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America's middle class is in trouble. Here's what that fact means for the world's largest economy — and the rest of planet earth.
 

Can Walmart help build India's middle class?

In India, the entrance of America's giant retailer is as controversial as outsourcing in the US.
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Indian employees welcome Bharti Wal-Mart President Managing Director and CEO Raj Jain (unseen) following an inauguration ceremony of a newly opened Bharti Wal-Mart Best Price Modern wholesale store in Hyderabad on September 26, 2012. The government last week unexpectedly revived long-delayed plans to open up the retail, aviation and broadcasting sectors to more foreign investment and reduced deficit-bloating fuel subsidies, after policy paralysis and graft scandals dimmed the outlook for India's once-booming economy. (NOAH SEELAM/AFP/Getty Images)

Walmart is hardly known for creating quality jobs in America, where it has been criticized for its labor practices. But in India the government hopes the retail giant--and others like France's Carrefour and the UK's Tesco--will help increase farm incomes, boost agricultural production, and create vital non-farm jobs that will help bring a million more Indians a step closer to the middle class.

In case you're wondering, the move is about as controversial here as American companies' outsourcing of work to India.

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Poll: Obama better for middle class

GOP hopeful Mitt Romney, on the other hand, is seen benefiting the rich. White men, too.
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Graphic. (Kyle Kim/GlobalPost)

BOSTON — Middle-class voters are, of course, important to the Nov. 6 presidential election.

Both President Barack Obama and Republican challenger Mitt Romney have been aggressively targeting this group, particularly in swing states like Ohio, Michigan, Virginia, Pennsylvania and other places where members of this large and economically struggling voting bloc call home.

The big question: whose policies would be better to get middle income Americans back on track?

According to a poll released today by Gallup, President Obama is winning this argument.

Convincingly.

Here's how Gallup put it in today's report:

"More Americans believe middle-income earners would be better off in four years if President Barack Obama is re-elected than if Mitt Romney wins, by 53% to 43%. The public also says lower-income Americans would be better off under an Obama presidency, while, by an even larger margin, they say upper-income Americans would do better under Romney."

According to the Gallup poll, these groups would also fare better under four more years of Obama: racial and ethnic minorities, women, young adults and senior citizens.

The two are tied (47 percent v. 47 percent) when it comes to small-business owners.

Here's how Gallup analyzed the findings:

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Middle class effect: India scores from higher costs in China

Rising labor costs and other production issues have forced China to look to India for leather products
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Taken on July 3, 2012, an Indian employee checks reels of thread on a carpet weaving machine at a factory in the Bari Brahmana industrial area of Jammu. (STRDEL/AFP/Getty Images)

Here's another effect of the growth of the middle class in developing countries like China: When wages and other production costs go up, companies start sourcing products from abroad -- just like those pesky US garment brands.

As the Times of India reports, India's leather industry is beginning to reap the benefits, as rising production costs and labor trouble in China have forced companies there to start buying from Indian factories.

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Middle class ad watch: Obama and Romney reach out to the middle (VIDEO)

Middle-class voters are key to November's election. Amid Mitt Romney's infamous 47-percent comments, here's how both sides are trying to reach them.
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Graphic. (Kyle Kim/GlobalPost)

The fallout over Mitt Romney's infamous "47-percent" comments has become a key factor in the ongoing race for the White House.

Both President Barack Obama and his Republican challenger, of course, have been desperately wooing this large — and economically-challenged — middle-class voting bloc.

That's especially true in the swing states — think Ohio, Virginia, Pennsylvania — that are likely to decide this election, and where lots of middle-class Americans live.

But with new polls showing President Barack Obama widening his lead, there was more bad news today on the middle class front for GOP candidate Mitt Romney.

According to a poll by the Washington Post and ABC News, 54 percent of Americans who heard the Romney fundraising comments regarded them in "an unfavorable light."

But the pain for Romney's campaign cuts even deeper.

