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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.
 

Global middle class shifts from West to East

Assuming current trends continue, China could become the world's largest middle class by 2020.

BOSTON — As the middle class shrinks in America, it swells elsewhere. In Asia, to be exact.

The numbers, according to experts from the Brookings Institution, a think-tank in Washington, DC, are staggering.

"By 2021," write Homi Kharas and Geoffrey Gertz in a chapter of the compilation, "China's Emerging Middle Class," "there could be more than 2 billion Asians in middle-class households."

According to our estimates, by 2015, for the first time in 300 years, the number of Asian middle-class consumers will equal the number in Europe and North America. ... In China alone there could be more than 670 million middle-class consumers, compared with only perhaps 150 million today.

This is not a done deal, they say, since many things depend on as-yet-to-be developed infrastructure, education and health care.

But assuming these systems can rise to the occasion, China could become the world's largest middle class by 2020. Whereas today it accounts for only 4 percent of the global middle class, making it seventh on the list.

Already, global markets are shifting to reflect the changing dynamics of the global middle class. (Data from Kharas and Gertz's chapter.)

Auto sales

In 2000, the US accounted for 37 percent of all car sales, while China accounted for barely 1 percent. Fast forward to today, and China is the world's largest auto market. 13.6 million vehicles sold in China in 2009, well above the 10.4 million that sold in the United States.

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India: Outsourcing at center of US election battle

It's the most talked about loss of American jobs since Japan took over the auto industry. But what's it all about?
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India and the Philippines are among the countries which have benefited the most from US outsourcing. (Jes Aznar/AFP/Getty Images)

NEW DELHI, India — The outsourcing of work to India and a handful of other countries is the most talked about loss of American jobs since Japan took over the auto industry in the 1980s. But how many, and what kind of jobs is it really costing US workers?

Both the Obama and the Romney campaign have tried to make outsourcing an election issue, demonizing Indian workers and promoting a kind of xenophobia that would be universally decried if it were directed at actual immigrants.

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America the Gutted: Where the jobs have gone (VIDEO)

A video snippet from a 10-month GlobalPost investigation into the decline of America's middle class.

NEW  YORK — US jobs have been going overseas for decades, along the way decimating whole swaths of the country.

Textile and apparel workers have been particularly hard hit: since 1994, more than a million people have lost their jobs in this one industry.

But it’s a different story overseas, where many of these jobs have gone.

For workers in places like this one — in a suburb of Manila — a factory job can mean the difference between chronic hunger and a middle class life. 

Here's a snippet:

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America the Gutted: Wooing the middle class voter (VIDEO)

Down, out, and headed for the ballot box? Presidential candidates target the big group of Americans in the shrinking middle.
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Democratic presidential candidate, US President Barack Obama speaks on stage as he accepts the nomination for president during the final day of the Democratic National Convention at Time Warner Cable Arena on September 6, 2012 in Charlotte, North Carolina. (Tom Pennington/AFP/Getty Images)

BOSTON — Think Republican Party presidential candidate Mitt Romney would like some middle class votes come November?

What about President Barack Obama?

Swing states like Ohio, Michigan, Pennsylvania, Wisconsin and others are full of these key voters, of course.

Each place is thick with former manufacturing and other middle class workers, many of whom have struggled mightily over the past decade, to say nothing of the past four difficult years.

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Video: Decoding the middle class

What's happening to America's middle class? How is this playing around the world? And why does it matter? Three questions for GlobalPost Editor Thomas Mucha.

BOSTON — America's middle class is in trouble, a development that is producing serious consequences for the lives of millions of people.

It's also affecting the well-being of the US economy.

Around the developing world, however, the story is very different.

Over the past two decades — and roughly during the same time as the middle class has struggled in the US — millions of people have moved out of poverty and into middle class status.

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America the Gutted: What happens when the middle class disappears? (VIDEO)

A 10-month investigation by GlobalPost travels from the shuttered factory towns of the United States to the emerging boomtowns of the developing world.
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Graphic. (Kyle Kim/GlobalPost)

BOSTON — There is a deep unease spreading across the United States.

As anyone who's living through it can tell you, America's middle class — the backbone of the world's largest economy — is in distress.

The numbers tell the story:

Median family income in America peaked in the year 2000. Since then it is down some 6 percent, the worst 12-year stretch for the middle class since the Great Depression.

Meanwhile many of the jobs that once employed this group have moved overseas or have been replaced by new technologies, a big problem for one subset of the middle class: the 5 million out-of-work Americans who the Labor Department calls the "long-term unemployed."

In short, America's middle class is being gutted by a variety of complex and interrelated factors, and this economic pain is increasingly evident to those at the center of it.

According to an August survey by the Pew Research Center, 85 percent of middle class Americans say it is more difficult today to maintain their standard of living than it was 10 years ago.

This seismic shift is decades in the making and transcends Democratic and Republican parties and politics. It was exacerbated by the Great Recession of 2008, which decimated the US job and housing markets, a key source of middle class income and wealth.

The implications are profound and troubling.

As this middle hollows out, millions have fewer financial resources for their families, and less spending power to help fuel the consumer-based US economy.

Millions more are losing hope that their country can provide good jobs now or in the future.

Many are questioning the very ideals of America, and what the country's historic opportunity once represented to the rest of the world.

But America's problems are not the whole story.

Over roughly the same period as the middle class decline in the US, huge numbers in the developing world have enjoyed big increases in their standards of living — notably in China and India, as well as other countries in Asia, Latin America and beyond.

While the Great Recession has challenged some of these high-flying places, the long-term trend is clear: more people around the world are expected to ascend into the middle class.

According to scholar Cheng Li of the Brookings Institution Press, by 2030 "5 billion people — nearly two-thirds of the global population — could be middle class."

What does this complex trend mean for people around the world? How is it playing out in shuttered factory towns across America? How is it changing lives — for good and sometimes ill — in the emerging boomtowns of the developing world? What is the future for the middle class in the US?

These questions and more are the focus of a 10-month GlobalPost investigation, America the Gutted.

In this worldwide reporting project, GlobalPost's award-winning team of journalists will tell the stories of American middle-class workers who have lost their jobs across a number of industries, and who are today struggling to make ends meet.

On the flip side, we'll also profile workers around the world who now own the jobs once held by America's faltering middle class — in China, India, the Philippines and elsewhere.

It's our goal to humanize this global economic shift by telling real stories of real people — across text, video and photography. 

Along the way, we'll be using this America the Gutted blog to tease out some of the project's larger themes and original reporting. We'll also point to related news stories from around the world and, yes, on the US presidential campaign trail, where a sharp debate over America's economy could define the election.

Then, in early October, we'll launch the full America the Gutted reporting project on GlobalPost.

We hope you'll join us.

And please feel free to offer your own stories and thoughts in the comment section below. This global trend concerns all of us, no matter where you happen to live.

Here's more on why we're covering this:

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