is.
Yet, what his post alludes to implicitly is that the
Yet, what his post alludes to implicitly is that the
concept of “middle-class” has evolved over the last
concept of “middle-class” has evolved over the last
few decades, and not in a good direction. That’s
few decades, and not in a good direction. That’s
why so many Americans, including millions with
why so many Americans, including millions with
incomes that used to place them firmly in the
incomes that used to place them firmly in the
middle class, feel strapped as never before,
middle class, feel strapped as never before,
wondering how they can afford things their
wondering how they can afford things their
parents took for granted, such as putting the kids
parents took for granted, such as putting the kids
through college and saving for a comfortable
through college and saving for a comfortable
retirement.“The nation’s affordability crisis has not spared
retirement.“The nation’s affordability crisis has not spared
middle-class families, one-third of which struggle
middle-class families, one-third of which struggle
to afford basic necessities such as food, housing,
to afford basic necessities such as food, housing,
and child care,” Hannah Stephens and Andre M.
and child care,” Hannah Stephens and Andre M.
Perry of the Brookings Institution observed last
Perry of the Brookings Institution observed last
week. Their analysis covered 160 U.S. metro
week. Their analysis covered 160 U.S. metro
areas, and held firm in all of them.
areas, and held firm in all of them.
(They defined the middle class as falling into the
(They defined the middle class as falling into the
income range of $30,000 to $153,000.)
income range of $30,000 to $153,000.)
Let’s give Green’s argument the once-over.
Let’s give Green’s argument the once-over.
He started with the origin of the federal poverty
He started with the origin of the federal poverty
calculation, which dates back to 1963, when a
calculation, which dates back to 1963, when a
Social Security economist named Mollie
Social Security economist named Mollie
Orshansky figured that since American
Orshansky figured that since American
households spent an average of one-third of their
households spent an average of one-third of their
budget on food, if you estimated the cost of a
budget on food, if you estimated the cost of a
minimally adequate food basket and multiplied by
minimally adequate food basket and multiplied by
three, you might have a useful overall standard for
three, you might have a useful overall standard for
poverty.
poverty.
“If it is not possible to state unequivocally ‘how
“If it is not possible to state unequivocally ‘how
much is enough,’” she wrote, “it should be
much is enough,’” she wrote, “it should be
possible to assert with confidence how much, on
possible to assert with confidence how much, on
an average, is too little.” She pegged that at $3,130
an average, is too little.” She pegged that at $3,130
for a nonfarm family of four. Green festooned
for a nonfarm family of four. Green festooned
his post with lots of hand-waving
his post with lots of hand-waving
and magic asterisks to accommodate changes in
and magic asterisks to accommodate changes in
American lifestyles over the ensuing six decades
American lifestyles over the ensuing six decades
and come up with his $140,000 standard. But if
and come up with his $140,000 standard. But if
one applies a constant inflation rate to
one applies a constant inflation rate to
Orshansky’s $3,130 via the consumer price index,
Orshansky’s $3,130 via the consumer price index,
you get about $33,440. As it happens, the
you get about $33,440. As it happens, the
government’s official poverty level for a family of
government’s official poverty level for a family of
four today is $32,150. Pretty close.
four today is $32,150. Pretty close.
That’s an important figure, because it defines
That’s an important figure, because it defines
eligibility for a host of government programs.
eligibility for a host of government programs.
Eligibility for Medcaid under the Affordable Care
Eligibility for Medcaid under the Affordable Care
Act (in states that accepted the ACA’s Medicaid
Act (in states that accepted the ACA’s Medicaid
expansion) runs up to income of 138% of the
expansion) runs up to income of 138% of the
poverty level; higher than that steers families into
poverty level; higher than that steers families into
ACA health plans. As KFF notes, “in states that
ACA health plans. As KFF notes, “in states that
have not adopted Medicaid expansion, adults with
have not adopted Medicaid expansion, adults with
income as low as 100% FPL can qualify for
income as low as 100% FPL can qualify for
Marketplace plans.”
Marketplace plans.”
Green’s critics generally note that the median
Green’s critics generally note that the median
household income in the U.S. was $83,730 in
household income in the U.S. was $83,730 in
2024, meaning that he’s placed well more than
2024, meaning that he’s placed well more than
half of America into the poverty zone. That just
half of America into the poverty zone. That just
swears at reality.
swears at reality.
