The affordability crisis rippling through American politics saw voters dump Democrats for another Donald Trump presidency last year, while this year saw a democratic socialist elected as mayor of New York City.
That’s despite economic data showing cooler inflation, steady income gains, and resilient consumer spending.
But according to Michael Green, chief strategist and portfolio manager for Simplify Asset Management, conventional gauges don’t capture how much Americans are struggling with the cost of living, even households earning six figures.
In a viral Substack post last week, he took particular aim at the federal government’s poverty line, which traces back to the early 1960s and was calculated by tripling the cost of a minimum food diet at the time.
“But everything changed between 1963 and 2024,” Green wrote. “Housing costs exploded. Health care became the largest household expense for many families. Employer coverage shrank while deductibles grew. Childcare became a market, and that market became ruinously expensive. College went from affordable to crippling. Transportation costs rose as cities sprawled and public transit withered under government neglect.”
Meanwhile, a two-income household is now needed to maintain what one income once provided, but that incurs childcare costs and the need for two cars.
As a result, the poverty line’s narrow focus on food leaves out how much other expenses are now sucking up incomes and lowballing the minimum amount Americans need to get by.
Green estimated that food comprises just 5% to 7% of household spending, but put housing at 35% to 45%, childcare at 20% to 40%, and health care at 15% to 25%.
“If the crisis threshold—the floor below which families cannot function—is honestly updated to current spending patterns, it lands at $140,000,” he added. “What does that tell you about the $31,200 line we still use? It tells you we are measuring starvation.”
‘The Valley of Death’
At the same time, Americans who are below Green’s version of the poverty threshold are still falling behind, even as they climb the income ladder.
That sets up a perverse disincentive as the poorest, by contrast, aren’t penalized with mounting burdens when support is taken away.
“Our entire safety net is designed to catch people at the very bottom, but it sets a trap for anyone trying to climb out,” he explained. “As income rises from $40,000 to $100,000, benefits disappear faster than wages increase. I call this the Valley of Death.”
Lockdowns during the COVID-19 pandemic offered a respite for many families because working parents didn’t pay for childcare or gas to commute while working from home. Stimulus checks also added to their incomes.
But after the economy reopened, those costs came back, and inflation surged. And while it has come down drastically since 2022, overall price levels didn’t come down and remain high.
“This mathematical valley explains the rage we see in the American electorate, specifically the animosity the ‘working poor’ (the middle class) feel toward the ‘actual poor’ and immigrants,” Green said.
The anger doesn’t stem from racism or lack of empathy, he added. Instead, it’s more about resentment at the government.
“When you are drowning, and you see the lifeguard throw a life vest to the person treading water next to you—a person who isn’t swimming as hard as you are—you don’t feel happiness for them,” he said. “You feel a homicidal rage at the lifeguard. 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.”
Life is expensive
To be sure, Green acknowledged his calculations are based on costs in suburban New Jersey. His threshold is also above the median household income for a family of four in 37 states, according to the Washington Post.
But Massachusetts Institute of Technology’s Living Wage Calculator and the Economic Policy Institute have also put family expenses in some states at more than $100,000 a year.
Meanwhile, financial strains from the higher cost of living also help explain why discount retailers like Walmart have reported seeing more upper-income customers shopping at their stores.
In Green’s view, the point is that food is relatively affordable, notwithstanding higher grocery prices lately. Life overall is what’s expensive.
“The real poverty line—the threshold where a family can afford housing, health care, childcare, and transportation without relying on means-tested benefits—isn’t $31,200. It’s ~$140,000,” he wrote.
His Substack post also echoed a recent survey from the Harris Poll that showed many Americans earning six figures, even $200,000 a year, are privately struggling.
Among the findings was that 64% of six-figure earners said their income isn’t a milestone for success but merely the bare minimum for staying afloat.
“Our data shows that even high earners are financially anxious—they’re living the illusion of affluence while privately juggling credit cards, debt, and survival strategies,” Libby Rodney, the Harris Poll’s chief strategy officer and futurist, said in a statement.
