Apocalypse Not
Revealed: the Source of Those Bad $140,000 Poverty Line Numbers
Now we’re getting somewhere! Thanks to the person who posts on X.com using @MTSInsights, I know where Michael Green got his inflated cost estimates, which I critiqued in my last post. (Green, you may recall, claimed that $140,000 is the new poverty line and the “cost of existing.”) His figures come from the Living Wage Calculator (LWC), a project of Amy Glasmeier, a professor of economic geography and regional planning at MIT’s Department of Urban Studies and Planning (DUSP).
I’ll spend the bulk of this post critiquing the LWC numbers, but it’s first worth emphasizing how misleadingly Green characterized his numbers.
First, he claims to have “built a Basic Needs budget for a family of four” himself. No citation of the LWC at all. (Actually, as I was writing this, the Free Press version of his post was updated to include a link to the LWC site. His original post was unchanged when I published this.) It’s a data-analytic equivalent of plagiarism not to cite someone whose numbers you use and to pass them off as your own.
Green also indicates that the numbers he provides involve, “conservative, national-average data.” But he revealed to @MTSInsights that the figures were for Essex County, New Jersey. (In fact, they are here.) Now, you might think “conservative, national-average data” reflects the national average or, being conservative, somewhere that is poorer than the national average. You would be wrong. Out of 3,114 counties with per capita income estimates available from the Bureau of Economic Analysis for 2023, Essex County, New Jersey is the 224th richest. (It includes Newark and, more importantly, its western suburbs.) Per capita income in Essex County was $80,460 in 2023, 15 percent higher than the US figure ($69,810). Jeremy Horpedahl noted on X.com that median family income in Essex County for a married couple with children was $174,644 in 2024—nearly one-third higher than the national median of $132,959. We should expect that expenses in Essex County will be 15-30 percent higher than national figures too. And, indeed, I found in my last post that his averages were too high by 20 percent. (We’ll see below that they’re even more off than these estimates.)
Finally, while I noted that Green said nothing about his “Other essentials” category in his post (a $21,857 expense), I can tell from the LWC documentation what it represents: “Entertainment: fees and admissions; Audio and visual equipment and services; Pets; Toys, hobbies, and playground equipment; Entertainment: other supplies, equip., & services; Reading; and Education,” “Apparel and services; Housekeeping supplies; Personal care products and services; Household furnishings and equipment; and Miscellaneous household equipment,” and “Cellular phone service.” (These are the components of the LWC categories, “Civic Engagement,” “Internet & Mobile,” and “Other Necessities.”)
It takes a bit of digging to uncover this, but these categories reflect the entirety of spending tracked in the federal Consumer Expenditure Survey (CEX) on categories outside the other ones Green lists (excepting alcohol and tobacco, and a couple other small categories). So whether we call them essentials or necessities, what they really are is “all other spending,” more or less, as I anticipated in my last post. In particular, while Green says his budget involves “no vacations, no Netflix,” that’s simply not true; they are implicitly included in his “other essentials.”
OK, let’s move on from Green’s obfuscation and look at the Living Wage Calculator.
First of all, lest one make too much of the authority of the “MIT” on Glasmeier’s CV, it’s worth emphasizing that DUSP is not part of MIT’s renowned economics program. It sits within the university’s School of Architecture and Planning. Just so it’s clear where we’re starting from, here’s the mission of DUSP:
We prepare leaders to plan, design, and create communities and places that are socially, economically, and environmentally just.
We pursue this mission through four evolving strategic priorities: achieving racial justice, enhancing multi-racial democratic governance, tackling the climate crisis, and closing the wealth gap.
We aim to fulfill our mission through all aspects of our teaching, research, department culture, and external collaborations.
Now, the clear point of view doesn’t necessarily mean that the department has sacrificed rigor for ideological goals and doesn’t necessarily mean that the Living Wage Calculator is bunk. We need to dive into the calculator’s methods to ascertain that. But when you do that, you find that the Living Wage Calculator is bunk.