It needs to be said that Green’s approach differs
It needs to be said that Green’s approach differs
from those articles that regularly appear asking us
from those articles that regularly appear asking us
to commiserate with families earning $400,000
to commiserate with families earning $400,000
or $500,000 because they can’t make ends meet.
or $500,000 because they can’t make ends meet.
As I’ve reported in the past, these articles
As I’ve reported in the past, these articles
invariably depend on sleight-of-hand. They offer
invariably depend on sleight-of-hand. They offer
their own definitions of “rich” and list as
their own definitions of “rich” and list as
necessary or unavoidable expenses many items
necessary or unavoidable expenses many items
that ordinary families would consider luxuries —
that ordinary families would consider luxuries —
lavish vacations, charitable donations (including
lavish vacations, charitable donations (including
to the adults’ alma maters), etc., etc. The strapped
to the adults’ alma maters), etc., etc. The strapped
family eking out an existence on $500,000
family eking out an existence on $500,000
featured in one such piece had fully-funded
featured in one such piece had fully-funded
retirement and college plans, payments on two
retirement and college plans, payments on two
luxury cars, “date nights” every other week ... you
luxury cars, “date nights” every other week ... you
get the drift.
get the drift.
Levenson ran the numbers for a hypothetical
Levenson ran the numbers for a hypothetical
family in his hometown of Brookline, Mass.,
family in his hometown of Brookline, Mass.,
which is objectively upper-crust, but his approach
which is objectively upper-crust, but his approach
applies more widely. Let’s run them for a
applies more widely. Let’s run them for a
hypothetical household in Los Angeles County.
hypothetical household in Los Angeles County.
These figures are necessarily conjectural, because
These figures are necessarily conjectural, because
your mileage may vary — in fact, everyone’s
your mileage may vary — in fact, everyone’s
mileage varies.
mileage varies.
The median monthly rent in L.A., according to
The median monthly rent in L.A., according to
Zillow, is $2,750, or $33,000 a year. On the other
Zillow, is $2,750, or $33,000 a year. On the other
hand, the median home price in the county is
hand, the median home price in the county is
close to $1 million. At today’s average mortgage
close to $1 million. At today’s average mortgage
rate of 6.2% and assuming a 20% down payment,
rate of 6.2% and assuming a 20% down payment,
the cost of an $800,000 mortgage runs to $4,900
the cost of an $800,000 mortgage runs to $4,900
a month, or $58,800 a year. One can find a
a month, or $58,800 a year. One can find a
cheaper home farther from the coast, so for
cheaper home farther from the coast, so for
argument’s sake let’s posit a $500,000 home with
argument’s sake let’s posit a $500,000 home with
a $400,000 mortgage: $2,450 a month, or only
a $400,000 mortgage: $2,450 a month, or only
$29,400 a year. But you’re probably living farther
$29,400 a year. But you’re probably living farther
from work, so your transportation costs go up.
from work, so your transportation costs go up.
The property tax on that $1-million home:
The property tax on that $1-million home:
$10,000 in year one. (On the $500,000 home, it’s
$10,000 in year one. (On the $500,000 home, it’s
$5,000.)
$5,000.)
State and federal taxes on a $140,000 income:
State and federal taxes on a $140,000 income:
about $18,000. Social Security payroll tax:
about $18,000. Social Security payroll tax:
$8,680.
$8,680.
So of our $140,000, housing and taxes leave us
So of our $140,000, housing and taxes leave us
with somewhere between $44,500 and $78,920.
with somewhere between $44,500 and $78,920.
Food: The bureau of economic analysis pegs the
Food: The bureau of economic analysis pegs the
annual spending of a four-member California
annual spending of a four-member California
family at an average $18,000. That figure is
family at an average $18,000. That figure is
almost certainly on the upswing.
almost certainly on the upswing.
