Financial expert Michael W. Green is making waves with a provocative claim: the official U.S. poverty line is a “lie” — that is, wildly disconnected from reality, and the actual threshold for basic survival is more than four times higher than the government currently considers it.

According to the U.S. Department of Health and Human Services, the 2024 poverty guideline for a family of four is $31,200.

But Green, who is a chief strategist and portfolio manager at Simplify Asset Management, argues in a now viral blog that the real number should be closer to $136,500 (1). The median income for a family of four in America is $125,700, which means the majority are living in poverty by this calculation.

Here’s how he arrived at this stunning figure.

The current poverty measure traces back to economist Mollie Orshansky in 1963. Her approach was straightforward: families typically spent about one-third of their income on food, so she calculated a minimum food budget and multiplied it by three.

Back then, this made sense, Green notes. Housing was affordable on a single income, cars were considered affordable, employer-provided health care cost about $10 monthly and child care wasn’t really an expense because one parent typically stayed home. The formula captured a genuine crisis threshold — the point where families couldn’t function.

But American life has transformed completely since the 1960s. According to the U.S. Bureau of Labor Statistics’ 2023 Consumer Expenditure Survey, housing now accounts for 32.9% of total household expenditures — nearly a full third of all spending. Health care takes another 8% of total expenditures on average, though this varies significantly by age and insurance status.

Meanwhile, food — which Orshansky used as her baseline — now represents just 12.9% of household spending. If you apply Orshansky’s original logic using current spending patterns, the multiplier would need to increase dramatically from the original three.

Green built what he calls a “Basic Needs budget” for a family of four with two working parents and two children. No extras — just the essentials required to hold jobs and raise kids in 2024. With what he calls “conservative national averages,” here’s what that looks like, he said:

That totals $118,009 in required net income. Add approximately $18,500 in federal, state and payroll taxes, and you reach a gross income need of about $136,500.

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The single largest expense isn’t housing — it’s child care. And this creates what Green calls “The Valley of Death.”

It’s worth noting here that Green later disclosed he was using spending data for Essex County, New Jersey from the MIT Cost of Living project.

Here’s where the math gets cruel. To reach the median U.S. household income of around $80,000, most families need two earners. But the moment both parents work, they trigger the full child care expense. Green’s analysis reveals that families earning between $40,000 and $100,000 can actually be hurt financially as they climb the income ladder. At lower incomes, they may qualify for Medicaid, SNAP benefits and child care subsidies.

“Our entire safety net is designed to catch people at the very bottom, but it sets a trap for anyone trying to climb out. As income rises from $40,000 to $100,000, benefits disappear faster than wages increase,” he writes. “I call this The Valley of Death.”

For example, he says, a New Jersey family moving from $35,000 to $45,000 might lose Medicaid eligibility, suddenly owing over $10,000 in health care costs and wiping out their entire raise. At around $65,000, Green argues, child care subsidies disappear, requiring families to pay the full market rate.

The result? He says a family earning $100,000 can find themselves in a worse financial position than one making $40,000 with full benefits.

Of course, $136,500 doesn’t mean the same thing everywhere. According to data from the MIT Living Wage Calculator analyzed by SmartAsset, a family of four in Mississippi needs about $186,618 to live comfortably (covering necessities plus discretionary spending and savings), while the same family in Massachusetts needs $313,747 (2).

Even within states, costs vary dramatically. In Ohio, families need around $220,563 on average, but this masks significant differences between rural and urban counties. Meanwhile, in New York state, the figure is $276,973 — but that’s statewide. In Manhattan specifically, costs are even higher.

The housing figure used in the $136,500 calculation — $1,938 monthly — actually represents a conservative national average, Green argues. He writes, “If we plug in the actual cost of living in the zip codes where the jobs are — where rent is $2,700, not $1,900 — the threshold pushes past $160,000.”

There’s been plenty of responses to this viral blog post saying it gets it wrong. Economist Tyler Cowen said the piece is “based on bad assumptions and selective evidence.”

“If someone is trying to argue that $140,000 a year is the new poverty line, I would urge them to get some perspective by spending more time in most of the rest of the world, where people earn only a modest fraction of that amount and live under significantly worse conditions. Driving around America could just as easily suffice,” wrote Cowen in an article for The Free Press (3). Green addressed the criticism and “legitimate issues” in a new blog post.

Whether you agree with the $136,500 figure or not, the exercise offers a valuable framework you might find handy.

Calculate your own family’s non-negotiable costs: housing, health care, child care, transportation and taxes. How much margin really remains?

The debate isn’t really about whether $136,500 is the perfect number. It’s about acknowledging that the official poverty line may measure something closer to starvation than security — and that millions of families earning what we call “middle-class incomes” are far more financially precarious than policymakers seem to want to admit.

The question isn’t just whether Green’s right, but how much longer we can ignore the math.

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@michaelwgreen/Substack (1); SmartAsset (2); The Free Press (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.