Affordability vs. the Poverty Line

An essay went viral by claiming that $140,000 is what a family of four needs to just get by — a number higher than what 70% of American households earn. Conservative economists called it idiotic. Kathryn dismissed it and got a nasty DM. What’s the real controversy? It’s not that the poverty line is misleading. It's that we have no measure for our current affordability crisis. And the American mindset has been so warped by decades of bad economic policy that we think the only way to get help is to prove that we’re poor. END NOTES: The essay in question: Part 1: My Life Is a Lie - by Michael W. Green https://substack.com/@michaelwgreen/p-179492574, What economists thought: Viral essay says $140,000 should be the new poverty line - The Washington Post https://www.washingtonpost.com/business/2025/11/29/poverty-line-green/ ; Cato: The $140,000 ‘Poverty Line’ Is Laughably Wrong, So Why Does It Feel Right? https://www.cato.org/commentary/140000-poverty-line-laughably-wrong-so-why-does-it-feel-right ; AEI: How Not to Redefine Poverty https://cosm.aei.org/how-not-to-redefine-poverty/ How U. S. poverty measures actually work: Two Ways the U. S. Census Bureau Measures Poverty to Capture Clearer Picture of Poverty in America https://www.census.gov/library/stories/2022/01/national-poverty-in-america-awareness-month-measuring-poverty.html Kathryn on Money with Katie https://podcasts.apple.com/us/podcast/curtain-call-all-stars-return-to-talk-financial-independence/id1589146097?i=1000743287185 (at min. 35) Watch video clips from this episode at the Optimist Economy YouTube channel⁠⁠ https://www.youtube.com/@optimist_economy. Follow us on Instagram at ⁠⁠@optimist_economy https://www.instagram.com/optimist_economy. Follow us on TikTok at ⁠⁠@optimist_economy https://www.tiktok.com/@optimist_economy. Read some stuff on our Substack https://optimisteconomy.substack.com/. Consume leisure in an O. E. hat or shirt: https://merch.ambientinks.com/collections/optimisteconomy Support us and our tireless editors and producers by donating: https://optimisteconomy.com And send your economic questions, concerns, or executive orders: [email protected] mailto:[email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Mitt Romney and Ted Kennedy were about as different as two politicians could be. The lanky businessman and the stout old senator, the conservative darling and the liberal icon. But did you know they once teamed up to tackle an elusive challenge: universal healthcare?

• 0:16Speaker 01

  This is a politician's dream.

• 0:18Speaker 00

  In season four of the Big Dig podcast, we tell the story of Romney Care and the odd couple alliance behind it. Find Mitt and Ted wherever you listen.

• 0:30Robin Rauzi?

  We had a lot of technical difficulties this time.

• 0:33Speaker 03

  This was so hard. It was so hard and we didn't even do it. Oh, man.

• 0:38Robin Rauzi?

  Oh, wow.

• 0:46Speaker 04

  Hello and welcome to Optimist Economy. I'm Catherine Ann Edwards, economist.

• 0:49Robin Rauzi?

  I'm Robin Rousey, editor.

• 0:51Speaker 04

  On this show, we believe the US economy can be better and we talk about how to get there, one problem and solution at a time.

• 1:02Robin Rauzi?

  Today on Optimist Economy, we're going to talk about an essay that made the rounds while we were on hiatus, suggesting that the new quote-unquote poverty line is $140,000. Catherine has thoughts.

• 1:12Speaker 04

  Spoiler, it's not. It's not. Just FYI, spoiler, it's not. But we'll talk about why.

• 1:16Robin Rauzi?

  At the top of our show, a couple of announcements. Big announcement, which is I'm in Houston with Catherine, but after much travails, we're in two separate rooms trying to record this podcast.

• 1:25Speaker 04

  Fam, we wanted to be in the same room talking to each other.

• 1:28Robin Rauzi?

  Couldn't do it.

• 1:29Speaker 04

  It did not work on many levels. It didn't work. And luckily, we didn't do it because I think at some point, one of us would have died when we tripped over all the cords.

• 1:37Robin Rauzi?

  There's so many cords.

• 1:38Speaker 04

  We had connected. So this is a safer, better way to podcast, is to have a conversation when you're actually like 25 feet away in the next room over. This is better. The future is now.

• 1:51Robin Rauzi?

  This feels more natural.

• 1:52Speaker 04

  It does feel more natural. So instead, we're just gonna get beers after the show together and not record it.

• 2:00Robin Rauzi?

  Exactly.

• 2:00Speaker 04

  But you can trust it's happening this time. So this is gonna be our first five-minute episode.

• 2:06Robin Rauzi?

  And thanks for coming.

• 2:08Speaker 04

  Okay, so in summary, announcement one is that Robin and I are hanging out without you.

• 2:13Robin Rauzi?

  Announcement number two is, I forgot to say last week, we had four people become spiritual sponsors of Optimist Economy while we were on hiatus, which was so

• 2:22Speaker 04

  That's amazing.

• 2:23Robin Rauzi?

  So amazing and so sweet. So specifically, this week, we want to shout out Rebecca from Hillsboro, Oregon, who is one of them. And you too can sponsor our show at the spiritual level or any level that you're comfortable with at optimist economy dot com.

• 2:38Speaker 04

  Our next segment is retcon.

• 2:39Robin Rauzi?

  It's only our second episode of the season. Do we have a retcon?

• 2:43Speaker 04

  I actually don't think I have a retcon. I mean, I could definitely try to think of one if I wanted to, but I don't think we have anything to apologize for at the moment.

• 2:51Robin Rauzi?

  Except for the thing we're gonna retract that we haven't retract yet.

• 2:54Speaker 04

  Yeah.

• 2:55Robin Rauzi?

  Yep. Okay. Terms and conditions. Did you look anything up this week, Catherine?

• 3:00Speaker 04

  I actually took a very small, some would say maybe a little bit dumb, how short of a vacation I took to London, but I was across the pond. So.

