Wall Street strategist explains today’s political rage with a poverty line that should be $140,000 and the ‘Valley of Death’ trapping people below it – Fortune

Report on the American Affordability Crisis and Its Implications for Sustainable Development Goals

Introduction: Reassessing Economic Well-being and the Poverty Line

An analysis of the current economic landscape in the United States reveals a significant disconnect between conventional economic indicators and the financial reality experienced by a large portion of the population. Despite data showing controlled inflation and steady consumer spending, a pervasive affordability crisis is evident. This report examines the argument that current poverty metrics are obsolete, thereby masking the true scale of economic hardship and hindering progress toward key Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).

Critique of the Official Poverty Metric

Historical Inadequacy and Modern Expenses

The federal poverty line, established in the 1960s, is based on an outdated calculation that triples the cost of a minimum food diet. This model no longer reflects contemporary household expenditure patterns. According to analysis by Michael Green of Simplify Asset Management, food now constitutes only 5-7% of household spending, while other essential costs have escalated dramatically. This failure to adapt the poverty metric directly impacts the ability to accurately measure and address SDG 1 (No Poverty).

• Housing: Accounts for 35-45% of household spending, impacting SDG 11 (Sustainable Cities and Communities).
• Childcare: Represents 20-40% of spending, creating significant barriers related to SDG 5 (Gender Equality), as the need for dual-income households disproportionately affects women.
• Healthcare: Comprises 15-25% of budgets, undermining efforts toward SDG 3 (Good Health and Well-being).
• Education and Transportation: The rising costs of college and commuting, linked to urban sprawl and underfunded public transit, create further financial strain, affecting SDG 4 (Quality Education) and SDG 11.

Proposed “Crisis Threshold”

It is proposed that a more accurate “crisis threshold”—the income level below which families cannot function without assistance—is approximately $140,000. This stands in stark contrast to the current official poverty line for a family of four at $31,200. The existing metric, therefore, is not measuring poverty but rather a threshold for starvation, fundamentally misrepresenting the challenges to achieving SDG 1.

Systemic Barriers to Economic Advancement and SDG Alignment

The “Valley of Death”: A Disincentive to Growth

A critical systemic flaw, termed the “Valley of Death,” actively penalizes households attempting to increase their income. As wages rise from approximately $40,000 to $100,000, government benefits and safety nets are withdrawn at a rate faster than the income gains. This creates a trap that discourages economic mobility and undermines the principles of SDG 8 (Decent Work and Economic Growth).

This structural disincentive fosters social resentment and exacerbates divisions between the “working poor” and those receiving aid, directly contradicting the objective of SDG 10 (Reduced Inequalities). The system effectively creates a scenario where the only financially viable positions are destitution sufficient to qualify for aid or wealth sufficient to be unaffected by costs.

Corroborating Data and Broader Economic Implications

Supporting Evidence

The assessment that a high income is now required for basic financial stability is supported by multiple sources:

1. Academic and Institutional Data: Both the Massachusetts Institute of Technology’s Living Wage Calculator and the Economic Policy Institute have calculated that necessary family expenses in many states exceed $100,000 annually.
2. Consumer Behavior Shifts: Discount retailers report an increase in high-income shoppers, indicating financial strain even among households traditionally considered affluent.
3. Public Surveys: A recent Harris Poll survey revealed that 64% of earners with six-figure incomes view their salary not as a measure of success but as the minimum required to remain financially solvent. This highlights widespread financial anxiety that threatens SDG 3 (Good Health and Well-being).

