Can anyone pass independent judgment on how accurate this is? (I mean, yes, he lays out all his sources and logic. I don't know enough to tell whether he's making an accurate assessment of the situation, or is trying to grind some particular axe.)
Because if this is true, it's massive. And it explains so much - starting with why everyone feels the economy is broken.
Nitpicks and writing style aside (who posts charts without context?), the napkin math checks out to me as legit.
Here’s the thing all the detractors keep missing by nitpicking one data point or another: this author is talking systems, not products. Sure, the technologically inclined could get their phone cost down to that of an MVNO and a refurbished Android handset for $30/month, but most people aren’t that capable. Most people pay AT&T, Verizon, or T-Mobile - it’s why they’re the “big three”, after all. Same with home broadband, which nitpickers ignore in that $200 estimate the author makes; even if you qualify for subsidized internet, the waffling of the FCC combined with the hostility of carriers means most folks won’t even be able to get it or keep it.
And this is why I’m ultimately disappointed that the article is flagged, because for all the specific nitpicking done here in the comments, the author pre-empts those nitpicks in the piece. When you talk about systems at scale, you abandon precision for ranges, specifics for patterns, details for trends. Any idiot can point out that ahkshually, rent is only $R amount in this specific town that overbuilt two-bedroom units, and ahkshually, you can save on phone costs by using an MVNO, and ahkshually the government uses figure $P to measure poverty now.
The author lays out the most compelling argument yet of the brokenness of America as an economy. It drags the fiscal cliffs of poverty out into the daylight for all to see, with hard numbers of income versus expense to drive home how fucking impossible it is to survive and thrive in America today. It makes a compelling argument out of data and systems analysis that not just corroborates my own math, but also my lived experiences with poverty. He rightly calls out how the present system points to fancier phones, nicer cars, bigger homes, and bigger paychecks while yanking the rug out from under the working class in the form of crippled social services and non-existent price controls, leading over time to the modern era where the survival essentials are too expensive even on six figure salaries in most cities and towns. He doesn’t even pitch a solution, knowing that would detract from the argument (“SHIT IS BROKEN BY DESIGN”), leaving that to readers to figure out.
Look, most of HN think themselves as armchair savants, but we’re emphatically not. We’re also not particularly special, either, just lucky. The present system does not reward hard work, it punishes it. It is absolutely infuriating to see others receive aid and assistance for working less than I do, until I realize they’re also simply surviving by avoiding the cliffs that would tilt them to ruin. I wasn’t mad because they got help, I was mad because I didn’t.
That, I think, is what the author was trying to shift perspective on. Even if you make the big bucks, unless you’re a single income pulling down $200k+ outside a major metro area (which, let’s face it, HN readers represent a disproportionately large amount of said individuals), you’re still struggling. We’ve built a system around erroneous benchmarks that have gone unchecked and unaddressed for so long that everyone has optimized against them to keep more for themselves at the expense of others, and there is no pretty way out of it.
So if you think that the poverty line should be delineating that income below which a household is subject to major systemic risks and has no clear path to retirement, it does appear that the poverty line as currently defined is wildly inaccurate.
If you rule of thumb just looking at $2k/mo housing and $2k/mo for health insurance for four, it implies that a living wage for such a household is some number well above $60k, and potentially as high as $105k w/ my napkin math. This, IMO, suggests that there is a level of accuracy to the article, even if the $140k it suggests is high.
Pretty sure this is AI written or at least assisted. “It’s not just X, it’s Y. And the foo? It bazzed.”
Honestly hard to disagree with what the message is but I can’t really take him intellectually seriously even with an obvious premise with such lazy writing
> “It’s not just X, it’s Y. And the foo? It bazzed.”
The common complaint to see a bunch of em-dashes in a passage, and assume it was AI written irritated me—because I like using em-dashes. But this writing… quirk. I don’t know what dank repository of marketing text LLMs picked it up from, but it’s obnoxious, and I hope it dies a painful death.
It's quite easy to disagree with the headline argument that the problem is a broken benchmark. There are definitely problems with poverty and inequality but changing some benchmark won't fix them.
> “The U.S. poverty line is calculated as three times the cost of a minimum food diet in 1963, adjusted for inflation.”
> If you keep Orshansky’s logic—if you maintain her 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.