• 3:11Robin Rauzi?

  Look at you.

• 3:12Speaker 04

  I liked a really simple stuff like words that are in English, but I didn't know what they were meant because I was in another country. But we don't need to go over that. Now I'm just bragging about being in London.

• 3:21Robin Rauzi?

  You are. You are.

• 3:25Robin Rauzi?

  I looked up hedonic adjustments because it was in this essay, and he used it as the quote-unquote, the hedonic lie. So it took me a while to figure out that he was referring to hedonic adjustments. As far as I can tell, this is an adjustment that the BLS makes to how much something costs related to how much more valuable it is and how much more value or usefulness it provides.

• 3:52Speaker 04

  And he called it a lie?

• 3:54Robin Rauzi?

  Yeah. Maybe you can explain it better than I did.

• 3:58Speaker 04

  Hedonic is, it's a really cool concept that's hidden behind economics language that makes it so inaccessible, but you absolutely understand. So if you think of a house, that house has a price. Let's say this house is $500,000. $500,000 encompasses what we would call many differentiated characteristics of the house. Hedonic pricing is the idea that there is a, like, a price component of the quality that is not necessarily just the overall price. Hedonic pricing would be the price component of a house that comes down to how nice the

• 4:40Speaker 04

  park is at the end of the street, or if it's next to, like, a power plant. And we think of hedonic pricing as a way to discuss the implicit prices that make up the overall price. It is the quality that makes up a big price. I'm willing to pay for a good school. I'm willing to pay for a nice street. I'm willing to pay for lots of windows. And all of those are the components of this overall sticker price. And so those are the, you can think of them as implicit prices, component prices, hedonic prices. They're all kind of different, but they get at the same idea, that each aspect of the house that you buy has its own price.

• 5:16Robin Rauzi?

  But this is used, I mean, in the definition I was looking up, related to CPI, right? Which is the Consumer Price Index?

• 5:23Speaker 04

  Mm-hmm.

• 5:24Robin Rauzi?

  I mean, a house is something you buy one time. I think for the CPI, don't they adjust things, like, I don't know, a car, adjusted for inflation, would cost this much, but a car that now has airbags and analog brakes and all these additional features, there's more value to the, to the vehicle?

• 5:40Speaker 04

  Yeah, so the hedonic pricing adjustments to the Consumer Price Index are getting at this idea that the components of the overall price has changed. So, the way that I always thought about it is that most of the time when you go shopping, you're actually shopping on a hedonic price. And then the price tag is almost like an afterthought.

• 6:00Robin Rauzi?

  Like, does it match, does the price tag match what your hedonic pricing in your head is?

• 6:05Speaker 04

  Say one were to testify in front of Congress and wanted a new suit.

• 6:10Robin Rauzi?

  Yes.

• 6:10Speaker 04

  Right? I'm going to go shopping for a suit. I'm shopping for components, right? I'm shopping for a color that's really just going to bang on camera. And I'm shopping for a fit and quality that like, if I get something on it, it won't show. Right? I'm, I'm shopping for all of those components. And you can think of each of those components as having an implicit price. Where I would pay 20 bucks extra for a really good color versus I'm shopping for a suit that costs $99. You shop hedonically, you're, you're buying on that margin. But when it comes to aggregate statistics of prices, I mean, this is so hard. This, in my mind, this is one of the hardest things the BLS has to do.

• 6:49Speaker 04

  Is somehow put into statistical terms, the quality adjustments that we know and see in our everyday life and have that make sense over time. There's lots of ways that they go about doing it, but it's not perfect. And of course, being the BLS, when they think they've missed, they'll go back and they'll say, we think we were wrong. And they'll issue a correction.

• 7:09Robin Rauzi?

  All right, we're going to take a quick break and then we'll be back with our centerpiece discussion. Or the big pill crow.

• 7:15Speaker 04

  The big pill crow, the biggest pill crow.

• 7:20Robin Rauzi?

  Okay, we're back for our centerpiece discussion today, which is about this essay that appeared during our hiatus. And we both were asked about, and I think Catherine has a lot to say about. I actually stumbled on this piece on Substack before it blew up. I was Googling something for something else I was editing. One thing led to another and I, somebody in another Substack said, if you haven't read this and you should. So I was like, oh, okay, I'll read it. But then my mother sent it to me in a text and said, I want to know what Catherine thinks about this. So the original essay on Substack was called My Life is a Lie, I think.

• 8:00Speaker 04

  Yep, part one, My Life is a Lie. This is where I'm going to say the subhead is how a broken benchmark quietly broke America. And this is, this is when, that's like when I started to get a little pissed off, but.

• 8:14Robin Rauzi?

  Yeah, and you weren't alone. You know, it went a little viral in sort of finance bro kind of social media circles. And it got picked up by the Free Press. The original version is like 3,000 words long. They did an edited version, and I think the headline on that was something like The Valley of Death. Why $100,000 is the new poverty? So it was written by this guy named Michael Green, and he's a strategist at a financial advisory firm. I think that gives him a particular point of view that comes through in this piece. This idea of trying to look beyond something to try to find something that's not obvious to people. So it wound up not just shared kind of virally, but it also wound up. The Washington Post wrote an article about what economists thought about what he said,

• 8:59Robin Rauzi?

  which was mostly, he doesn't understand the poverty line, but he's touching on something that clearly touched a nerve. And that's where I'm going to hand it to you.

• 9:09Speaker 04

  Well, you sent me this article because you were like, hey, my mom. And I like moms come first. So you said your mom wants to know what I thought. And so I, at some point during some maternity leave, Hayes had like clicked on it and started to read it. And I just, I had a really hard time getting through it because like the opening salvo is the broken measure, where he, he's both right and wrong in that he correctly describes the genesis of the poverty measure, but he incorrectly describes.

• 9:35Robin Rauzi?

  What's been done since.