Let’s look at each of the LWC categories in turn. There are two different potential problems here: the fact that Essex County isn’t representative, and possible issues with the LWC methodology. The LWC doesn’t seem to provide national estimates, so I’ll compare the Essex County figures to those for Montgomery County, Alabama, which is roughly the median county for per capita personal income. I’m going off of the documentation LWC provides.
I’ll report the Essex County amounts (Green’s), the Montgomery County amounts, amounts from national CEX data for married parents, and a preferred measure to use. At the end, we’ll sum the category amounts and compare them to incomes. As I emphasized in my last post, this is a bad thing to do! But it is the bad thing Green does, so let’s kick the tires a bit.
Food
The LWC gives the typical food expense in Essex County for a family with two workers and two children as $14,717. (Everything I cite from the LWC below will be for two worker families with two children.) This estimate is superior to several of the other categories we’ll get to in that it is not simply an average expenditure amount but based on some standard of need (from the US Department of Agriculture). The USDA amounts vary by family size and type and reflect the cost of a given standard if food is purchased and then prepared at home. It is adjusted by the LWC folks to reflect county-level amounts using other data. It’s not an unreasonable approach.
The amount for Montgomery County is not much lower than the amount for Essex County—$12,811. That said, nationally, married couples with children spent $15,059 on food in 2023. Forty percent of that was on food away from home; just over $9,000 was spent on food at home. These are rough bounds on how much the average married couple family with children would have to spend if they bought all their food at home. Let’s just go with the LWC amount for Montgomery County ($12,811) as the preferred measure.
Childcare
According to the LWC, typical childcare expenses in Essex County for a family with two workers and two children amount to $32,773. The LWC childcare amounts are based on the cost of center-based care. Nationally, just 37 percent of children under age 5 and not yet in kindergarten are in center-based care. So this component of the “cost of existing” is relevant for barely a third of children. Since center-based care is more expensive than other forms of child care, it’s no wonder that even among families that pay for childcare, the average amount is less than half what the LWC indicates for Essex County.
If we look at Montgomery County, the LWC reports the typical expense as $15,006. Again, this is the amount for people who pay for center-based care; it would be lower for families who don’t pay for care or who pay for less formal arrangements.
In the national data, I obtain a value of under $16,000 for 2022 for people paying for care, an amount that falls to $5,300 in 2023 for married-couple families with no child over age five (including those not paying for any care and those with fewer or more than two children). It’s just $1,525 for married-couple families with a child older than five, and if you just look at all married-couple families with children, it’s $1,704. That’s the most appropriate estimate to use, because families with children do not spend an average of $5,300 every year a child lives at home. Remember, though, that this is an average and not a standard of need (unless you think everyone should be able to afford the average).
Medical
The amount for Essex County is $10,567. It is based on (1) the employee share of premiums for health insurance sponsored by private employers and (2) out-of-pocket spending on prescription drugs, medical services, and medical supplies. These are state and national averages that are adjusted to the county level with other data sources. The two county amounts are then presumably added together.
Again, these are averages, not standards of need. The insurance premium component is the amount that people with employer coverage spend, which reflects the comprehensiveness of the coverage offered. If some people reject employer coverage or are not offered it, they might obtain public coverage, including subsidized premiums for many middle-class families. About three in four married non-elderly adults who have health insurance get it from their employer.
Two other potential problems to flag. First, adding these two averages (premium expense and out-of-pocket costs) overstates average spending on health care. People who pay more for their premium will tend to have better coverage and lower out-of-pocket costs. Second, the use of averages is also likely to be particularly problematic for out-of-pocket costs given that a small number of people who are sick or disabled may have very large spending that pulls the average up so that it doesn’t reflect the typical person. (In 2022, five percent of people accounted for half of health spending.) Even for employee premiums for family coverage, the mean is 18 percent higher than the median (see Table X.D.1). Third, the out-of-pocket averages are not confined to those with health insurance. Basing the averages only on people with employer coverage would probably increase them.
In Montgomery County, the LWC gives the typical expense as $9,570. Nationally, average healthcare spending for married couples with children was just $7,600. Since the LWC is using the same source as me for the out-of-pocket amounts, the difference is due to the insurance premium estimate (or the county-level adjustment). Let’s use $9,570 for the preferred amount, just to be conservative.
