President Trump can’t seem to make up his mind as to whether America is suffering an affordability crisis. One day he declares himself the “AFFORDABILITY PRESIDENT” on social media for his efforts to lower prescription drug prices. Three days later, he says that affordability “doesn’t mean anything to anybody” and is a “fake narrative” and “con job” cooked up by Democrats. One day he meets with NYC mayor-elect Zohran Mamdani and agrees that high costs are an issue. A few days later, he tries to trick Americans into thinking that Thanksgiving meals were cheaper thanks to him—even though they most certainly weren’t.
There is no doubt in our minds whatsoever that working people are getting crushed under the weight of high prices. Over half the country said it was harder to afford their Thanksgiving meal this year, and no less than 86% of Americans say they are stressed about the price of groceries.
But for anyone out there still questioning whether the conversation on affordability is overblown, they need only read Michael W. Green’s viral Substack that he published recently on the cost of living in America. Green is the Chief Strategist and Portfolio Manager for Simplify Asset Management. According to Green’s estimates, it would cost a family of four with two adult earners and two children in the US roughly $140,000 in order to afford basic necessities. That’s a far cry from the $32,150 federal poverty line.
Given the stark difference between Green’s number and the government’s poverty line, we decided to devote an entire Closer Look to it. We’ll start by giving you a mini history lesson on how the federal poverty line was established. Then, we’ll highlight the main points that Green made in his Substack and address some of the criticism he’s received. Finally, we’ll close by offering the solution that lawmakers need to take up to begin to solve America’s cost-of-living crisis: our MONEY Agenda.
History of the federal poverty line
There are two formal versions of the federal poverty measure: poverty thresholds and poverty guidelines. Every year, the U.S. Census Bureau establishes poverty threshold levels primarily for statistical reasons, e.g. to determine the number of people living in poverty in the US, the percentage of people in poverty, etc. Meanwhile, the Department of Health and Human Services (HHS) uses the Census Bureau’s poverty thresholds to set poverty guidelines, which are simpler versions of the thresholds that federal agencies use to determine people’s eligibility for programs like Head Start and the Supplemental Nutrition Assistance Program (SNAP).
To keep things simple for this newsletter, when we refer to the “poverty line,” we mean the federal poverty guidelines—this is what Green did in his Substack. This year, HHS put the poverty line at $32,150 for a family of four. Put simply, any household that does not meet that income level is considered to be in poverty and may be eligible for various types of government assistance.
The poverty line was created by Mollie Orshansky, an economist at the Social Security Administration. It was established as three times the cost of a minimum food diet in 1963.
Here’s the kicker: It still is.
That’s right. The poverty line in the United States of America today, in the year 2025, is calculated as three times the cost of what a minimum food diet was in 1963, adjusted for inflation.
This may sound ridiculous now, but it wasn’t ridiculous for Orshansky in the 1960s. As Green points out in his Substack, back then, Orshanky found that families spent about a third of their earnings on groceries. Because pricing data for other essentials like housing was hard to come by, it made sense for the poverty line to be a multiple of three of a minimum food budget. Even without hard data though, we know now that essentials like housing, healthcare, transportation, etc. were relatively cheap back then.
But that was 1963. And 1963 America is very, very different from 2025 America.
Green does the math on the cost of living in the US
In his Substack, Green didn’t hold back in explaining how much more expensive necessities are in America today. Over the last few decades, everything from housing, healthcare, college tuition, and transportation has exploded in price. Childcare in particular has become a huge line item in budgets, as women entered the labor force to maintain their families’ standard of living.
The result? According to Green, families no longer spend a third of their budget on food like they did in 1963. Today, they spend 5 to 7 percent. If Mollie Orshansky was to update her formula for 2025, you’d have to multiply the minimum food budget not by three, but by 16. Which would bring the poverty line for a family of four to roughly $140,000—more than four times greater than the current one.
Green took things a step further. He calculated a “Basic Needs” budget himself to determine how much it costs to live in America today for a family of four, with two adult earners and two children. He added up national average costs for childcare, housing, food, transportation, healthcare, other essentials, and taxes, and ultimately arrived at a grand total of $136,500.