• 9:36Speaker 04

  The logic behind it. And the kind of genesis since, it was a little too like poverty is three times food. I felt sick to my stomach. I was like, come on, like get it together. So I kind of read through the rest of the essay and I was like, okay, this is what this guy's doing. And then by the time I got to the end, I was like, wow, he's still going. And I, and I skipped. So then separately, many. Of y'all are Money with Katie listeners and she just ended her show. She's taken a break of an indefinite hiatus. And on her last episode, she had a bunch of people back as like kind of a best of conversation. And I was incredibly honored to be among one of these best of. And she was like, I want to know what you think of this essay.

• 10:20Speaker 04

  And I was just honest, like I had a hard time finishing it. I didn't really like it. And I tried to explain in this interview of like what my hesitations were. And I got one of the more personal and nastiest DMs I have ever gotten, where I was called a dismissive little B word for ignoring the troubles of people.

• 10:41Robin Rauzi?

  Hmm. That's interesting.

• 10:43Speaker 04

  I underestimated how much this essay resonated with people. We don't have to repeat the conversation I have with Money with Katie. Like y'all go listen. That was my like kind of formal introduction to it is that I didn't take it seriously enough. And I wasn't like respectful enough of it. And someone was just like, you are an awful person for ignoring Americans. Like just like this like nasty screed about how people like me are what's wrong with America. So second verse, same as the first. Let's talk about it this time and see if I can be as dismissive, but not get people mad at me.

• 11:19Robin Rauzi?

  So you, if you haven't listened to our What You Don't Understand About Poverty episode, that might be a really good background. You can just hit pause and go listen to that, come back. But it explains how Molly Oshinsky came up with the poverty line as a, as the idea of what deprivation looks like.

• 11:38Speaker 04

  You know, keep in mind that like she's doing this without a computer. She doesn't have regular survey data. She has very little at her disposal, not even a good measure of income in the United States. She has two pieces of data. One that says Americans spend about a third of their money on food. And one that is an estimate from the US Department of Agriculture of how much food costs for family sizes. The logic is if people need this much food to live, say it's like I need a hundred dollars to buy food and people spend a third of their money on food, then three hundred dollars a month is the poverty line. Or three hundred dollars a month is a measure of adequacy.

• 12:21Speaker 04

  Later, Johnson's kind of brain trust within the White House that is directing the war on poverty adopts this measure and calls it the poverty line. What I think is the most interesting part, which this guy totally missed, is that if you go back and think about the Great Depression and unemployment, we did an episode about this, we didn't have a measure of unemployment going into the Great Depression. We didn't have a reliable and uniformly and consistently measured of unemployment until the late 1930s. Really, at the earliest you could claim is the late 1930s.

• 12:57Robin Rauzi?

  Late in the Depression, yeah.

• 12:58Speaker 04

  We have tried to piece together how many people were unemployed, but we don't really know. Same thing when the US decides it's going to declare war on poverty. We don't have a measure of poverty. It's not adopted, it's not accepted, we don't have a way of doing it. We kind of find one and take it. And both of these measures have trade offs, they have advantages and disadvantages, but it's like, we recognize the problem before we measured it. And then we went back to trying to find a measure that worked. I think the era that we're in now is we're in this affordability crisis and we can't measure it because we don't have a measure of affordability. That is the more interesting notion, that we're seeing these like massive turning points,

• 13:41Speaker 04

  these huge like epochs in the US economy of the problem is mounting and part of the problem is that we can't measure the problem and people feel like they're not seen or that what's going on doesn't matter, which is suggestive of like, we are at a focal point, right? Like, to me, the fact that people are so mad at the poverty measure as like not measuring affordability, which it's not supposed to do, that is the interesting part. I didn't convey that before, but like, looking back on this essay and how people responded and how mad people got after my money with Katie essay and kind of trashed me, I think, I think I didn't say what I wanted to say, which is... Kind of shocking, given how much I talk, but I didn't say what I really wanted to say,

• 14:26Speaker 04

  which is like, he was so close, but he just kind of wasn't there.

• 14:30Robin Rauzi?

  Yeah.

• 14:31Speaker 04

  The big picture is affordability. This is what the US, like, the average American is circling around, is that they cannot afford their life, and they can't prove that they can't afford it. It's like, they have to convince politicians that they can't afford it. And we don't have a way of measuring it.

• 14:50Robin Rauzi?

  Yeah, and that's kind of what he attempts to do in the second half of this essay. He makes some, obviously, really bad leaps, one of which is going from a measure of deprivation, right, of bare sustainability, and then saying, "Okay, now I'm just gonna look at averages. I'm just gonna look at the national averages." And then try to call the new, the national average, if you're below the national average, that you're poor.

• 15:16Robin Rauzi?

  Which you're just like, okay, like, not an economist, famously not an economist, and even I can tell you, that doesn't math.

• 15:24Speaker 04

  I thought there was like, a little bit of irony here, of like, "Oh, so you're gonna like, trash a woman in the 1950s who didn't have a computer and came up with one of the first measures of inadequacy and deprivation, and how hard that was for her, and then you're gonna like, put together your own measure? And you're gonna get trashed for it, and you're like, oh, it's..." But it does remind me of that Onion article about Bill de Blasio of like, "Oh, not so easy to find a mayor who doesn't suck [BLEEP], huh?"

• 15:48Speaker 04

  Of like, "Oh, not so easy to put together a number that describes a primary feeling in the US economy that people are gonna get really mad at you for."

• 15:56Robin Rauzi?

  For people who haven't read this, I do worry that this is gonna be hard to understand, if you haven't read this. He feels like, three times food does not adequately reflect our current reality because people don't spend a third of their income anymore on food. So, then he tries to reverse engineer Orshinsky's system, which makes zero sense, and many, many of the critiques of his piece are like, that part of what he does in this essay... Makes zero, zero sense. He then, though, goes on to basically tally up what it takes for a family of four to get by right now. That's the part that really resonated with people. And he says, like, look, you can't just have a landline phone anymore. You have to have a cellphone.

