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Foxconn Riots and the Revival of the U.S. Middle Class


A plant owned by Chinese electronics supplier Foxconn Technology was shut down early Monday after a fight involving as many as 1,000 workers and police. Reports are sketchy but China's state-run news media said 5,000 police officers were called in to the Tiayuan plant, which employs 79,000 workers.

Naturally the first questions surrounding the riot were whether or not Apple (AAPL) iPhone 5s were being manufactured at the plant, despite Foxconn operating 13 plants in China, where it employs over 1 million people.

Whether or not Apple products were being made at the plant, the news and unauthorized footage are another headache for the company. This is also yet another example of why the U.S. is about to see an explosion in the number of middle class jobs.

Cost Advantage Waning

Globalization is slowly, inevitably, taking away the cost advantage of producing goods overseas. Wages overseas still lag those paid to workers in the U.S. but shipping costs, public relations headaches and a lack of manufacturing control all make it harder to justify expanding manufacturing at places such as Foxconn.

Arguing that producing domestically will drive up consumer costs misses the point. Prices are going higher regardless because wages are moving up worldwide. That's what happens when you globalize; working conditions and costs start to equalize. It costs more to pay employees a living wage and we're running out of countries where workers will assemble our widgets for 50 cents a day. That's a good thing.

Airbus, Honda (HMC), Boeing (BA) and Ford (F) are just a few companies building or expanding U.S. plants this year. The corporations are coming back to America again for the same reason they left: money.

The U.S. middle class is being reborn even as it's being declared dead -- despite our government's best efforts to stop it. Jobs will be created in America again. It's inevitable, and a very horrific incident like what happened at Foxconn speeds up the process.