Conclusion: Redefining Poverty to Achieve Sustainable Development

The evidence strongly suggests that the official definition of poverty is dangerously out of touch with the economic realities of modern life. The “illusion of affluence” among higher earners masks a systemic crisis where essential costs for housing, healthcare, and childcare make financial stability unattainable for many. To make meaningful progress on the Sustainable Development Goals—specifically SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities)—it is imperative that policymakers adopt a more realistic and comprehensive measure of economic hardship that reflects contemporary living costs.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 1: No Poverty
   • The article’s central theme is the inadequacy of the current poverty measure in the U.S. It argues that the official poverty line ($31,200) only measures “starvation” and fails to capture the true cost of living, suggesting a much higher, more realistic poverty threshold of around $140,000. This directly engages with the goal of ending poverty in all its forms.
2. SDG 3: Good Health and Well-being
   • The article explicitly mentions the soaring cost of healthcare as a major financial burden. It states, “Healthcare became the largest household expense for many families,” and estimates it comprises 15%-25% of household spending. This connects to the goal of ensuring healthy lives and well-being, particularly regarding financial risk protection from healthcare costs.
3. SDG 8: Decent Work and Economic Growth
   • The article highlights a disconnect between economic indicators (like steady income gains) and the reality of household finances. It notes that a “two-income household is now needed to maintain what one income once provided,” and even those earning six figures are “privately struggling.” This suggests that current employment and wage levels are not providing “decent work” that ensures a stable and secure livelihood, which is a key aspect of SDG 8.
4. SDG 10: Reduced Inequalities
   • The article describes a “Valley of Death” where the “working poor” (middle class) are penalized as they earn more because social benefits are withdrawn faster than their wages increase. This creates a system where “Everyone in the middle is being cannibalized,” exacerbating economic inequality and creating resentment. This directly relates to the goal of reducing inequality within a country by examining how social and fiscal policies affect different income groups.
5. SDG 11: Sustainable Cities and Communities
   • The article points to critical urban and suburban infrastructure challenges that contribute to the high cost of living. It mentions that “Housing costs exploded” and “Transportation costs rose as cities sprawled and public transit withered under government neglect.” These issues are directly related to the goal of making cities and human settlements inclusive, safe, resilient, and sustainable, particularly concerning affordable housing and accessible transportation.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 1 (No Poverty):
   • Target 1.2: “By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.” The article’s entire argument is a critique of the U.S. national definition of poverty, suggesting that to meet this target, the definition itself must be updated to reflect the actual costs of housing, healthcare, and childcare.
   • Target 1.3: “Implement nationally appropriate social protection systems and measures for all… and by 2030 achieve substantial coverage of the poor and the vulnerable.” The article critiques the existing “safety net,” describing how it “sets a trap for anyone trying to climb out,” indicating that the current social protection system is not appropriate or effective for a large segment of the population.
2. Under SDG 3 (Good Health and Well-being):
   • Target 3.8: “Achieve universal health coverage, including financial risk protection, access to quality essential health-care services…” The article’s claim that healthcare costs consume 15%-25% of household income and that “employer coverage shrank while deductibles grew” points directly to a lack of financial risk protection associated with healthcare, a key component of this target.
3. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.5: “By 2030, achieve full and productive employment and decent work for all…” The article implies that even with employment, work is not “decent” if it doesn’t provide enough income to cover basic living expenses without falling into financial anxiety. The finding that 64% of six-figure earners feel their income is the “bare minimum for staying afloat” supports this connection.
4. Under SDG 10 (Reduced Inequalities):
   • Target 10.4: “Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.” The article’s analysis of the “Valley of Death” is a direct criticism of current social protection policies that create perverse incentives and worsen the financial situation for the middle class, implicitly calling for policy reform to achieve greater economic equality.
5. Under SDG 11 (Sustainable Cities and Communities):
   • Target 11.1: “By 2030, ensure access for all to adequate, safe and affordable housing…” The article highlights the failure to meet this target by stating, “Housing costs exploded,” now comprising 35%-45% of household spending, far above the traditional affordability benchmark.
   • Target 11.2: “By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all…” The mention of rising transportation costs and withering public transit directly addresses the challenges related to achieving this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For Target 1.2 (Reduce poverty by national definitions):
   • Indicator: The national poverty line. The article explicitly discusses the official U.S. poverty line ($31,200) and proposes an alternative based on modern living costs (~$140,000). The gap between these two figures serves as an indicator of how inadequately poverty is being measured.
2. For Target 3.8 (Achieve universal health coverage):
   • Indicator (Implied): Proportion of household expenditure on healthcare. The article provides a direct measure for this, stating that healthcare accounts for “15%-25%” of household spending. A reduction in this percentage would indicate progress towards financial risk protection.
3. For Target 10.4 (Adopt policies for greater equality):
   • Indicator (Implied): The net financial impact of earning more income versus losing social benefits. The article describes the “Valley of Death” where “benefits disappear faster than wages increase.” An indicator could measure the income range where this negative effect occurs and the number of households affected.
4. For Target 11.1 (Ensure affordable housing):
   • Indicator (Implied): Proportion of household expenditure on housing. The article provides a figure of “35%-45%,” which is a clear indicator of the housing affordability crisis. Progress would be measured by a decrease in this percentage.
5. For other targets:
   • The article provides several other data points that can serve as indicators: the percentage of household spending on food (5%-7%), childcare (20%-40%), and the percentage of high-earners who feel financially anxious (64% of six-figure earners). These metrics help quantify the economic pressures discussed and could be used to track changes over time.

4. Summary Table of SDGs, Targets, and Indicators

Source: fortune.com