• 16:39Robin Rauzi?

  You have to have broadband access because you need it to communicate with your child's school. You need it to do your job. And he calls this, what does he call it? Like, the price of full participation in the economy? Or something like that?

• 16:53Speaker 04

  Yeah. This is what this guy does. He takes the average price of various goods and services that he deems his necessities, and he adds them up. And whatever they come up to for a family of four, that's poverty. It's $140,000. I'm going to give you two numbers to put into context why, you know, kind of, I don't say flabbergasting that often, but I was flabbergasted by 140,000. The first number is that if you were to line up all households in the US, from richest to poorest, inclusion in the top 25% starts at $150,000 a year.

• 17:31Speaker 04

  So $140,000 is going to be more than what probably 70% of American households make. Another way to think about it is, okay, so lots of households might have, like, you know, young people, you know, old people, people who are retired, just have one person. Maybe it's not the same. He thinks it's just a family. So another way to think about it is that if you were to take, just look at workers, not everybody, just workers, and look at the median full-time worker. So this is someone who works 40 hours a week, 52 weeks a year. The middle person of that group of workers earns $63,000 a year. So by his metric, two median full-time workers would not make enough money to be out of

• 18:16Speaker 04

  kind of his measure of poverty. That's how high this number is. Now, the problems in our economy can be high enough so that that people making that much money can be a struggle, but it is describing well over 60 to 70% of Americans, whether you look at workers, whether you look at households, whether you look at families. I mean, that's, it's a really high number. And I had this like, really, like, really, really, really, really. I mean, I just got mad when I read it because my first kind of reaction was, this is a guy who doesn't understand the income distribution.

• 18:52Robin Rauzi?

  No.

• 18:52Speaker 04

  To say that $140,000 is poor, when $150,000 is the top 25%, is someone who like, has never met someone who makes less money than him and only knows richer people, so he thinks like, he's barely getting by. That was the first reaction. But the second reaction, less about him and more about the response, was this kind of conflation that people have, that if they're struggling, they're poor. If they're having problems with rent, if they're having problems with their cellphone, that, that, that is poverty. Poverty is not, not being able to afford things. Poverty is poverty. And we have a categorically cruel social welfare system in the US that helps very few people. We either push benefits through the tax system, where you're more likely to get it if you're

• 19:36Speaker 04

  high income, or we have a paltry, meanly distributed social welfare system to only the very poorest of the poor. And then we do a lot of things to sabotage them even getting it if they're eligible. That's how we help people. That leaves out a bunch of people in the middle. The answer is not, let's make all those people poor, and so then we can help them. Let's just do a better job managing our economy and not reward poverty like a little letter jacket that people get to say, I'm poor, I get to have help now. Our economy has problems. The answer isn't, let's all be in poverty. I, it's so, it's really messed up for people who are in actual poverty, to say, I make $100,000 a year and I'm poor.

• 20:20Robin Rauzi?

  Yeah. There's a whole section in this essay that he calls, I think, the Valley of Death, which is where he's talking about how as you're trying to climb from $40,000 toward $100,000, that you hit these tiers of income where you begin to lose these benefits. And when this piece came out, we were having a lot of that discussion around the Affordable Care Act healthcare subsidies. So I think that it also fed into that narrative in the political moment about people potentially who didn't have their health insurance through their job, but had to buy it on the marketplace, potentially looking at this really big jump in monthly premium costs and that this government help that they've been getting would go away.

• 21:04Robin Rauzi?

  But he also suggests, you know, that people are getting huge childcare subsidies. And I was like, in what planet? And basically suggesting that you earn another $10,000, but because you essentially step beyond the subsidy level of some sort of government assistance, that you actually wind up taking on all that expense and then some, all of which seemed like pretty far-fetched.

• 21:29Speaker 04

  There is a very large part of the poverty and social benefits literature that looks at this, kind of like, they call it the marginal tax on income, the marginal tax on labor, that the idea that like, if you moved up in income and you lose benefits, the value of the extra income is worth less than the value of the benefit that you'll lose. And this is why a lot of public programs have been redesigned so that benefits phase out. So, you know, if you have ever applied for food stamps, the amount that you get is a function of your income so that if you have, your income can rise and your benefit kind of falls accordingly, so that there's no cliff of benefits that you fall off of.

• 22:13Speaker 04

  The one that's very hard to price this way is Medicaid, because there's no way to phase out Medicaid, the way that you can phase out a weekly or monthly food benefit, the way that you could phase out cash if we had it. But this idea that you lose benefits and that you have this disincentive to earn extra income has been a part of the economics literature for decades. And There's a poverty researcher, or there's an economist at Johns Hopkins, who was pioneering in this field. And I heard him give a talk a few summers ago where he said that he thought that the research had been quite effective. And that this idea that you have to phase out benefits and be careful about five benefits all phasing out at the same time, those benefit cliffs, like, we now have programs that take these into account.

• 22:57Speaker 04

  Things like the earned income tax credit, you know, basically kicks in to boost the return to earned income as program eligibility is phasing out. And so they're basically coming up with a work bonus through the tax system so that if you are losing benefits, you're losing food stamps on the right hand, but your left hand is getting more money from work because you're going to get a work bonus from the government. I mean, they did try to think of these things thoughtfully. It's a lot harder at the bottom when there's up to six programs or seven programs that you could have a family be eligible for. But where this research lives now is the understanding that the vast majority of people will not collect a benefit for everything that they're eligible for.

• 23:41Robin Rauzi?

  Say that again.

• 23:42Speaker 04

  So like, in theory, if I am making $10,000 a year and I have a kid, I should be, I mean, like, food subsidies, health subsidies, housing subsidies, energy subsidies, I mean, I should be eligible for...

• 23:55Robin Rauzi?

  You should qualify for all of those things.

