The rising cost of living in America is causing profound political and personal shifts, highlighting the inadequacy of the federal poverty line, originally calculated in the 1960s. While traditional economic indicators suggest stability, many Americans, including those with six-figure incomes, are struggling. Michael Green of Simplify Asset Management argues that the poverty line is outdated, focusing narrowly on food costs and ignoring significant expenses like housing, healthcare, childcare, and transportation, which have surged. Green estimates these essential expenses now comprise vast portions of household budgets, with food taking up just 5%-7% of spending, and housing, childcare, and healthcare taking much more.
Green suggests a realistic poverty threshold should be around $140,000, starkly contrasting with the official poverty line of $31,200. This discrepancy highlights the struggle of families who fall into what he describes as “The Valley of Death,” where benefits rapidly disappear as income rises, leaving many without sufficient support. The frustration felt by middle-class families, who witness aid going to the “actual poor,” fuels dissatisfaction.
While costs soared during the pandemic, contributing to financial pressure, the political resentment isn’t rooted in racism but in anger towards government policies perceived as neglectful. Green’s analysis is supported by data from the Massachusetts Institute of Technology and the Economic Policy Institute, underscoring that life—not just food—has become significantly more expensive.