Housing
The LWC estimate for Essex County is $23,267. This estimate is based on Department of Housing and Urban Development data on the 40th percentile of rents in metropolitan areas. It is actually an estimate for the entire Newark metro area, which includes three counties other than Essex. There are 4,764 entries in the latest HUD spreadsheet with rents (multiple ones per county), and when I ranked them by the rent for a 3-bedroom apartment, Essex County was at the 94th percentile (meaning one of the most expensive).
While the 40th percentile of rents is something like a needs standard (rather than simply an average), it’s also definitionally true that 40 percent of people will be below it. If you think that 40 percent of people can’t meet their housing needs, that might make sense to you, but if you think only 20 percent of people can’t, you’d want to use the 20th percentile. You see the problem here.
Moreover, homeowners face very different housing costs than renters. Fully 80 percent of married couples with children are homeowners. So at best, this measure gets it “right” for the one-fifth of families that rent. The costs homeowners face include mortgage interest payments, homeowners insurance, maintenance and depreciation, and property taxes.
In Montgomery County, the LWC reports a typical housing amount of $12,707—much lower than in Essex County. The national average for 2023 for married parents was $19,946 for shelter. This is higher than the Montgomery County amount because it is an average, not the 40th percentile of shelter spending. The 40th percentile would be a much more useful needs standard. Let’s use $12,707 for the preferred estimate.
Transportation
It’s not at all clear to me how the LWC estimates its transportation costs, and I view this component as the least reliable of the major ones. It uses an elaborately (not necessarily well-) modeled set of county-level estimates from another source and then adjusts them further. The estimate for Essex County is $14,828, compared with $16,392 for Montgomery County. (Of note is that the latter is higher, perhaps because it is more rural and requires more driving.) Nationally, the average spending on transportation for married parents was $19,343. I think that’s largely due to differences in how the cost of buying a new car are treated. Absent net outlays on vehicle purchases, the national figure is $10,800. That’s too low, but it’s also not the case that buying a new car entails the full cost of the outlay—one is partly transferring assets from a bank account to a vehicle, though the vehicle depreciates rapidly and one will incur interest expenses if a car loan is used to finance the purchase. All of these estimates are based on averages, not any needs threshold. Sure, let’s go with $16,392 for the preferred estimate.
Civic Engagement
This is entirely based off of the CEX (the same source I’m using) and reflects average spending amounts (adjusted to the county level). Specifically, it includes spending on “audio-visual equipment; education; fees and admission; other entertainment; pets; reading; and toys, hobbies, and playground equipment.” It’s an odd set of goods and services to lump under “civic engagement,” and it’s part of Green’s “other essentials” category. In the CEX, these spending amounts are subsumed in just three categories: entertainment, reading, and education. The reading amount is negligible.
If Green and the LWC were being consistent with their approach to childcare, they would (wrongly) determine how much families with non-zero spending on education pay and assign that to “education” (as if that amount were paid every year rather than primarily occurring when children are in college).
You can think some level of spending on these things represents a necessity, but it’s probably not the average amount people spend. The Essex County amount is $8,810, while in Montgomery County it is $6,450, again, much lower. The national average for married parents for these categories is $8,872. If we’re talking about “essentials,” let’s stick with the education amount for our preferred estimate, which is $3,301.
Internet & Mobile
Mobile service again comes straight from the CEX and represents average spending amounts (adjusted to the county level). Internet spending is based on county-level data on low-cost internet service plans. The “low-cost” distinction makes it a useful needs standard.
In Essex County, the typical spending was $2,001; it was $2,142 for Montgomery County. Nationally, for married parents, I estimate it would be about $2,500 in 2023, based on the amounts for internet service and cell service for all families and the spending on mobile service for married parents. Let’s use mine to be conservative.
Other Necessities
This category basically includes the remaining categories of spending, and uses averages from the CEX. Specifically, it includes spending on “apparel; household furnishings and equipment; housekeeping supplies; personal care products; and miscellaneous household equipment.” At this point, the LWC is declaring that all categories of spending, in fact, are necessities, and at least for these ones, everyone should be able to afford what the average family affords.