Here's how the Post's Jon Cohen digs into the numbers:

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China's Great Wall of Inequality: how a booming economy is creating a deeply divided society

The rich-poor divide in China is a "very dangerous" situation, says one income distribution expert.
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A man works inside a fresh seafood shop at a wet market in Hong Kong on June 26, 2012. The wealth gap in Hong Kong, already one of the world's widest, is worsening as the rich get richer and the poor struggle to make ends meet, official figures show. (DALE de la REY/AFP/Getty Images)

HONG KONG — When it comes to development, China has gotten the bad along with the good.

At the same time that it has brought millions of people out of poverty and benefited from US outsourcing, the country's wealth gap has widened so much it is now one of the largest social problems the country faces.

As I found in my reporting in Shanghai — to be described in an upcoming story — even workers who moved from the countryside and know that their lot has improved over their parents’ generation feel limited, even stifled, by China’s deeply unequal society.

A recent Bloomberg interview shows that this rich-poor gap is unlikely to be fixed anytime soon. Li Shi, a professor at Beijing Normal University’s China Institute of Income Distribution, projects that China’s Gini coefficient (a measure of income inequality) will stand well above a level associated with social unrest for the next decade:

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Who says the US doesn't export anymore?

In fact, exports are stronger than ever. But it's the 1 percent who are profiting.
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Oh exports, where art thou? (Justin Sullivan/Getty Images)

BOSTON — It's a common lament, the kind of rant that rolls off the tongue in an election year: American workers can’t compete globally. They no longer produce stuff that the world wants. And that's why our economy is sluggish.

The problem is, it just isn't true.

On the contrary, America may not be stitching many pants or making much steel, but it has never before hauled in so much money from abroad. The fruit of our labor is at an all time high. And exports are more critical to US prosperity than ever.

Here are the Commerce Department’s numbers: In 2011, America’s sale of goods and services to the rest of the world grew by 14.5 percent, setting a record of $2.1 trillion. Exports accounted for 13.8 percent of the US economy — higher than any year since an anomalous boom during World War I.

Exports are also critical to the economic recovery, contributing more than half of GDP growth in 2011, according to the Commerce Department.

So where are the robust opportunities for American workers?

It turns out that we’re just too efficient — and perhaps a bit underpaid.

Yes, exports have more than tripled in the past two decades, and they account for a greater part of the US economy than ever. But as a share of employment, they’ve stayed relatively constant, at about 6 to 7 percent, according to a 2008 International Trade Administration report.

How could this be?

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India: IT outsourcing gives Indian firms a foothold in management consulting business

As IT grows in importance for businesses, India's outsourcing giants are going head to head against Accenture, McKinsey, and, of course, Bain.
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Kashmiri employees working at a call centre in Srinagar. This call centre works 24/7 operations at Access Infrastructure which serves clients of one of India's largest cell phone networks. (ROUF BHAT/AFP/Getty Images)

NEW DELHI — Call it "Revenge of the Downsized."  Now, those guys at the consultancy might just lose their gig, too.

Even as Americans continue to view India's business impact as limited to telemarketing and tech support call centers, the country's largest IT outsourcing firms are moving into ever more complex areas -- which means competing INSIDE the US, too.

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Foxconn riots: Good news for US middle class?

How unrest in China's factory economy might affect middle-class manufacturing jobs in America.
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Participants dressed up to represent Foxconn workers take part in a protest against the Taiwanese technology giant, which manufactures Apple products in mainland China, outside an Apple retail outlet in Hong Kong on May 7, 2011. At least 13 Foxconn employees died in apparent suicides last year, which rights activists blamed on tough working conditions in a case that highlighted the challenges faced by millions of Chinese factory workers. (ANTONY DICKSON/AFP/Getty Images)

BOSTON — There's been more trouble at Foxconn, the Taiwanese electronics company that supplies many US technology giants — including the parts for Apple's iPhone and iPad.

Details are still murky, but it seems a riot broke out at one of the company's factories in the northern Chinese city of Taiyuan.

