Solutions Economic and Market Watch

Hello, and welcome to the Economic and Market Watch podcast for the week of March 16, 2026. This is John Suter of CFC.

Today, we are talking about an economic concept regarding the U.S. poverty line, which is in itself a somewhat depressing topic. Over 36 million Americans are living below the established poverty line of $15,960 for a single individual defined by the Department of Health and Human Services. For each additional member of the household, $5,680 is added to the poverty threshold.

The federal poverty levels, FPLs, are derived from the official poverty thresholds, which were originally developed in the 1960s based on the cost of a minimum food diet multiplied by three, reflecting the fact that food makes up about one third of a typical family's budget. The thresholds are updated annually for inflation using the Consumer Price Index for all urban consumers, the CPI-U. In addition to family size, these thresholds vary by the number of children in the household and for one or two person households, whether someone is 65 years of age or older. So using the numbers above for a family of four, the poverty line would be $33,000. I don't know about our listeners, but I'm not sure a family of four could live on that amount anywhere in the United States these days. Geographic location does play a crucial role in determining poverty rates across The United States. Rural communities often experience higher poverty rates than their urban counterparts due to limited economic opportunities and fewer social services.

To put this into further context, the median household income in the United States was $83,730. For families with two or more children, the median income was well over $100,000 according to census data. The fact is nominal incomes are higher than they have ever been. We are buying different things and in a lot of cases, we are buying nicer and better things.

Wall Street economist Michael W. Green published an article that garnered a lot of attention in Substack that came up with a poverty line of a $140,000 — the level of income a family of four needs to feel secure in modern day America. For people that don't earn this level income, he believes they are trapped in what he calls the "valley of death." The valley is inhabited by people earning between $40,000 and a $100,000 or even more in high cost areas. His basic premise is that these people are not making enough income to really cover the cost of full participation in the economy.

I was most curious how Mr. Green arrived at the $140,000 and what were the estimates being used for necessary expenses.

I'm sure if you thought about it, you would guess the two highest categories and you would be correct: childcare and housing. Childcare was the most expensive at $32,773, followed by housing at $23,267.

Other itemized expenses were as follows:

Food, $14,717. Transportation, $14,828. Healthcare, $10,567. Other essentials, $21,857 —and let's not forget taxes at $18,500.

It's a tough subject to tackle. Others have tried before. For example, MIT's state by state living wage calculator says that in Maryland, for instance, two working adults with two children need an income of $129,572 to afford food, childcare, housing, transportation, and other expenses.

The left-leaning Economic Policy Institute says that for a "modest but adequate standard of living," a family needs a $139,524.

That's to pay for housing, child care, food, and transportation in the DC Metro Area. Or they estimate a little over $100,000 in Birmingham, Alabama or Cleveland, Ohio — or $84,019 in El Paso, Texas. These independent studies show the differences in what one considers poverty level, but make no mistake, the one thing that is clear is that the federally designated number of $33,000 is antiquated and needs to be revised. Poverty scholars have talked about this for quite a while, the official poverty measure being extremely outdated. For decades since the 1960s, the share of Americans in poverty by the official definition has hovered between 10–15% every year.

Some economists point to the fact that for a number above $100,000 to be considered poverty mistakes what poverty really means. A poverty measure is not meant to be a middle class measure. The question then becomes, what do you need to be comfortable or thriving or middle class in America? Then, of course, you get a much bigger number. I suspect that few of our listeners are living at or below the U.S. poverty line. However, this study illustrates a good exercise to undertake in terms of knowing what your annual expenses are.

Do you actually know where all your hard earned income goes on an annual basis? This is especially helpful if you're getting close to retirement. You may not be living in poverty, but upon retirement you will likely be living on a fixed income and knowing what your annual expenses are and how to manage them may facilitate your decision on whether you draw your pension in the form of a lump sum payment or an annuity. Or it could be a combination approach given all the options that exist today.

You see, I'm a big believer in options to choose from because they will help you make the right decision that fits your lifestyle upon retirement. And of course, we all at CFC wish you the best of luck.

That's it for today. As always, we thank you for listening, and be sure to download the Economic and Market Watch dashboard and intelligence brief. We'll talk to you soon.