How Outdated Is America's Poverty Metric? One Wall Street Analyst Says It Should Be 4X Higher

A 60-Year-Old Formula That No Longer Fits Reality

The poverty line calculation hasn’t been updated since 1963. Mollie Orshansky, an economist at the Social Security Administration, created a formula based on the USDA’s Thrifty Food Plan multiplied by three—an approach the White House adopted and never revisited.

Fast forward to today: that same formula sets the poverty line at roughly $32,000 annually for a family of four. But is this number realistic in 2024?

Why the Numbers Don’t Add Up Anymore

Michael Green, portfolio manager and chief strategist at Simplify Asset Management, recently challenged this standard in a detailed analysis. His core argument is compelling: the cost structure of American family life has fundamentally shifted.

In 1963, food consumed about one-third of household budgets. Now? It’s only 5-7%. That dramatic change reflects a broader reality—other expenses have exploded.

Back then, housing was affordable on a single income. Employers covered healthcare for around $10 monthly. Childcare wasn’t really a market expense. College could be paid for with summer work. Retirement meant a pension.

Breaking Down Today’s Actual Costs

Green calculated what a family of four actually needs to cover basic expenses:

• Childcare: $32,773
• Housing: $23,267
• Healthcare: $10,567
• Transportation: $14,828
• Food: $14,717
• Other essentials: $21,857

Add federal and state taxes to this baseline, and Green arrives at a gross income requirement of $136,500—more than four times the current poverty line.

The Controversial Take

Green’s analysis sparked significant debate. Critics argue his figures are inflated and that the poverty line is meant to represent bare minimums, not typical family spending. They point out that most families don’t spend $32,773 on childcare, and that people could reduce costs by relocating to cheaper areas.

Fair points. However, Green’s work highlights a genuine tension: the middle class squeeze is real. Housing now consumes a far larger share of income than decades past. Healthcare costs are staggering. Saving for retirement—once guaranteed by pensions—now falls entirely on individuals.

What This Actually Reveals

Whether Green’s $136,500 figure is precise or not, his analysis exposes how outdated the current poverty metric truly is. Most Americans would acknowledge that affording daily expenses while building retirement security has become substantially harder than it was in previous generations.

The 1963 formula captured a different America. The question isn’t whether Green’s exact number is right—it’s whether we can honestly defend a poverty measure that hasn’t evolved in six decades.