In 1906, Upton Sinclair's investigation into Chicago's meatpacking plants revealed the harsh realities of poverty in his book, "The Jungle," where families lived in cramped conditions, children endured dangerous factory work, and workers were left injured without support. Fast forward to 2025, a new form of investigative work comes from Michael W. Green, an asset manager who sparked widespread debate with his assertion that American families earning less than $140,000 annually are impoverished.
This claim raises eyebrows at the thought of families struggling on a six-figure income. By Green's estimation, a significant portion of Americans would qualify for food assistance. However, unlike Sinclair, Green's analysis appears to lack firsthand engagement with the families he discusses, suggesting a disconnect from practical realities.
Economists have largely dismissed Green’s conclusions. Scott Winship criticizes it as "the worst poverty analysis" he's encountered, while Tyler Cowen and others find both Green’s methodology and conclusions fundamentally flawed. Jeremy Horpedahl labels the use of $140,000 as a poverty threshold absurd, and Noah Smith claims that Green's numbers and conclusions are "very silly."
Green's argument, though more complex than it seems, cites the MIT "cost of thriving" index. This index shows a stark contrast in living standards, indicating that in 1985, 30 weeks of median male earnings sufficed for a good life, whereas now, it requires 63 weeks. Despite not being an economist, the general perception is that life has become economically easier compared to 1985, even if pop culture back then held its appeal.
Today, consumer goods like cars, appliances, and video games are not only better in quality but more affordable when adjusted for these improvements. Cowen points out that although housing costs have risen, Americans enjoy more living space and fewer cohabitants on average. He further explains that healthcare costs, contrary to some beliefs, have generally declined over time, making modern healthcare preferable to past decades.
This notion, that current statistics overlook significant advancements in purchasing power, echoes William Nordhaus's insights. By examining the historical cost of lighting through various technologies, Nordhaus illustrated how failing to account for quality improvements leads to underestimations of economic progress. The shift from candlelight to modern bulbs, for instance, reflects a dramatic improvement in affordability and quality.
Such insights highlight the flaw in Green's approach, which overlooks the enhanced value of modern goods and services. Cowen argues that high prices reflect high demand, arising from more Americans being able to afford these goods. A $140,000 income offers substantial purchasing power.
Analyzing broader economic trends, the U.S. middle class has been shrinking not due to poverty, but because of the expansion of the upper class. In 1967, only a small percentage of families earned over $150,000 (adjusted for inflation), compared to a much larger percentage now. More people have moved into the middle class, with a significant increase in those earning more than 200% of the federal poverty line since 1975.
Data from the Economic Strategy Group show a decline in poverty rates, both in income and consumption-based measures, revealing greater improvement than official statistics suggest. Americans are consuming more calories and have better healthcare access than in previous decades. Historically, even simple lighting was a luxury, but advancements have drastically reduced the cost of living over time.
Nordhaus's work made economic progress more relatable by showing how the "time-price" of light has decreased drastically, illustrating the broader improvements in living standards. As we consider these perspectives, it's clear that the narrative of poverty at a $140,000 income level doesn't align with the tangible progress observed in economic conditions.