When Poverty Isn’t What It Seems

When Poverty Isn’t What It Seems

The U.S. federal government currently defines poverty for a four-person household as $32,150, according to the Department of Health and Human Services. But a debate ignited last week after Michael Green—Chief Strategist and Portfolio Manager at Simplify Asset Management—argued that the true threshold should be more than quadruple that number.

A Number Frozen in Time

The poverty line we reference today has roots in the 1960s, when President Lyndon Johnson launched his “War on Poverty.” The formula at the time was remarkably straightforward: calculate how much food a family needed for a year, multiply the cost by three, and compare it with household income.

That math might’ve made sense in 1965, but Green says it’s detached from modern living. Food has become a smaller share of total expenses, while the price of living—especially rent, medical care, insurance—has climbed steeply. Based on those shifts, Green argues:

• $32,150 is no longer a realistic measure of hardship

• A more accurate floor today would be around $136,500–$140,000 for a family of four

• Earning less than that, he claims, restricts a family’s ability to fully participate in the economy

  
  

Not Everyone Buys It

Green’s thesis drew heavy attention online, with supporters calling it essential reading—entrepreneur Anthony Pompliano even said every business and finance professional should read it.

But the pushback came quickly too. Some economists questioned the math behind the revised threshold. Noah Smith, writing on Noahpinion, dismissed the $140K target as “very silly,” noting that many Americans living below that level do not appear to be experiencing poverty in the traditional sense.

The Reality Check

The U.S. government says roughly one in ten Americans falls under the official poverty line. Yet perception tells another story: a recent Harris Poll shows 33% of households earning six figures feel financially under stress. Meanwhile, the median income for U.S. families with two or more children sits at $109,300, a far cry from the $32K government considers poor—yet also notably below Green’s proposed threshold.

Takeaway

Whether $32K or $140K defines poverty may depend less on accounting and more on how we define living well, not merely surviving. One thing is clear: as the cost of being part of society rises, the old metric is facing louder scrutiny.