The American economy has become so distorted that it's now hard to tell how much money a family needs to stay above the poverty line, but it's probably about $140,000 a year!
That theory is presented by a portfolio manager and chief strategist at Simplify Asset Management named Michael Green, noting that the original poverty level figure was decided in 1963 by Mollie Orshansky, a Social Security Administration economist, who just wanted a shorthand figure that could be measured for inflation and for changes in markets.
But markets didn't just change in the years thereafter, they evolved while growing and shrinking, until things that were once considered luxuries, like a second car, are in many cases required for a family of four to survive, Green theorizes, and food insecurity expert Chonnie Richey says she agrees.
"Families have become systems," wherein both spouses in the classic family have to work to make the money to pay the daycare and car payments and repairs, mortgage payments or rents.
"If they can't get one of those things working they won't be able to put food on the table," Ms. Richey says.
The original 1963 way of figuring poverty was to take the monthly cost of food and triple that number to reach the monthly poverty figure, times 12 to reach the yearly poverty level.
The average price of food was higher then, costs for a home were less on average as prices shifted dramatically.
So since 1963 the average price of food has gone down, while the cost of almost everything else, especially housing and insurance, have gone up dramatically.
"The threshold that we're still measuring the poverty level are not accounting for real scenario numbers that families are experiencing today," Richey says.
And while $140,000 a year has long been considered middle class, she says such a high number representing such a low purchasing power indicates that the American Dream for much of the middle class is pushing itself out of reach, leaving people, even the ones in higher income groups, scrambling to make their way.
What to do about all this? It needs to be part of a larger discussion of the US and its economy.
"We really need to start looking at the shift in how we are approaching what success means for the middle class."