• 23:56Speaker 04

  And I should, like, arguably, maybe even get cash from the government. Like, it is actually rare that someone will get all of the benefits, all the programs that they're eligible for. Right? Like, housing subsidies are...

• 24:08Robin Rauzi?

  And is that because they just don't know about all of them? They don't apply for all of them? They're just not, they don't get qualified?

• 24:14Speaker 04

  Yeah, it's a combination. So, housing subsidies aren't an entitlement. You can have the income low enough to get housing help from the government, but they don't have enough money to go around, so you don't get it. You can have income low enough to get childcare help from the government, but they don't have enough to go around, so you don't get it. So there's that problem. Then there's a problem that you have to know to apply. You have to fill out the application, and that process has to be something that you can navigate. Some states have been really active at trying to come up with almost like a common application. Or when you apply for food stamps, you're automatically applying for Medicaid and just trying to get you all the benefits you can. Other states will make it as hard as humanly possible so that you get deterred from applying and don't actually finish it. So this came up

• 24:58Speaker 04

  a ton in the pandemic when unemployment insurance claims spiked and some states had so cruelly designed their application process with the intention of getting people to quit before finishing the application that now all this federal money is on the table and states are basically now desperate to try-

• 25:17Robin Rauzi?

  Capable of getting it.

• 25:18Speaker 04

  Yeah, so Florida was the case where they had just paid millions of dollars for someone to redo their online application for unemployment insurance, but they had done it in a way to make it harder to apply. And the way that it really broke down was that every time you answered a question, you had to go to a new page. So the number of times you could crash was high. So Florida ended up having parking lots where they printed out applications and handed them to people through the window to work on and then bring back. Greg, you couldn't come inside and get the application. All of this was a way, we call this administrative burden. We're going to make it hard for you to go get the benefit. So the point that he

• 25:59Speaker 04

  brings up about the idea that you could lose a benefit as you make more money is a universal problem in any program that you design in any place. But in some ways, it's almost like, it's like a really early 90s problem. You know, the problems that we have now is getting people connected to the benefits that they're eligible for and getting them enrolled. And knowing that in some ways, the people who deliver those benefits are actively operating in a way to make sure that you don't get them. So a great example is work requirements. Work requirements are a paperwork administrative burden that is designed to get people to drop out of public programs.

• 26:41Robin Rauzi?

  We also have an episode on this from season one. You can go-

• 26:44Speaker 04

  We do have an episode here.

• 26:45Robin Rauzi?

  You can go back and listen to it. It's called Work Requirements Don't Work.

• 26:48Speaker 04

  Yeah, but work requirements, like the state of Michigan added work requirements to temporary assistance to needy families, which is the cash benefit that replaced welfare that is not as generous, doesn't go to as many people and has a time limitation. They put work requirements on TANF during the Great Recession because they needed to get people off of it. If people have to reapply and recertify and fill out their paperwork, you lose people at every certification. And the harder you make the certification, the more you lose people. Not harder like the income test has changed. I mean harder like it's 30 pieces of paper.

• 27:20Robin Rauzi?

  Mm hmm.

• 27:20Speaker 04

  And if they mess up, they lose the benefit. That is the problem that we have in benefit delivery for the very poor. So, yes, if you earn more money, you could lose assistance. And he brought up the case of subsidies. But there was this real like, is it forest for the trees?

• 27:40Robin Rauzi?

  Yeah, he couldn't see the forest for the trees. Yeah.

• 27:42Speaker 04

  Couldn't see the forest for the trees. I think he was missing the whole picture. The problem isn't that the poverty line is too low, or that we don't count poverty as $140,000. The problem is, is that we have mismanaged our economy for the past five decades to ignore market failures that make it very hard for people to afford their life. And a healthcare subsidy phasing out at around $100,000 that someone's going to lose if they earn more money is very different from, we should not be selling healthcare for profit, and that's hurting a bunch of people, right? Like, it was a very, like, privileged focus on like,

• 28:24Speaker 04

  look at this family with $100,000 who's losing their health insurance subsidy. Very hard for that family. But it was like, making the wrong conclusions. Like, picking a part of the problem that hits a privileged set of people and then says... Well, maybe not a privileged set of people. It was a privileged point of view.

• 28:39Robin Rauzi?

  Yeah, I, you know, this, this is a person who works in finance and whose clients are people who have financial advisors. Like, he's talking to people who are well off. He used the language that they speak, and they could maybe understand it, right? And there's a usefulness to that part of what he was doing. When I went back to read this for a second time before we recorded this, I realized at the very beginning of this essay, he says that he wanted to figure out why people are struggling to make ends meet when we've had strong economic and GDP growth and low unemployment. And I thought, I got a paper you should read, you know? And in fact, somebody linked to the Time Magazine article about the study that

• 29:20Robin Rauzi?

  you did about why household income taxable household income has not kept up with GDP growth. I mean, at the end of the day, that's the question he's trying to interrogate, and he winds up down this other rabbit hole about benefits and things that are that's not the source of the problem.

• 29:37Speaker 04

  I almost didn't want to do an episode on this because I feel like it's it's gotten so much attention and not that piling on is what we're all doing because I think it's good to have a conversation, but I almost like didn't want to give too much attention to what was in fact like not a great essay, like it misses the mark on a couple of levels. But I guess if so many people were interested and it hit a nerve in some way, like it's worth talking about, but I almost thought like the essay is the least interesting part. Like it's it's it's he misses this big question of like GDP is growing, but incomes aren't. That's been a problem for a long time.

• 30:14Robin Rauzi?

  Yeah, I think he's he's sort of obsessed with how much our economic outlays cost. He's forgetting in this piece about the inputs, which are our income, right? And that that's what's not growing.

• 30:27Speaker 04

  Yeah, and I and I if you're interested in social policy, like deciding that the poverty line is poorly constructed is like a pretty easy port of entry. And I think it opens up the door to have these conversations about like, you know, well, how do we measure struggle? But don't lose sight of what is causing the struggle. And there was a bit of just like not keeping your eye on the ball, kind of in the whole reaction on some level that we have made policy choices and we are reaping what we sow and we need to make different choices.