Healthcare? In its annual report on employer-
Healthcare? In its annual report on employer-
sponsored health coverage, KFF found that the
sponsored health coverage, KFF found that the
employee share of family coverage reached
employee share of family coverage reached
$6,850 this year, with employers shouldering the
$6,850 this year, with employers shouldering the
balance of the average $27,000 total. For families
balance of the average $27,000 total. For families
on Affordable Care Act plans, the costs are
on Affordable Care Act plans, the costs are
impossible to calculate just now, because
impossible to calculate just now, because
Republicans in Congress can’t get their act
Republicans in Congress can’t get their act
together to extend the premium subsidies that
together to extend the premium subsidies that
make these plans workable.
make these plans workable.
Then there’s child care. In the old days, when
Then there’s child care. In the old days, when
single-earner families were more common than
single-earner families were more common than
today, that wasn’t as much of an issue than it is
today, that wasn’t as much of an issue than it is
today. But if both parents work, children have to
today. But if both parents work, children have to
be stowed in child care until they’re old enough
be stowed in child care until they’re old enough
for kindergarten or first grade — let’s say up to
for kindergarten or first grade — let’s say up to
age 5 or 6. In California, according to one survey,
age 5 or 6. In California, according to one survey,
that’s about $13,000 per year per child.
that’s about $13,000 per year per child.
A few more things we haven’t counted yet:
A few more things we haven’t counted yet:
cellphone account, say $100 a month; home Wi-
cellphone account, say $100 a month; home Wi-
Fi, another $100; computers, $1,000 or so each;
Fi, another $100; computers, $1,000 or so each;
cars, $17,000 to $25,000 used; auto and home
cars, $17,000 to $25,000 used; auto and home
insurance, $1,500 each; gasoline; and utilities
insurance, $1,500 each; gasoline; and utilities
($3,300 a year, according to SoFi).
($3,300 a year, according to SoFi).
At the low end of housing costs, our California
At the low end of housing costs, our California
family has remaining monthly discretionary
family has remaining monthly discretionary
income of a few hundred dollars. At the higher
income of a few hundred dollars. At the higher
mortgage level they’re underwater. Levenson
mortgage level they’re underwater. Levenson
adds, “Our notional couple best not have any
adds, “Our notional couple best not have any
student loans.”It’s also worth noting that our couple hasn’t put a dime into retirement or college funding. If they
student loans.”It’s also worth noting that our couple hasn’t put a dime into retirement or college funding. If they
set aside 10% of their income for 401(k)
set aside 10% of their income for 401(k)
contributions, they’re in trouble.
contributions, they’re in trouble.
What we’re actually looking at is the collapse of
What we’re actually looking at is the collapse of
the American middle class. “It is jarring that in
the American middle class. “It is jarring that in
one of the richest countries in the world, one-
one of the richest countries in the world, one-
third of the middle class does not make enough to
third of the middle class does not make enough to
afford basic necessities,” Stephens and Perry of
afford basic necessities,” Stephens and Perry of
Brookings write. “The single woman living in
Brookings write. “The single woman living in
Pennsylvania buying her first home, the Latino or
Pennsylvania buying her first home, the Latino or
Hispanic couple in Indiana running a local
Hispanic couple in Indiana running a local
business, the Black parents in Texas starting their
business, the Black parents in Texas starting their
family — all of these faces of the American middle
family — all of these faces of the American middle
class are struggling with affordability when they
class are struggling with affordability when they
shouldn’t have to.”
shouldn’t have to.”
Trump could alleviate these pressures, notably by
Trump could alleviate these pressures, notably by
knocking off the tariff stunts. For all that he
knocking off the tariff stunts. For all that he
declares “affordability” to be a Democratic hoax or
declares “affordability” to be a Democratic hoax or
that his acolytes Treasury Secretary Scott Bessent,
that his acolytes Treasury Secretary Scott Bessent,
Commerce Secretary Howard Lutnick and White
Commerce Secretary Howard Lutnick and White
House chief economist Kevin Hassett try to smile
House chief economist Kevin Hassett try to smile
away the reality, the American public isn’t fooled.
away the reality, the American public isn’t fooled.
The Conference Board, a business think tank,
The Conference Board, a business think tank,
reported that U.S. consumer confidence fell
reported that U.S. consumer confidence fell
sharply in November. No surprise. Michael Green
sharply in November. No surprise. Michael Green
put his finger on something, and the likelihood is
put his finger on something, and the likelihood is
that things are only getting worse.
that things are only getting worse.