I'm not sure how accurate the methodology is to come up with the specific budget that produces the number "sixteen" here, but broadly speaking, it seems extremely likely that the number is no longer "three", and thus the conclusion that the "poverty line" is broken seems quite likely.
I think this was the section that made me question the accuracy of the rest:
> To function in 1955 society—to have a job, call a doctor, and be a citizen—you needed a telephone line. That “Participation Ticket” cost $5 a month. / Adjusted for standard inflation, that $5 should be $58 today. / But you cannot run a household in 2024 on a $58 landline. To function today—to factor authenticate your bank account, to answer work emails, to check your child’s school portal (which is now digital-only)—you need a smartphone plan and home broadband. / The cost of that “Participation Ticket” for a family of four is not $58. It’s $200 a month.
We're talking about needs here, yes? If your kids are young enough to need childcare (a recurring theme of the article), they don't need their own phones, so we're talking about two adults.
You can easily get an MVNO plan for $20 a month with 10GB data, which is more than enough for needs. Tether to it if you absolutely must access something on a device other than a phone. Get two of them, one for each of the adults in the family.
There's $40, not $58 and definitely not $200.
It just made me wonder if it's this easy to save 80% on the author's expected cost in this category, why should I trust that the other "national averages" the author uses should be considered as the factors in how families struggling financially could meet their needs?
It reminds me of when people use the "average SNAP benefit" as an indication that people on SNAP are going hungry. It's called "supplemental" for a reason: people are expected to spend some of their other money on food--and people receiving the average SNAP benefit as opposed to the maximum SNAP benefit have been through an assessment that determined they should have other money available to spend on food.
I don't doubt the poverty line should be higher than it is, but jumping from 3x to 16x a minimum food budget is much too far a jump.
It seems the author fed a list of documents and points to an AI, asked it to write an argument on it, then the AI hallucinated quotes and tried to badly extrapolate from real data. I think the original point might be true, but it is hard to trust tbh.
140k is significantly more money than I've ever made in my life.
Where I live, really the line where life becomes a real struggle is about 80k I would say. Below that, you're putting off maintenance, not saving money, the car is accumulating wear that you can't fix, and a medical bill is fatal.
People living way below 80k can only be doing so with significant government assistance.
Dept of Labor [0] says childcare has a median cost of $6,552 to $15,600 (least expensive county to most expensive county). The article appears to be basing their childcare assumptions on the most expensive county (where household incomes are also high), and assuming all families of 4 have two children in childcare.
Yes, childcare is problematically expensive. But one of the core numbers in the article appears to be misleading at best.
Ignore the bit about food and multipliers. They're not really relevant.
This Orshansky person used estimates and approximations to come up with a rough "this is what it takes to not starve" number, in the absence of sufficient high-quality data to calculate something more precisely.
If you trust inflation / cost of living numbers, they're a measure of how expensive life is overall.
This is the correct way to do things. The methodology of the original SWAG is not relevant to how to update it over time.
.
If you take apart the original estimate into all the different things that made up household expenses, and adjust those separately for price changes and substitutions and such, and our or back together... you're just putting in a ton of extra effort to re-build the "adjust for inflation" calculation from scratch. With tons of room to make mistakes, as demonstrated in the article.
The problem with the "adjust for inflation" methodology, is that inflation is not equal for all components of the basket. The CPI measures the average inflation of the basket, but if some components have grown significantly differently from others.
In particular, some components of the current household budget were not included in the the original cost estimates. So the "inflation adjusted cost of living" doesn't incorporate those aspects, which is why rebuilding the number from scratch gets a result so wildly different from the inflation adjusted number, instead of being a few percent off due to a different methodology.
The strongest argument is probably that for someone subsisting on the minimal wage, the CPI is not a good representation of their consumption basket (whereas it might be for someone close to the median).
Therefore the adjustment should probably be based on a different number reflecting the actual consumption of households near the poverty line (food would probably be higher than it is in the CPI currently, as one example)
This OPM and SPM thing you use in the US looks quite disturbing. I did not know poverty is defined in another way than in Europe. With the European model (60% below the median income) about 25% of the US would count as poor. That's shocking.