• 31:04Robin Rauzi?

  Well, he also he really hammers on economists, like he blames economists for saying everything's fine when it's not. He sort of misses the entire definition of that, that I think actually you said, you know, last week, which is what we were feeling in this post COVID period is the struggle of the middle class, like that the middle class is the one that got really sudden more suddenly squeezed. And his kind of conclusion is the middle class isn't middle class. The middle class is poor now.

• 31:35Speaker 04

  Yeah, so we can put in context that the conservative economists are who like really hated this piece.

• 31:40Robin Rauzi?

  They really hated it, yeah.

• 31:42Speaker 04

  And really hated it. And they, I mean, they like really piled on and they took it down. Someone who wants to trash economists, I'm like, shoot your shot. I don't think we're like a lovable profession. There's this pretty loathsome people who have the same title that I do. Open net.

• 31:56Robin Rauzi?

  Yeah, I did. I feel like the post article, you know, you had some liberal economists who were like, you know, he's trying to understand this poverty thing and these conservative economists who are just...

• 32:05Speaker 04

  What an idiot.

• 32:06Robin Rauzi?

  This guy doesn't know what the hell he's talking about.

• 32:08Speaker 04

  I mean, conservatives were so mad at this because the conservative, I would say the central conservative argument over the past 30 years has been income inequality is not that bad. Poverty is not that bad and that actually wages and incomes are growing sufficiently for America to be a prosperous place. And this feeling that people can't afford enough or that their life is hard or that poverty is rising, that none of that is true. And that if you looked at other ways to think about poverty, like poverty in what you consume versus poverty versus what you bring in, poverty is closer to like 3%. That is their central, you know, and very consistent over numerous decades, argument.

• 32:50Speaker 04

  America is not poor. Americans are doing well. We don't have deep income inequality. It is exaggerated. We don't have wage stagnation. That is exaggerated. We don't have mass poverty. That is exaggerated. And that if you actually measure correctly, we are doing great. They have to...

• 33:06Robin Rauzi?

  If you just measure correctly.

• 33:07Speaker 04

  If you just measure correctly, we're doing great.

• 33:09Robin Rauzi?

  This is like Cato and the American Enterprise Institute.

• 33:13Speaker 04

  And a whole set of conservative economists.

• 33:15Robin Rauzi?

  Like conservative think tanks and conservative economists.

• 33:17Speaker 04

  This is like very fundamental to the conservative economics point of view is that all the complaints of wage stagnation and income inequality and poverty are exaggerated. They are, they are misrepresenting what is actually going on. In some ways, they have to because we are in the fifth decade of a deeply conservative era in American economic policy. We are fighting unions and not protecting them. We are letting the minimum wage road. We are passing tax cuts and almost no social policy. We are not intervening in any type of market failure in a significant way. If something is wrong,

• 33:58Speaker 04

  we'll throw a tax credit at it and some market regulation, but we will not grossly interfere. I mean, we've passed five tax cuts this century. They have to say America is doing awesome because they're the ones in charge.

• 34:11Robin Rauzi?

  They got what they wanted. And if it's not working, then yeah.

• 34:14Speaker 04

  Yeah, so to say that Americans are struggling is to be liberal in some kind of fundamental way in the US economy or in the economic space because you're saying that the ruling policy agenda is failing. So to say that people are struggling is a liberal argument, which is why this guy got so dumped on by so many conservative economists of like, this is ridiculous.

• 34:38Robin Rauzi?

  And the liberals were like, but Molly Oshansky.

• 34:41Speaker 04

  Yeah, but the liberals were like me and they were like, you get Molly Oshansky's name out of your mouth, sir. And please do not further misrepresent what this pioneering woman did. It is one of the most misrepresented things I hear talk about in some ways in the poverty space is what Oshansky did. And I'm sure I'm culpable in that in some degree because I feel the need to defend someone who set out to try to help children in poverty in any way that she could and didn't like how much she gets piled on over the years as if she endorsed how we went about things. You know, his essay is basically saying we

• 35:22Speaker 04

  have these massive structural economic problems that need fixing. And I guess on some level, I just thought he didn't say it very well. It resonated with other people. It didn't resonate with me. And I have a visceral reaction to the casual way in which people will claim that they're in poverty. So there's this like really fundamental moment for me in my like economic journey where this really hits home. So I'm studying at the University of California, Davis, and I take a break from Wisconsin in the middle of my PhD to go to the Poverty Center at Davis to do a poverty fellowship and to get exposed to different poverty researchers. And one of the professors there explained to me that they had this problem of, not necessarily a problem, but

• 36:07Speaker 04

  like, in Davis, California, they were trying to set aside money for the local school district for schools that were in high poverty areas and schools that needed help. And one of the schools that showed up as being kind of high poverty wasn't high poverty per se, it had a lot of grad students. And grad students don't make that much money. In fact, most grad students would have low enough income to be at or near the poverty level. And so...

• 36:31Robin Rauzi?

  I'm sorry, they were like resident in the neighborhood?

• 36:33Speaker 04

  Like, it was like a neighborhood that lots of PhD students lived in.

• 36:37Robin Rauzi?

  Oh, I see. And they have no income, really?

• 36:38Speaker 04

  And they have really low income. So if you're a PhD student, I mean, fifteen to twenty thousand dollars a year is your stipend. At least it was fifteen when I went to school. Which does put you below the poverty level.

• 36:49Robin Rauzi?

  Poverty line.

• 36:50Speaker 04

  I was like, well, if they have, if they're low, if they meet the measure, right? Like, they should get the money. And she was like, Catherine, they are not poor. They have low income. That is not the same thing as being poor. And I, it always struck me of what she was trying to say, right? Like, these were students who were taking a temporary vacation into the land of very, very low income. They were going to finish and have a high job. If they ever needed more money, in a desperate way, they could immediately get it. And there was a ticking clock to their low-income status. And that was very different from being stuck there. And I think that I kind of have that same reaction when I read something like this of like, struggle is not poverty. And we don't just have to

• 37:34Speaker 04

  channel solutions in our economy through poor people. Like, y'all, our mindset is so broken.