Food prices are certainly ticking up these days, but Greens say that, compared to other essentials, they have actually tracked with inflation in the grand scheme of things. Think about it: Are our diets THAT different than what they were in 1963? This explains why the poverty rate, using the government’s food-budget-times-three formula, has held fairly steady over the last few decades. In 1970, 12.6% of Americans lived below the poverty line; in 2023, 11.1% did. That’s not much of a difference.
Another of Green’s main points is what he calls “The Valley of Death.” It works like this: As people earn more and move up the income ladder, they lose subsidized benefits like healthcare, SNAP, and childcare. For example, if a family jumps from $35,000 to $45,000, they will no longer qualify for Medicaid; they will now be responsible for paying $10,567 in premiums and deductibles, which will put them at a net loss. In the end, Green says, “When you run the net-income numbers, a family earning $100,000 is effectively in a worse monthly financial position than a family earning $40,000…We have created a system where the only way to survive is to be destitute enough to qualify for aid, or rich enough to ignore the cost. Everyone in the middle is being cannibalized.”
Since he published his Substack, Green has faced a hefty amount of criticism. Some found it difficult to believe that you could be in poverty while making a six-figure income. But other organizations have run calculations like Green’s and come up with similar numbers. The MIT Living Wage Calculator, for one, says that a family of four with two working adults and two children in Hawaii (the state with the highest cost of living) needs an annual income of $147,181 to afford essentials. The Economic Policy Institute’s Family Budget Calculator says that even a family of four in a low-cost city like El Paso, Texas needs $84,019 to break even.
Another criticism we’ve seen of Green’s piece is that he used national averages for the costs of essentials. People don’t necessarily need to afford the average cost of housing, healthcare, etc. to escape poverty; they just need to afford the cheapest. This is a fair point, so we decided to crunch some numbers using the “cheapest” essentials on the market ourselves to see if Green’s argument holds water.
One of our Great Economy Project cohorts is based in Whiteville, North Carolina. We looked on Zillow, and there are currently four houses to rent in the town. (There are no apartments.) The cheapest of these houses is $1,500 a month. That comes out to $18,000 a year for housing.
The minimum wage in North Carolina is $7.25 an hour. If two working adults in a family of four earn the minimum wage, they bring in $30,160 a year. For what it’s worth, that already puts them below the official federal poverty line of $32,150. They can afford the $18,000 rent, but will be left with just $12,160 to somehow pay for everything else in life. (For some perspective, the MIT Living Wage Calculator says a family of four in Columbus County needs $10,871 just for food.)
We’re not data scientists. We don’t know if Green’s $136,500 is the exact right figure on how much it costs to live in America. But we have no doubt that it’s a better approximation than what America is getting with the current poverty line.
The Solution: The MONEY Agenda
Despite what Trump may say about America’s affordability crisis, there is no doubt that his and congressional Republicans’ policies are making life more, not less, expensive for Americans these days. Among other things, the One Big Beautiful Bill he signed into law in July made cuts to SNAP and Medicaid and his tariffs are costing people an arm and a leg.
We have a solution—our four-part legislative platform, The MONEY Agenda—that will help to bridge the gap between how much money Americans have and how much it takes to actually make ends meet. Two pieces of legislation—the Cost of Living Tax Cut Act and the Cost of Living Wage Act—especially will provide relief. The Cost of Living Tax Cut Act will exempt taxpayers who earn less than the national median cost of living from paying federal income taxes, and have millionaires like us make up the difference in any revenue loss. Meanwhile, the Cost of Living Wage Act will raise the federal minimum wage to the cost of living for a single adult with no children and index it to inflation. Both will go a long way in putting more money where it belongs: in working people’s pockets.
Even without our MONEY Agenda though, the least that lawmakers can do is update the poverty line to actually reflect what it costs to live in America—and by that we mean 2025 America, not 1963 America.
If we updated the poverty line to something like Green’s $136,500, the majority of Americans would be classified as poor. (The median household income in 2024 was $83,730.) Maybe it’s time we reframe what it means to get by in America and create more opportunities for the government to help families afford their basic needs. This would help us properly acknowledge our affordability problem and finally get America on a healthier, more stable, and more sustainable path.