The core premise (benchmarks are broken), might be correct, but the poverty benchmark he uses is a bad example. The OPM and SPM (supplemental poverty measure, developed in 2009-2012), disagree by less than 10%; and the latter takes into account many of the criticisms in the article.
The author uses MIT Living Wage numbers to argue that should be the new "poverty" benchmark - an absurd proposition. Those might be reasonable middle class numbers. He also implies that the benchmark historically represented what is now covered under that $140K calculation - also false; it took ~$9000 in 1966 to cover a "basic standard of living" for a family of 4 with 1 earner; inflation adjusted, that's around $90,000 today. If you add in SS/Medicare taxes (3% then, 15% today), that puts you at ~$100K-105K.
Using the same MIT Living Wage numbers and taking Essex-Princeton NJ as the area (roughly what the author used), you end up with $99,922 as the living wage for a single earner, 4 person household - almost exactly the same as the household back in 1966.
Were there more jobs in 1966 that paid $9000/year versus jobs that pay $100K today? That's the real story you're looking for.
21 comments
[ 2.3 ms ] story [ 51.6 ms ] threadBecause if this is true, it's massive. And it explains so much - starting with why everyone feels the economy is broken.
Here’s the thing all the detractors keep missing by nitpicking one data point or another: this author is talking systems, not products. Sure, the technologically inclined could get their phone cost down to that of an MVNO and a refurbished Android handset for $30/month, but most people aren’t that capable. Most people pay AT&T, Verizon, or T-Mobile - it’s why they’re the “big three”, after all. Same with home broadband, which nitpickers ignore in that $200 estimate the author makes; even if you qualify for subsidized internet, the waffling of the FCC combined with the hostility of carriers means most folks won’t even be able to get it or keep it.
And this is why I’m ultimately disappointed that the article is flagged, because for all the specific nitpicking done here in the comments, the author pre-empts those nitpicks in the piece. When you talk about systems at scale, you abandon precision for ranges, specifics for patterns, details for trends. Any idiot can point out that ahkshually, rent is only $R amount in this specific town that overbuilt two-bedroom units, and ahkshually, you can save on phone costs by using an MVNO, and ahkshually the government uses figure $P to measure poverty now.
The author lays out the most compelling argument yet of the brokenness of America as an economy. It drags the fiscal cliffs of poverty out into the daylight for all to see, with hard numbers of income versus expense to drive home how fucking impossible it is to survive and thrive in America today. It makes a compelling argument out of data and systems analysis that not just corroborates my own math, but also my lived experiences with poverty. He rightly calls out how the present system points to fancier phones, nicer cars, bigger homes, and bigger paychecks while yanking the rug out from under the working class in the form of crippled social services and non-existent price controls, leading over time to the modern era where the survival essentials are too expensive even on six figure salaries in most cities and towns. He doesn’t even pitch a solution, knowing that would detract from the argument (“SHIT IS BROKEN BY DESIGN”), leaving that to readers to figure out.
Look, most of HN think themselves as armchair savants, but we’re emphatically not. We’re also not particularly special, either, just lucky. The present system does not reward hard work, it punishes it. It is absolutely infuriating to see others receive aid and assistance for working less than I do, until I realize they’re also simply surviving by avoiding the cliffs that would tilt them to ruin. I wasn’t mad because they got help, I was mad because I didn’t.
That, I think, is what the author was trying to shift perspective on. Even if you make the big bucks, unless you’re a single income pulling down $200k+ outside a major metro area (which, let’s face it, HN readers represent a disproportionately large amount of said individuals), you’re still struggling. We’ve built a system around erroneous benchmarks that have gone unchecked and unaddressed for so long that everyone has optimized against them to keep more for themselves at the expense of others, and there is no pretty way out of it.
If you rule of thumb just looking at $2k/mo housing and $2k/mo for health insurance for four, it implies that a living wage for such a household is some number well above $60k, and potentially as high as $105k w/ my napkin math. This, IMO, suggests that there is a level of accuracy to the article, even if the $140k it suggests is high.
I did not know that is how that is calculated. Sigh, that’s not a great way to do that.
Honestly hard to disagree with what the message is but I can’t really take him intellectually seriously even with an obvious premise with such lazy writing
The common complaint to see a bunch of em-dashes in a passage, and assume it was AI written irritated me—because I like using em-dashes. But this writing… quirk. I don’t know what dank repository of marketing text LLMs picked it up from, but it’s obnoxious, and I hope it dies a painful death.