• 37:40Robin Rauzi?

  Yeah.

• 37:41Speaker 04

  Do you remember that? Remember that you've been in five decades of conservatism? So you, you are desperate to show that you're poor because you're desperate to get help from the government because you think that the only people who are allowed to get help by the government are the very, very poor. Your mindset is totally broken. We can have universal childcare right now, and you shouldn't have to be poor to have a benefit from an investment in children.

• 38:04Robin Rauzi?

  To get it, or to, yeah, to deserve it.

• 38:06Speaker 04

  Yeah. And in some ways, his logic and what took off represents what is broken about how we view the economy in some way that we don't understand. That there's this, it's not paradigm shift. It's not sea change or something. Transformation.

• 38:21Robin Rauzi?

  Yeah, I mean, I think we're, we're at a, I don't know if it was COVID or two Trump administrations. I don't know, but we're at a pivot point where we really have, people are really saying like, can this continue to go on like this?

• 38:32Speaker 04

  It can't.

• 38:33Robin Rauzi?

  And these are the big questions, I mean, I think that we're going to try to wrestle with on this show.

• 38:38Speaker 04

  It can't, it can't go on. And I think what's been happening over time is that the number of people who are feeling like they can't make it is just creeping up the income distribution. And I hate to say it, but like, it's finally hurting people who matter. Because the difference between $140,000 in poverty is that people who are in poverty have struggled always. And $140,000 is not good enough today. $20,000 has never been good enough. It's never been near good enough. They don't have near enough to get by. What the people who are struggling with affordability, it's just, you see it go higher and higher that as goods become, and services become higher and necessities get out of reach,

• 39:21Speaker 04

  that it's more and more people who feel the squeeze. But it's worth remembering that there's an order to who matters in our economy and who matters in our society. And like, we're starting to see affordability hit some heavy hitters who have some sway in how we do things.

• 39:39Robin Rauzi?

  I mean, I think that we've had this, this problem with pathways of the middle class and middle class affordability for a while. And it's manifesting in different ways. And people's political response to it manifests in a lot of different ways, a lot of different frustrations, different anger. So you think, you feel like it's just, it's climbing up out of the middle class and the upper middle class. Is that what you're saying when you say it's beginning to affect people who, who have some sway or some power?

• 40:06Speaker 04

  Yeah. I mean, this guy's a finance bro. And the post is titled, "My Life Is A Lie." And he's saying that the affordability and the struggle to make it and the paucity of government, meaningful government help to put the thumb on the scale for you is $140,000.

• 40:29Speaker 04

  I mean, that's well above median income.

• 40:33Speaker 04

  That's well above average income for a family. He wrote an essay saying that the average American can't afford a life, basically.

• 40:42Robin Rauzi?

  For childcare for two children. He's talking about a family of four.

• 40:45Speaker 04

  Yeah.

• 40:45Robin Rauzi?

  Yeah.

• 40:46Speaker 04

  Yeah, but I mean, it's, it's, you know, this is, this problem is seeping into many more Americans' lives than are comfortable with it or are used to it or expect it.

• 40:56Robin Rauzi?

  Yeah.

• 40:57Speaker 04

  Yeah.

• 40:57Robin Rauzi?

  No, I think that's right. I think that the thing that he's tapping into is the difference between, I pretty much always have enough money, I just have to decide how to allocate it. And now I actually can't, I don't have any slack to allocate.

• 41:09Speaker 04

  Yeah.

• 41:10Robin Rauzi?

  Can I afford car payments if I need to get a new car? No, I can't. Do I need to worry about how much it's going to cost to insure my car if I get a new car? I mean, housing costs, people talk about insurance costs through the roof. And, and all of these things have added up and added up and added up.

• 41:26Speaker 04

  Yeah. I, I mean, just to make sure there's going to be someone who listens and they're going to be like, man, F her.

• 41:35Speaker 04

  Just for like this, like final caveat of, just because I didn't like this essay doesn't mean I don't think people are struggling.

• 41:43Robin Rauzi?

  Yeah.

• 41:43Speaker 04

  Or that people could be at $140,000 and struggle. I think that they're absolutely struggling and I think they're struggling much higher than that. It's not about the people's experience that I didn't like or saying that it's not true.

• 41:59Robin Rauzi?

  It's that it's not poverty.

• 42:01Speaker 04

  Yeah, it's that it's the poverty thing that really, it's like, yeah, once you've said it, I'll never be able to look away. I just, yeah, but I, we always try to end on an optimistic note and, you know, where like we say, one problem and solution at a time. Well, this was like the problem.

• 42:16Robin Rauzi?

  Yeah.

• 42:17Speaker 04

  This is the big problem. But I guess the optimistic thing is kind of what it was last week, which is that the more people that recognize it, the better that we'll be able to address it. Not through shitty subsidies. I mean, like, actually address it. Like, do something bold, do something big. And I guess the bigger the problem gets, and the bigger that the problem feels, the bolder the action gets to be. And you think about healthcare reform 15 years ago versus the healthcare reform today. I mean, our society has transformed in how it views private health insurance, employer-sponsored health insurance, health insurance in general.

• 43:01Speaker 04

  You know, the problem didn't feel as big back then. Now it feels insurmountable. And on so many levels, things that might have been a problem 15 years ago feel like a battle that we'll never win. And that means that the solution gets to be that much bigger. If we ask for it, if we fight for it, if we take advantage of this boldness. So I think that the common parlance of affordability, I think it's only going to be for the best that it's broad, it refers to a lot of things. It could mean housing, it could be transportation, it could mean healthcare, it could be childcare, because that means we get to do a ton of stuff in response. And everything can affect affordability, so let's do it. I don't even actually like affordability as like a...