Foxconn has suspended production there as it sorts out the latest mess.

Here's how the New York Times put it:

"Unconfirmed photographs and video circulated on social networking sites, purporting to be from the factory, showed smashed windows, riot police officers and large groups of workers milling around. The Foxconn plant, in the Chinese city of Taiyuan, employs about 79,000 workers."

Foxconn, of course, has had of problems over the years, ranging from alleged rights abuses to pay and other working conditions complaints. GlobalPost documented these stories and others in our award-winning reporting series Silicon Sweatshops and its follow-up.

But could trouble in China spell good news for middle class workers in America?

That's the point of an interesting post today by Jeff Macke at Yahoo Finance.

Macke makes the case that a variety of factors — think higher transportation costs, management challenges, cultural difficulties — are eroding the logic behind shipping these kinds of jobs overseas.

Most importantly, due to globalization wages around the world are going up and it's only a matter of time before the world runs out of countries where people "will assemble our widgets for 50 cents a day."

All of this is a good thing — Macke's argument goes — because it raises living standards abroad and directs investment back into the US, where companies are already finding a ready-made manufacturing base to employ.

Here's a sample:

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India: An antidote to US outsourcing fears

Indian firms are also in the US, creating as many as 280,000 jobs – 218,000 of which are held by citizens or green card holders.
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India's successful IT industry is moving up from back-office outsourcing, and into the consumer market in English speaking countries, using the internet. (Uriel Sinai/Getty Images)

NEW DELHI — Barack and Mitt have sparred a lot over outsourcing, with China and India as the main targets.  But as a new article in India's Outlook magazine points out, there's more to the story than Indians stealing American jobs.

A report by India's National Association of Software and Services Companies (Nasscom) found this March that India's IT sector had created more than 280,000 jobs in the US over the past five years, 218,000 of which are held by US citizens and green card holders, the magazine reports.

"The US is the largest trading partner in the technology sector for the Indian industry and will continue to be so in the future," the magazine quotes Nasscom vice president Ameet Nivsarkar as saying. "Over a period of time, more and more companies are getting closer to their customers. This kind of work can be outsourced [to specialist firms based in the US] but it can't be offshored."

The magazine adds that it's not just IT firms that are creating jobs in the US, either. There are hundreds of Indian origin companies operating tin the US in the fields of education, manufacturing, financial services, healthcare and hospitality, the magazine says. And some of them have been there longer than you think.

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The 6 steps to entering the middle class

The Brookings Institution has investigated the key steps every American child should take to break into the middle class.
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Graphic. (Kyle Kim/GlobalPost)

BOSTON — High fives all around to the researchers at the Brookings Institution.

The Washington, D.C.-based think tank this week tackled a very important question: just how do people in America make it into the middle class?

It's a key question, of course, for the world's largest economy — particularly as this group has been struggling for the past two decades.

It's also a central question for GlobalPost's America the Gutted reporting project, which for the past 10 months has been investigating the long-term difficulties of the US middle class and how this economic trend is playing out around the world.

For its research, Brookings went to the root of the issue: children.

In a report titled "Pathways to the Middle Class: Balancing Personal and Public Responsibilities," Brookings asked why some children do better than others in eventually achieving middle class status.

And while there's some good news in here — 61 percent of Americans reach the middle class by middle age, Brookings says — the path is not equal for all. Moreover, the United States isn't comparing favorably around the world in this department:

"The reality is that economic success in America is not purely meritocratic," Brookings writes. "We don’t have as much equality of opportunity as we’d like to believe, and we have less mobility than some other developed countries. Although cross-national comparisons are not always reliable, the available data suggest that the U.S. compares unfavorably to Canada, the Nordic countries, and some other advanced countries. A recent study shows the U.S. ranking 27th out of 31 developed countries in measures of equal opportunity."

Most importantly, getting into America's middle class is easier if you've been born to the right parents. And it helps — a lot — if those parents are already rich.

Here's the money quote from the report:

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