> “The U.S. poverty line is calculated as three times the cost of a minimum food diet in 1963, adjusted for inflation.”
> If you keep Orshansky’s logic—if you maintain her 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.
I'm not sure how accurate the methodology is to come up with the specific budget that produces the number "sixteen" here, but broadly speaking, it seems extremely likely that the number is no longer "three", and thus the conclusion that the "poverty line" is broken seems quite likely.
It makes the essay hard to take seriously.
> To function in 1955 society—to have a job, call a doctor, and be a citizen—you needed a telephone line. That “Participation Ticket” cost $5 a month. / Adjusted for standard inflation, that $5 should be $58 today. / But you cannot run a household in 2024 on a $58 landline. To function today—to factor authenticate your bank account, to answer work emails, to check your child’s school portal (which is now digital-only)—you need a smartphone plan and home broadband. / The cost of that “Participation Ticket” for a family of four is not $58. It’s $200 a month.
We're talking about needs here, yes? If your kids are young enough to need childcare (a recurring theme of the article), they don't need their own phones, so we're talking about two adults.
You can easily get an MVNO plan for $20 a month with 10GB data, which is more than enough for needs. Tether to it if you absolutely must access something on a device other than a phone. Get two of them, one for each of the adults in the family.
There's $40, not $58 and definitely not $200.
It just made me wonder if it's this easy to save 80% on the author's expected cost in this category, why should I trust that the other "national averages" the author uses should be considered as the factors in how families struggling financially could meet their needs?
It reminds me of when people use the "average SNAP benefit" as an indication that people on SNAP are going hungry. It's called "supplemental" for a reason: people are expected to spend some of their other money on food--and people receiving the average SNAP benefit as opposed to the maximum SNAP benefit have been through an assessment that determined they should have other money available to spend on food.
I don't doubt the poverty line should be higher than it is, but jumping from 3x to 16x a minimum food budget is much too far a jump.
Where I live, really the line where life becomes a real struggle is about 80k I would say. Below that, you're putting off maintenance, not saving money, the car is accumulating wear that you can't fix, and a medical bill is fatal.
People living way below 80k can only be doing so with significant government assistance.
Yes, childcare is problematically expensive. But one of the core numbers in the article appears to be misleading at best.
[0] https://www.dol.gov/newsroom/releases/wb/wb20241119
This Orshansky person used estimates and approximations to come up with a rough "this is what it takes to not starve" number, in the absence of sufficient high-quality data to calculate something more precisely.
If you trust inflation / cost of living numbers, they're a measure of how expensive life is overall.
This is the correct way to do things. The methodology of the original SWAG is not relevant to how to update it over time.
.
If you take apart the original estimate into all the different things that made up household expenses, and adjust those separately for price changes and substitutions and such, and our or back together... you're just putting in a ton of extra effort to re-build the "adjust for inflation" calculation from scratch. With tons of room to make mistakes, as demonstrated in the article.
In particular, some components of the current household budget were not included in the the original cost estimates. So the "inflation adjusted cost of living" doesn't incorporate those aspects, which is why rebuilding the number from scratch gets a result so wildly different from the inflation adjusted number, instead of being a few percent off due to a different methodology.
Therefore the adjustment should probably be based on a different number reflecting the actual consumption of households near the poverty line (food would probably be higher than it is in the CPI currently, as one example)
The author uses MIT Living Wage numbers to argue that should be the new "poverty" benchmark - an absurd proposition. Those might be reasonable middle class numbers. He also implies that the benchmark historically represented what is now covered under that $140K calculation - also false; it took ~$9000 in 1966 to cover a "basic standard of living" for a family of 4 with 1 earner; inflation adjusted, that's around $90,000 today. If you add in SS/Medicare taxes (3% then, 15% today), that puts you at ~$100K-105K.
Using the same MIT Living Wage numbers and taking Essex-Princeton NJ as the area (roughly what the author used), you end up with $99,922 as the living wage for a single earner, 4 person household - almost exactly the same as the household back in 1966.
Were there more jobs in 1966 that paid $9000/year versus jobs that pay $100K today? That's the real story you're looking for.