• 43:45Robin Rauzi?

  As a concept?

• 43:46Speaker 04

  No, not even like as a motivator.

• 43:50Robin Rauzi?

  Yeah, that we have to be able to afford more.

• 43:52Speaker 04

  Or just have a better economy. I don't know. I don't know if I really like affordability as like the umbrella term, but...

• 43:59Robin Rauzi?

  It's the one that's out there.

• 43:59Speaker 04

  It's the one that's out there, and it does lead us to the same place, which is big, bold action. So that is great.

• 44:06Robin Rauzi?

  All right, we're going to take a little break, and then we'll be back with executive orders and spiritual sponsors.

• 44:14Speaker 04

  Okay, okay.

• 44:15Robin Rauzi?

  She'll come in there? I'm going to go in there?

• 44:17Speaker 04

  Yeah, yeah, yeah, you come in here, okay.

• 44:19Robin Rauzi?

  Okay.

• 44:22Speaker 04

  Wait, can you roll in one more time? Can we get a roll? Ready, in one, two. I'm gonna catch you.

• 44:35Speaker 04

  We need a rug. We definitely need a rug. This is, it's a little dicey. Okay.

• 44:40Robin Rauzi?

  Okay.

• 44:41Speaker 04

  We couldn't record the whole episode here because you're gonna see just how close our faces have to get.

• 44:46Robin Rauzi?

  I know, it's like we're gonna sing a duet.

• 44:47Speaker 04

  Yep.

• 44:48Robin Rauzi?

  In the 30s.

• 44:49Speaker 04

  In the 30s, yeah, just really close. So.

• 44:51Robin Rauzi?

  Both in Houston.

• 44:52Speaker 04

  We're both in Houston and we're gonna do executive orders and we'll just like pass the mic a little bit, because you probably do have to get closer.

• 44:57Robin Rauzi?

  I don't have an executive order. Huh. Okay, it's all you. Executive orders.

• 45:01Speaker 04

  I'll do two.

• 45:03Robin Rauzi?

  Okay.

• 45:03Speaker 04

  Um, so, my executive order is twofold. I'm taking Robin's order today. Executive order one is that several members of the cast of Bend It Like Beckham need Oscars. Both of the moms absolutely need an Oscar for that performance, because it's two very different moms with very different struggles with their daughters, and they're not one dimensional. Like, they have journeys as they go through, and they're both, it's played to perfection, especially, especially Jess's mom. She's so good. Yeah, the dad definitely needs an Oscar too.

• 45:39Robin Rauzi?

  Retroactive Oscars?

• 45:41Speaker 04

  I just think it's a movie that, it's a retroactive, you know, like, we need to do an apology Oscar for Bend It Like Beckham. Y'all made a sports movie that was also a movie about community and identity and so many other things. It was impeccable, it's impeccably acted. The moms, I just watched it again going to London. London, anyone? I like to watch movies that are themed for the destination.

• 46:08Robin Rauzi?

  Oh, there you go.

• 46:08Speaker 04

  So I was going to London, I watched it. It is the first time I have watched Bend It Like Beckham since becoming a mom, I think is probably the key thing. And so I now kind of see it more through the parent's perspective. It's not that I have teenagers, but I, their characterization, I'm like, oh man, that's actually like an amazing portrayal of moms on film.

• 46:26Robin Rauzi?

  One of the cast members, I don't know all their names, comes to the Angel City Football Club games all the time, and they always show her on the big screen. And everybody goes wild, yeah.

• 46:36Speaker 04

  Okay, anyway, I need to move on from the Bend It Like Beckham show, which is what we're now going to be now. My second executive order is that we need to remake Bend It Like Beckham on the regular. Like, why is this movie not set in America, Hollywood? You could do it with so many immigrant communities in the US. You could do it with like the Burgeny National Women's Soccer League. You could do it. There's just, I mean, like, because that movie is-

• 47:01Robin Rauzi?

  I mean, clearly it needs to be a series, like a Netflix, like, eight-part series.

• 47:06Speaker 04

  Yeah, every year, every year, yeah.

• 47:08Robin Rauzi?

  New, new situation, new immigrant community.

• 47:11Speaker 04

  It's also a movie about class, and there's lots of ways to explore class in the US. So that is the executive orders. Now we can do spiritual sponsors.

• 47:19Robin Rauzi?

  My spiritual sponsor this week is Carmen Maria Machado, who's a novelist and short story writer. And I went to see her give a reading last week, and she's amazing. And if you haven't read her work, you should.

• 47:29Speaker 04

  Okay, rolling on in. My spiritual sponsor are British biscuits.

• 47:36Robin Rauzi?

  AKA cookies.

• 47:36Speaker 04

  Yeah, they're cookies for us, because we're normal. And they're shortbread cookies, but they call them biscuits. And I don't know-

• 47:43Robin Rauzi?

  You just brought some and gave them to me and my wife.

• 47:45Speaker 04

  Yes, I brought biscuits, I brought biscuits home.

• 47:48Robin Rauzi?

  From London.

• 47:48Speaker 04

  From London.

• 47:49Robin Rauzi?

  Where she was.

• 47:52Speaker 04

  Oh, man, the title of this episode is going to be Catherine Was in London.

• 47:55Robin Rauzi?

  Yeah, and affordability.

• 47:57Speaker 04

  We like Paddington, too.

• 48:04Speaker 04

  Our show is edited by Sophie L'Enland. Our video production for social media is by Andy Robinson Video Consulting. If you like the podcast, you can share clips from the show with your friends and enemies on TikTok, Instagram, YouTube, and LinkedIn.

• 48:18Robin Rauzi?

  We also have a sporadic newsletter on Substack, as well as an Optimist Chat Room. It's just like a group text thread. That's also on Substack. Support from listeners like you helps keep our podcast going. So if you have the means to contribute, you can do so at optimist economy dot com.