“The Valley of Death”

How can families earning twice the average income feel so poor? Because they are. An eye-opening essay explains why.

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Atlanta, GA

November 25, 2025

We’re inundated with “information”, most of which doesn’t matter or is deliberately misleading.

But occasionally, like a glistening diamond in a municipal dump, an article shines. As we approach Thanksgiving, we’re grateful to Michael Green for shedding some light.

This week Americans gather to give thanks. Rising numbers wonder why they should bother.

It’s easy to be oblivious to their plight, especially when “economic indicators” assure us everything is great. Indifference comes particularly easy to those who’ve not tried to start a family, buy a house, pay for college, or meet a medical emergency in the last twenty years.

The government offers ample data that disguise these challenges. Yet “official” statistics are often issued as propaganda to convince constituents their rulers are wonderful.

GDP says little about lived well-being. Debt-levels are low-balled. Inflation and unemployment reports are notoriously understated.

Housing subsidies, student loans, and compulsory healthcare “coverage” further camouflage the cost-of-living squeeze by artificially boosting demand, constraining supply, and increasing expenses to pump profits at connected corporations.

But there’s a statistical scam that usually escapes notice. I didn’t see it till this morning, when I read an eye-opening essay by Michael Green, Chief Strategist and Portfolio Manager at Simplify Asset Management.

Line of Inadequacy

Americans (rightfully) lament a declining middle class. What they don’t realize is that much of that core is already gone. What remains is mostly a mirage.

The “poverty line” was established in 1963. At the time, food was assumed to be about a third of an average family budget.

Other major expenses—housing, education, healthcare, childcare—were either modest or marginal. In that context, the formula seemed reasonable.

To determine income necessary to escape poverty, the cost of subsistence food was estimated. Then that figure was tripled.

It’s important to recognize, as Green emphasizes, that this level reflects a line of inadequacy, not a floor of sufficiency. Being above it doesn’t imply comfort. It means barely escaping starvation.

Worse, the formula is based on food costs which… unlike other household expenses… have closely approximated the (official) rate of inflation. Over time, this has made the poverty line increasingly meaningless as a measure of privation.

Tripling subsistence grocery prices as a barometer for poverty today puts the line at about $32,000 for a family of four. Depending on the source, the average family income is between $60,000 and $80,000. No wonder politicians insist we’re living large!

Michael Green begs to differ:

“Housing now consumes 35 to 45 percent [of household spending]. Healthcare takes 15 to 25 percent. Childcare, for families with young children, can eat 20 to 40 percent.”

Unfortunately, because of the explosion of these costs, “food-at-home is no longer 33%. For most families, it’s 5 to 7 percent.” Yet the poverty calculation remains unchanged.

Green elaborates on what this implies:

“[If we] maintain the principle that poverty could be defined by the inverse of food’s budget share—but update the food share to reflect today’s reality, the multiplier is no longer three.

“It becomes sixteen.

“… [and] the threshold for a family of four wouldn’t be $31,200. It would be somewhere between $130,000 and $150,000.”

In other words, income necessary for a family of four to escape poverty is almost five times what is officially assumed. When we recall that this level is a survival line, the “disconnect” between authentic struggle and abstract statistics makes sense.

Closed Loop

Like most government measurements, the “poverty line” is an understatement that flatters public officials while making millions of Americans wonder what they’re doing wrong.

How can families earning twice the average income feel so poor? Because they are.

Two incomes are usually needed to make ends meet - or even for the ends to make eye contact. But additional earners add more expenses. They entail (among other things) childcare, a second car, and bigger tax bills. The water line rises while the swimmers sink.

This is what Green calls the “Valley of Death”, a “closed loop” that traps anyone who tries to escape.

Being above the “poverty line”, the “working class” isn’t indigent enough to receive government benefits. SNAP, childcare assistance, ACA credits, and Medicaid are reserved for those earning less than a subsistence pittance. This nudges the “middle class” to exchange the effort of the plow for the security of the safety net.

As Green puts it:

“We have created a system where the only way to survive is to be destitute enough to qualify for aid, or rich enough to ignore the cost. Everyone in the middle is being cannibalized.”

It’d be understandable if there were more grievance than gratitude this Thanksgiving. As any turkey can attest, it’s tough to appreciate a feast when you’re the meal.

But even with mounting challenges cloaked in made-up numbers, Americans continue to count their blessings. Ninety-one percent of Americans say they are thankful this year, including 97 percent of Republicans and 85 percent of Democrats.

It’s comforting that under societal strains and financial stress, so many remain attuned to what matters most.

JD