I don’t know where the line is but I completely agree with the rationale of this article. I argued a few weeks ago that higher income (in that case, due to RMDs on a bene IRA) can actually cause a household to lose some financial benefits - that there is a hole, “a trap” where earning more income can actually reduce your standard of living.
Snip:
The Measurement Failure
The formula was developed by Mollie Orshansky, an economist at the Social Security Administration. In 1963, she observed that families spent roughly one-third of their income on groceries. Since pricing data was hard to come by for many items, e.g. housing, if you could calculate a minimum adequate food budget at the grocery store, you could multiply by three and establish a poverty line.
Orshansky was careful about what she was measuring. In her January 1965 article, she presented the poverty thresholds as a measure of income inadequacy, not income adequacy—”if it is not possible to state unequivocally ‘how much is enough,’ it should be possible to assert with confidence how much, on average, is too little.”
She was drawing a floor. A line below which families were clearly in crisis.
…
But everything changed between 1963 and 2024.
Housing costs exploded. Healthcare became the largest household expense for many families. Employer coverage shrank while deductibles grew. Childcare became a market, and that market became ruinously expensive. College went from affordable to crippling. Transportation costs rose as cities sprawled and public transit withered under government neglect.
The labor model shifted. A second income became mandatory to maintain the standard of living that one income formerly provided. But a second income meant childcare became mandatory, which meant two cars became mandatory. Or maybe you’d simply be “asking for a lot generationally speaking” because living near your parents helps to defray those childcare costs.
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The Real Math of Survival
The official poverty line for a family of four in 2024 is $31,200. The median household income is roughly $80,000. We have been told, implicitly, that a family earning $80,000 is doing fine—safely above poverty, solidly middle class, perhaps comfortable.
But if Orshansky’s crisis threshold were calculated today using her own methodology, that $80,000 family would be living in deep poverty.
I wanted to see what would happen if I ignored the official stats and simply calculated the cost of existing. I built a Basic Needs budget for a family of four (two earners, two kids). No vacations, no Netflix, no luxury. Just the “Participation Tickets” required to hold a job and raise kids in 2024.
Using conservative, national-average data:
Childcare: $32,773
Housing: $23,267
Food: $14,717
Transportation: $14,828
Healthcare: $10,567
Other essentials: $21,857
Required net income: $118,009
Add federal, state, and FICA taxes of roughly $18,500, and you arrive at a required gross income of $136,500.
This is Orshansky’s “too little” threshold, updated honestly. This is the floor.
The single largest line item isn’t housing. It’s childcare: $32,773.
This is the trap. To reach the median household income of $80,000, most families require two earners. But the moment you add the second earner to chase that income, you trigger the childcare expense.
If one parent stays home, the income drops to $40,000 or $50,000—well below what’s needed to survive. If both parents work to hit $100,000, they hand over $32,000 to a daycare center.
The second earner isn’t working for a vacation or a boat. The second earner is working to pay the stranger watching their children so they can go to work and clear $1-2K extra a month. It’s a closed loop.
Much more at the link.