At Christmas, we are often reminded to think about those who are less fortunate. It’s a time for charity as well as excess, but it can be a prompt to reflect on a few basic aspects about life in modern Ireland. One question that recurs is why so many people in our country feel poor when most statistics tell us we are rich? Why is there such a contrast at Christmas? Survey after survey reveals that people are pinned to their collar, yet officially the number of people who are defined as living below the poverty line is declining.
Politically, if the vast majority of our citizens are living well above the poverty line, why do so many people indicate that they are either annoyed about excessive social welfare payments or housing immigrants for free? Surely they are well enough off not to care?
Could it be possible that the notions of poverty are well off the mark and the actual cost of living in Ireland is far higher than the statistics and definitions are capturing? This would mean that the economy economists talk about and the economy real people live in are completely different, leading to what is known as the ‘vibe-cession’ – a situation where the headline numbers of the economy look fantastic but the ‘vibes’, what people are really feeling, are awful.
These questions were sparked when an internet storm was triggered by an American substack post calling into question the metrics underpinning the poverty line in the US. In short, the author argues that the official definition of poverty is mathematically obsolete because it relies on a 1963 formula which assumes that a family living below the poverty line is defined by a family whose food budget accounts for one-third of its income.
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So they spend one third on food, leaving the other two thirds to spend on the rest of the basics: rent, childcare, utilities, etc. The author’s conclusion is that while the cost of food has become a much smaller fraction of household spending, other costs have ballooned – so much so that for a family to function and pay for the basics today requires a salary of $140,000 (€120,000) in the US.
Not surprisingly, economists have reacted with indignation, but the idea has resonated with many ordinary Americans. The debate continues and the success of Zohran Mamdani in New York, based on the ‘affordability’ ticket, indicates that many Americans feel far poorer than the official statistics suggest.
What’s the story in Ireland?
Here the poverty line is set at 60 per cent of the median disposable income, that’s about €344.92 per week (roughly €18,000 per year) for a single adult. For a household of two adults and one child, the official poverty line is around €645 a week, or €33,643 a year. Cross that income line, and by our definitions you’re not poor.
Ireland’s poverty line formula hasn’t fundamentally changed in decades, even as the cost of living has skyrocketed. The official measurement looks at income, but it doesn’t explicitly account for what things actually cost. The assumption is that anyone above 60 per cent median can afford a decent standard of living, but if you calculate the basic costs of a “modest but adequate” life in the Ireland of 2025, does that fit inside the neat €33.6k box? Here’s where things get tricky.
Life in Ireland today looks nothing like it did when these benchmark metrics were defined. Decades ago, one modest income could often support a family. Housing was cheaper, childcare was usually provided by a stay-at-home parent or relatives, college didn’t require debt, and a basic standard of living was attainable without two salaries. Those days are over.
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Housing costs have exploded. Rents are at record highs: in early 2025, the average open-market rent exceeded €2,000 per month nationally for the first time. Even outside the hotspots, a modest two- to three-bedroom home can easily cost €1,500+ in rent per month. Mortgages, for those lucky enough to buy, aren’t much easier. Childcare has become a second mortgage. Ireland has some of the highest childcare costs in Europe, with parents paying roughly €190 per week on average for a single child – about €800 a month, and well over €1,000 in many urban areas.
Essentials like food, utilities and transport have all climbed steeply. Groceries rose about 16 per cent in 2023 alone; an Irish family who spent €200 per week on groceries in 2021 was paying roughly €265 per week in 2025 for the same basket due to inflation – that’s an extra €3,300 a year on food alone. Fuel and energy costs have spiked. Running a car, often two cars, since public transport or proximity to work doesn’t cover many families’ needs, is a formidable expense. Insurance, petrol, maintenance, tax, and loan payments can total around €10,000 a year per car. While Ireland has public healthcare, over half of all households pay for private health insurance and for GP visits if they don’t qualify for a medical card, which can run to around a couple of hundred euro per month.
Today, the composition of an average family’s budget is utterly different from a generation ago. We spend far less proportionally on food and far more on housing, childcare, and other services. In fact, food now might be only 10 per cent of a family’s expenses, whereas housing can devour 30-40 per cent and childcare another 15-20 per cent or more. Adding this all together – housing €1,500, childcare €800, food €900, transport €500, healthcare €200 and utilities €500, without talking about holidays, going out or even a Netflix subscription – this family needs about €4,400 per month just to cover essentials – that’s €52,800 net per year.
Now, think back to that official poverty line: €33,600 for this household type. Our notional family would be well above the poverty line in terms of income, yet deeply stretched in terms of basic costs. They would need a take-home income almost €20,000 higher than the poverty threshold to meet a modest budget. Put another way, the “poverty line” falls nearly 40 per cent short of what this family realistically requires to avoid financial stress.
In the US, this large constituency voted in huge numbers for Donald Trump – but they also turned up in New York to vote for the anti-Trump, Zohran Mamdani. In Ireland, this group, “the working poor”, will determine future elections. They need someone who listens, understands and speaks for them. Who might that be?
