{"id":89150,"date":"2025-12-10T14:28:11","date_gmt":"2025-12-10T14:28:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/89150\/"},"modified":"2025-12-10T14:28:11","modified_gmt":"2025-12-10T14:28:11","slug":"hiltzik-what-140000-a-year-buys-in-todays-usa","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/89150\/","title":{"rendered":"Hiltzik; What $140,000 a year buys in today’s USA"},"content":{"rendered":"\n

On the Sunday before Thanksgiving, a wealth manager named Michael Green published a Substack post arguing that a $140,000 income is the new poverty level for a family of four <\/a>in America, where the official poverty line is $32,150.<\/p>\n

The post promptly went viral.<\/p>\n

One would hope that economic commentators coast-to-coast mentioned Green as their \u201cperson I\u2019m most thankful for\u201d at their family gatherings that week, because he gave them something to masticate ever since. On the spectrum from left to right, countless pundits have rerun Green\u2019s numbers to deride or validate his argument. <\/p>\n

It is jarring that in one of the richest countries in the world, one-third of the middle class does not make enough to afford basic necessities.<\/p>\n

\u2014 Stephens and Perry, Brookings<\/p>\n

\u201cThe whole thing doesn\u2019t pass the smell test,\u201d asserted centrist economist Noah Smith in a very lengthy rebuttal. <\/a> On the other side, Tom Levenson, who teaches science writing at MIT, gave us a Bluesky thread in which he noted that \u201c$140,000 in many urban areas in the US is a family income that is at least precarious, and at worst, one or two missed paychecks from having to make rent-or-food choice<\/a>.\u201d <\/p>\n

Green has asserted that the response to his post has been \u201cmassively favorable<\/a>.\u201d That isn\u2019t my impression, but leave it aside.<\/p>\n

Get the latest from Michael Hiltzik <\/p>\n

Here\u2019s my quick take: Green made a category error (and a rhetorical blunder) by hanging his argument on the concept of \u201cpoverty\u201d; that\u2019s the claim that most of his critics focus on. His real argument, however, concerns the concept of affordability. Indeed, in a follow-up post he redefined his argument as applying to \u201cthe hidden precarity for many American families<\/a>.\u201d<\/p>\n

We can stipulate that making $140,000 a poverty standard is absurd. Even in a high-cost economy such as California\u2019s, millions of families live comfortable lives on much less. (The median household income in Los Angeles County \u2014 meaning half of all households earn less and half earn more \u2014 is about $86,500.) <\/p>\n

Plenty of working families are raising children and having fruitful social lives on median incomes or even less: Living thriftily is not the same as living penuriously or meanly. Much of what middle-class families give up are things that aren\u2019t necessarily crucial. Green\u2019s image of families stripped to the bones with mid-six-figure or even high five-figure incomes feels like something conjured up by an asset manager with a distinctly affluent clientele, which is what he is.<\/p>\n

Yet, what his post alludes to implicitly is that the concept of \u201cmiddle-class\u201d has evolved over the last few decades, and not in a good direction. That\u2019s why so many Americans, including millions with incomes that used to place them firmly in the middle class, feel strapped as never before, wondering how they can afford things their parents took for granted, such as putting the kids through college and saving for a comfortable retirement. <\/p>\n

\u201cThe nation\u2019s affordability crisis has not spared middle-class families, one-third of which struggle to afford basic necessities such as food, housing, and child care,\u201d Hannah Stephens and Andre M. Perry of the Brookings Institution<\/a> observed last week. Their analysis covered 160 U.S. metro areas, and held firm in all of them. <\/p>\n

(They defined the middle class as falling into the income range of $30,000 to $153,000.) <\/p>\n

Let\u2019s give Green\u2019s argument the once-over.<\/p>\n

He started with the origin of the federal poverty calculation, which dates back to 1963, when a Social Security economist named Mollie Orshansky figured that since American households spent an average of one-third of their budget on food, if you estimated the cost of a minimally adequate food basket and multiplied by three, you might have a useful overall standard for poverty<\/a>. <\/p>\n

\u201cIf it is not possible to state unequivocally \u2018how much is enough,\u2019\u201d she wrote, \u201cit should be possible to assert with confidence how much, on an average, is too little.\u201d She pegged that at $3,130 for a nonfarm family of four. <\/p>\n

Green festooned his post with lots of hand-waving and magic asterisks to accommodate changes in American lifestyles over the ensuing six decades and come up with his $140,000 standard. But if one applies a constant inflation rate to Olshansky\u2019s $3,130 via the consumer price index, you get about $33,440. As it happens, the government\u2019s official poverty level for a family of four today is $32,150<\/a>. Pretty close. <\/p>\n

That\u2019s an important figure, because it defines eligibility for a host of government programs. Eligibility for Medcaid under the Affordable Care Act (in states that accepted the ACA\u2019s Medicaid expansion) runs up to income of 138% of the poverty level; higher than that steers families into ACA health plans. As KFF notes, \u201cin states that have not adopted Medicaid expansion, adults with income as low as 100% FPL can qualify for Marketplace plans.\u201d<\/p>\n

Green\u2019s critics generally note that the median household income in the U.S. was $83,730 in 2024, meaning that he\u2019s placed well more than half of America into the poverty zone. That just swears at reality.<\/p>\n

