Wall Street investor says the poverty line is $136,500, those who try to escape see 'benefits disappear faster than wages increase.' Do you agree?

But Green, who is a chief strategist and portfolio manager at Simplify Asset Management, argues in a now viral blog that the real number should be closer to $136,500 (1). The median income for a family of four in America is $125,700, which means the majority are living in poverty by this calculation.

Here’s how he arrived at this stunning figure.

The outdated formula

The current poverty measure traces back to economist Mollie Orshansky in 1963. Her approach was straightforward: families typically spent about one-third of their income on food, so she calculated a minimum food budget and multiplied it by three.

Back then, this made sense, Green notes. Housing was affordable on a single income, cars were considered affordable, employer-provided health care cost about $10 monthly and child care wasn't really an expense because one parent typically stayed home. The formula captured a genuine crisis threshold — the point where families couldn't function.

But American life has transformed completely since the 1960s. According to the U.S. Bureau of Labor Statistics' 2023 Consumer Expenditure Survey, housing now accounts for 32.9% of total household expenditures — nearly a full third of all spending. Health care takes another 8% of total expenditures on average, though this varies significantly by age and insurance status.

Meanwhile, food — which Orshansky used as her baseline — now represents just 12.9% of household spending. If you apply Orshansky's original logic using current spending patterns, the multiplier would need to increase dramatically from the original three.

Breaking down real costs

Green built what he calls a "Basic Needs budget" for a family of four with two working parents and two children. No extras — just the essentials required to hold jobs and raise kids in 2024. With what he calls “conservative national averages,” here's what that looks like, he said:

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

That totals $118,009 in required net income. Add approximately $18,500 in federal, state and payroll taxes, and you reach a gross income need of about $136,500.

The single largest expense isn't housing — it's child care. And this creates what Green calls "The Valley of Death."

It’s worth noting here that Green later disclosed he was using spending data for Essex County, New Jersey from the MIT Cost of Living project.

The benefits trap

Here's where the math gets cruel. To reach the median U.S. household income of around $80,000, most families need two earners. But the moment both parents work, they trigger the full child care expense. Green's analysis reveals that families earning between $40,000 and $100,000 can actually be hurt financially as they climb the income ladder. At lower incomes, they may qualify for Medicaid, SNAP benefits and child care subsidies.

“Our entire safety net is designed to catch people at the very bottom, but it sets a trap for anyone trying to climb out. As income rises from $40,000 to $100,000, benefits disappear faster than wages increase,” he writes. “I call this The Valley of Death.”

For example, he says, a New Jersey family moving from $35,000 to $45,000 might lose Medicaid eligibility, suddenly owing over $10,000 in health care costs and wiping out their entire raise. At around $65,000, Green argues, child care subsidies disappear, requiring families to pay the full market rate.

The result? He says a family earning $100,000 can find themselves in a worse financial position than one making $40,000 with full benefits.

A regional reality check

Of course, $136,500 doesn't mean the same thing everywhere. According to data from the MIT Living Wage Calculator analyzed by SmartAsset, a family of four in Mississippi needs about $186,618 to live comfortably (covering necessities plus discretionary spending and savings), while the same family in Massachusetts needs $313,747 (2).

Even within states, costs vary dramatically. In Ohio, families need around $220,563 on average, but this masks significant differences between rural and urban counties. Meanwhile, in New York state, the figure is $276,973 — but that's statewide. In Manhattan specifically, costs are even higher.