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We identify a group of people in Latin America that are not poor but not middle class either - namely “strugglers” in households with daily income per capita between $4 and $10 (at constant 2005 PPP). This group will account for about a third of the region’s population over the next decades; as the size and income of the middle class rises, they could become increasingly marginalized. The cash transfers they receive are largely offset by indirect taxes; the benefit of schooling and other in-kind transfers they receive is questionable after adjusting for quality. We discuss implications for the social contract.