The American Middle Class is Dead… And the Stats Prove It

Today, we’re going to play a game I’m calling “True or Stupid.”

The rules are simple: I’m going to give you a dollar value and then I’ll give you the context, and you get to decide if it’s true or stupid. Also, I’m going to give you that answer: It’s “stupid.”

So, let’s play…

The number: $37,482.

The context: That’s the dollar value that represents the Supplemental Poverty Measure, the SPM, as determined by the US Census Bureau for 2023, the most recent year.

What makes this stupid is that that number applies to a family or four in America.

It implies that the poverty line is $3,124 per month.

The average American family of four is paying $1,750 for rent at the low end and about $2,140 at the high end. We’ll go with the low end.

Average cost of health insurance for a family of four is $2,131 but that can be as low as $1,500—though expect big deductibles and co-pays. We’ll stick with $1,500 and assume the family is uber lucky and never needs to visit a doctor and shell out for those co-pays and deductibles.

The average, four-person family in America is spending $993 a month on food if they’re super thrifty, and about $1,600 if they’re liberal with their spending. Again, we’ll stick to the thrifty side of the grocery aisle.

Utilities, including a mobile phone plan, are $600 to $750 a month.

Right there, we’ve already spent $4,843 on just the four biggest necessities—food, shelter, health, utilities—and we’re using the affordable end of the scale.

We’ve not yet included a car or a car lease (81% of American households have one or the other), or the cost of keeping up a much older car that’s already paid for. We’ve not included the cost of gasoline to get back and forth to work and to the grocery store.

We’ve not included credit-card debt, which roughly 56% of American households carry, and for which those households are paying between $181 and $273 per month, depending on which report you put more faith in.

We’ve also not accounted for replacement clothing, particularly for kids in school. We’ve not touched on the cost of school supplies, or the cost of childcare for families with rugrats and younger kids.

Our point is that $37,482 is a stupid number.

Some bean counter in the government can probably justify the sum through all kinds of mathematical manipulations and hedonic adjustments and a little wing of bat, eye of newt chemistry… but the real poverty line in America is very likely closer to about $72,000, or $6,000 per month.

Below that, households of four are living a subsistence life in which just surviving to the next payday is nothing but a celebration of all that they can’t afford.

Now, I came to this topic today because of a recent Washington Post story about Michael Green, chief strategist and portfolio manager at Simplify Asset Management. He took to task the Census Bureau’s methods for determining where poverty begins and ends in America.

In terms of the SPM number, the government defines poverty as income that is 83% or less of median household spending on food, clothing, shelter, utilities, telephone, and internet.

Again, I urge you to think of the word “stupid.”

Why is there no healthcare? No childcare? No transportation costs? No debt servicing costs? What about tax obligations on personal consumption, or on personal income that must be paid to Uncle Sam and 41 of the 50 states that impose a personal income tax?

Those are legitimate expenses that American families of four must incur be productive members of society. Excluding those costs from a poverty-line analysis is, say it with me, “stupid.”

Which is exactly what Michael Green was getting at when he calculated that the poverty rate for a family of four in modern America really starts somewhere near $140,000, give or take $10k or so.

Yes—that seems like an egregiously egregious number.

Lots of people disagree with Sir Green.

I think the number is too large, myself. But it’s too large by too much.

It’s certainly a whole lot less stupid than $37,482 because Green’s number takes into account all the costs of living a normal American life and points out just how cray-cray America’s cost of living crisis really is.

And by now you might rightly be thinking, “Ok, great El Jefe—poverty yada yada yada. But why is any of this important to Field Notes or the stories you write in Global Intelligence?”

This poverty discussion speaks to a far larger issue: The rupture that exists deep in the American economy, and it helps explain why politics in America has run off the rails.

A middle-class life was once a birthright in America.

Today, it’s barely a dream for much of the country. A Wall Street Journal-NORC poll found that 70% of Americans say the American Dream—a solidly comfortable middle-class life—is dead. An ABC News/Ipsos poll found the same… 69% of Americans say the American Dream is dead and gone.

And what do people do when they feel like they have nothing left to lose?

They rebel and revolt.

History is packed with examples of that in France, Imperial Russia, Revolutionary America, et. al.

We’re seeing that again in recent presidential elections.

Trump, in certain ways, is the manifestation of a burn-it-all-down mentality that’s running amok in America today. He’s also a symbol of the Gatsby-esque society that exists today, where the wealthy and the ruling class are exploiting the systems they created by extracting ever more wealth from the middle class and below.

Stats back that up.

Back in 1970, 61% of Americans were in the middle class.

Today, it’s 51%.

Among those who’ve moved on, some of them progressed into the upper-income levels.

More fell into the lower-income ranks.

Back in 1970, the middle class held 62% of all the wealth in America. Today… 43%.

In effect, America has created a barbell society and a barbell economy. Lots of wealth and lots of poverty on the two extremes, and a narrowing middle connecting the two ends.

That never ends well.

Something always breaks.

And something will break this time.

The good news: A better future awaits.

You just have to survive the bad until the good and the new arrive.

You know the solution—gold, Swiss francs, and bitcoin. It’s old news and I know I repeat it too frequently. But every day we’re one sunrise closer to the reset.

A poverty level at $37,482 isn’t just stupid, it tells you that way too many Americans have no hope of catching up.

That’s where the end begins.

And the end is coming…