I’m pretty sure that the LWC is double-counting “miscellaneous household equipment,” since it is part of “household furnishings and equipment” in the data we’re both using.
The typical amount in Essex County was $11,046, while it was $9,120 in Montgomery County. Nationally, spending on these categories among married parents amounted to $8,881 ($10,675 if I double-count miscellaneous household equipment). We’ll use the correct national total for the preferred amount.
Taxes
The LWC assumes that everyone spends their entire after-tax income, then it runs the amounts for different family types through a widely-used tax simulator called TAXSIM to get income and payroll taxes. However, I’m pretty sure the LWC folks are understating these taxes, because they assume that after-tax income is pre-tax income and then compute taxes on the after-tax income. That’s the only way I can interpret the methods that are offered (and being familiar with TAXSIM, I think it would be very difficult to go from after-tax income and back into pre-tax income). On the other hand, by summing the amounts in each of the spending categories, they are overstating how much people really spend, or need to spend, as I discussed in my last post. That will tend to push the tax estimates too high.
The LWC reports $18,488 for Essex County and $11,538 for Montgomery County. Nationally, the average for married parents is $22,862—much higher than the Montgomery County amount, which suggests I’m right about the error in the LWC. We’ll use my estimate below.
Summing Up (Remember: Don’t Do This!)
OK, we can now sum these categories and see what we get. As a reminder: this is a bad idea, for the reasons I went through in my last post.
We already know that the total for Essex County—Green’s total—is $136,498. That’s his “cost of existence.” If we use the estimates for Montgomery County instead, we get $95,735. That’s lower by 30 percent. Put another way, Green’s estimate is higher than the median county by 43 percent. If we use the preferred estimates I flag for each of these categories for married parents, we get $90,728.
These amounts are too high as indicators of what people “need” to spend because some or all components reflect average spending rather than minimum needs and because averages are skewed by outliers and don’t reflect what’s even typical. They’re even too high as indicators of average spending: average spending does not equal the sum of component averages (since people trade off different kinds of expenses, especially at different points in their lives).
Nevertheless, we can look at how these amounts compare to incomes and see whether Green is right that much of the population can’t participate in American society. Green mentions in his post that median family income is “roughly $80,000.” Median household income is $81,604. That’s below his needs threshold by 40 percent. Apocalypse Now!
But of course, it’s a no-no to compare the national income amount to the higher-than-average Essex County spending amount. In Essex County, median family income among married parents is $174,644, which is 28 percent higher than Green’s (lousy) “needs” threshold. In Montgomery County, median income is $116,929, or 22 percent higher than the (still lousy) median-county threshold. And nationally, among married parents, median income is $132,959. That’s 47 percent higher than the (still lousy!) preferred spending threshold. [Added 11/30/25: I should also have emphasized that the median incomes here are for all married parents, not married parents with two workers, nor married parents with two children. Incomes for married parents with two workers and two children would be that much higher than these thresholds!]
I can’t emphasize enough that you should not use any of the thresholds I’ve reported here: they are all too high as indicators of what middle class families “need” because they are all much too close to simply being measures of what middle class families spend (and they are overstated measures of what middle class families spend). If everyone’s income doubled tomorrow, it’s likely that everyone’s spending would also roughly double. Would our “needs” also be required to double in that event? Would we be no better off as a society? No more secure? Of course not. But that’s the sort of logic behind Michael Green’s (and the Living Wage Calculator’s) analyses.
Finally, I have to say that it is remarkable that of the 3,000+ counties Green could have chosen, he found one that reinforced his $140,000 poverty line claim from his separate (also flawed) analyses.
I’ve spent more time on Green’s post than I have wanted to, and it’s possible I’m not done. This stuff needs to be discredited because it conveys a completely inaccurate picture of how the American economy is doing. It’s nice to get hundreds of thousands of followers—I wouldn’t know!—but followership is not the same as accuracy. Nor are vibes.