It needs to be said that Green\u2019s approach differs from those articles that regularly appear asking us to commiserate with families earning $400,000 or $500,000 because they can\u2019t make ends meet. <\/p>\n

As I\u2019ve reported in the past<\/a>, these articles invariably depend on sleight-of-hand. They offer their own definitions of \u201crich\u201d and list as necessary or unavoidable expenses many items that ordinary families would consider luxuries \u2014 lavish vacations, charitable donations (including to the adults\u2019 alma maters), etc., etc. The strapped family eking out an existence on $500,000<\/a> featured in one such piece had fully-funded retirement and college plans, payments on two luxury cars, \u201cdate nights\u201d every other week … you get the drift. <\/p>\n

Levenson ran the numbers for a hypothetical family in his home town of Brookline, Mass., which is objectively upper-crust, but his approach applies more widely. Let\u2019s run them for a hypothetical household in Los Angeles County. These figures are necessarily conjectural, because your mileage may vary \u2014 in fact, everyone\u2019s mileage varies.<\/p>\n

The median monthly rent in L.A., according to Zillow<\/a>, is $2,750, or $33,000 a year. On the other hand, the median home price in the county is close to $1 million. At today\u2019s average mortgage rate of 6.2% and assuming a 20% down payment, the cost of an $800,000 mortgage runs to $4,900 a month, or $58,800 a year. One can find a cheaper home farther from the coast, so for argument\u2019s sake let\u2019s posit a $500,000 home with a $40,000 mortgage: $2,450 a month, or only $29,400 a year. But you\u2019re probably living farther from work, so your transportation costs go up.<\/p>\n

The property tax on that $1-million home: $10,000 in year one. (On the $500,000 home, it\u2019s $5,000.)<\/p>\n

State and federal taxes on a $140,000 income: about $18,000. Social Security payroll tax: $8,680. <\/p>\n

So of our $140,000, housing and taxes leave us with somewhere between $44,500 and $78,920.<\/p>\n

Food: The bureau of economic analysis pegs the annual spending of a four-member California family at an average $18,000. That figure is almost certainly on the upswing.<\/p>\n

Healthcare? In its annual report on employer-sponsored health coverage, KFF found that the employee share of family coverage reached $6,850 this year, with employers shouldering the balance of the average $27,000 total. For families on Affordable Care Act plans, the costs are impossible to calculate just now, because Republicans in Congress can\u2019t get their act together to extend the premium subsidies that make these plans workable.<\/p>\n

Then there\u2019s child care. In the old days, when single-earner families were more common than today, that wasn\u2019t as much of an issue than it is today. But if both parents work, children have to be stowed in child care until they\u2019re old enough for kindergarten or first grade \u2014 let\u2019s say up to age 5 or 6. In California, according to one survey, that\u2019s about $13,000 per year per child.<\/p>\n

A few more things we haven\u2019t counted yet: cellphone account, say $100 a month; home Wi-Fi, another $100; computers, $1,000 or so each; cars, $17,000 to $25,000 used; auto and home insurance, $1,500 each; gasoline; and utilities ($3,300 a year, according to SoFi<\/a>).<\/p>\n

At the low end of housing costs, our California family has remaining monthly discretionary income of a few hundred dollars. At the higher mortgage level they\u2019re underwater. Levenson adds, \u201cour notional couple best not have any student loans.\u201d<\/p>\n

It\u2019s also worth noting that our couple hasn\u2019t put a dime into retirement or college funding. If they set aside 10% of their income for 401(k) contributions, they\u2019re in trouble.<\/p>\n

What we\u2019re actually looking at is the collapse of the American middle class. \u201cIt is jarring that in one of the richest countries in the world, one-third of the middle class does not make enough to afford basic necessities,\u201d Stephens and Perry of Brookings write. \u201cThe single woman living in Pennsylvania buying her first home, the Latino or Hispanic couple in Indiana running a local business, the Black parents in Texas starting their family \u2014 all of these faces of the American middle class are struggling with affordability when they shouldn\u2019t have to.\u201d<\/p>\n

Trump could alleviate these pressures, notably by knocking off the tariff stunts. For all that he declares \u201caffordability\u201d to be a Democratic hoax or that his acolytes Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and White House chief economist Kevin Hassett try to smile away the reality, the American public isn\u2019t fooled. <\/p>\n

The Conference Board, a business think tank, reported that U.S. consumer confidence fell sharply in November. No surprise. Michel Green put his finger on something, and the likelihood is that things are only getting worse.<\/p>\n","protected":false},"excerpt":{"rendered":"On the Sunday before Thanksgiving, a wealth manager named Michael Green published a Substack post arguing that a…\n","protected":false},"author":2,"featured_media":89151,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[29736,6772,49637,3409,1750,1431,13879,48,52,51,47,50,49,49635,49636,5767,225,2335,49639,49638,72],"class_list":["post-89150","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-affordability","tag-argument","tag-cheap-home","tag-child","tag-cost","tag-family","tag-income","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-michael-green","tag-middle-class","tag-post","tag-state","tag-today","tag-tom-levenson","tag-whole-thing","tag-year"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/89150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=89150"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/89150\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/89151"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=89150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=89150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=89150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}