US Media Talks Much About German Demands For Austerity, Not As Much About German Wages As Compared To US Ones
Posted by Phoenix Woman on December 26, 2011
Betcha you won’t see this on your evening TV newscasts — or hear about it on your drive-time radio news programmes:
In 2010, over 5.5 million cars were produced in Germany, twice the 2.7 million built in the United States. Average compensation (a figure including wages and employer-paid benefits) for autoworkers in Germany was 48.97 Euros per hour ($67.14 US), while compensation for auto work in the United States averaged $33.77 per hour, or about half as much as in Germany, all according to 2007 data from the Bureau of Labor Statistics. For Germany-based auto producers, the U.S. is a low-wage country.
Despite German companies’ relatively high labor costs in their home markets, these firms are quite profitable. An examination of the latest publically available financial statements of BMW, Daimler (Mercedes-Benz cars), and Volkswagen reveals strong sales and profits even in the midst of the currently weak consumer markets in Europe and the U.S. In 2010, for example, BMW, produced 1.48 million cars (63 percent of them in Germany), and earned a before-tax profit from its automotive division of 3.88 billion Euros. The Mercedes-Benz car division of Daimler, likewise produced 1.35 million cars (72.4 percent in Germany) in 2010, and earned a before-tax profit of 4.65 billion Euros.
America’s one-percenters — and the media companies they influence and/or control — are too busy pretending that the 99-percenters, the poor and middle-class people, are a burden that needs to be punished and stripped of whatever pennies they have so the one-percent crowd can get even richer. Anything that contradicts that pretense is generally suppressed by US establishment media, especially the media that most Americans encounter regularly.
That’s why, while you’ll hear and see lots of stories in the US media about Stern Germany Punishing Debt Sinner Countries, you won’t hear about German autoworkers getting paid twice as much as US ones. Or about Greek workers working more hours and retiring later than German workers.
That’s why you won’t hear that, far from dying, Japan is actually doing quite well, thank you very much: because Japan a) has a well-functioning social safety net and b) has reined in its rich people quite effectively.
It’s also why you won’t hear much about how Argentina, which told the IMF and World Bank “Enough!” rather than further hurt its own people at the banks’ request, is now the economic powerhouse of Latin America.
Charles II said
This is a very good post, with important points. Wages are only a component of cost structure. Skilled, motivated workers can be cheaper overall than demoralized, poorly organized workers no matter what the wage. Inequality in the US masks the fact that a few people are doing well, while a lot of people are not.
However, I am skeptical of, but intrigued by, Eamonn Fingleton’s description of Japan. I agree that things like stock market indices and official growth rates may not be good indicators of the standard of living. But just as well, I don’t think that car ownership rates or HDTV quality are good measures of the standard of living. Life expectancy is a good indicator, but it is a lagging indicator and it’s heavily influenced by things like smoking and antibiotics.
The best indicator is, unsurprisingly, whether people seem happy. The major factors in happiness include having genuine choices in and control over life, meaningful activities, inclusion in community, expectations for improvement in circumstances, and so on. To take an illustrative example, a woman in a wealthy but male-dominated society like Saudi Arabia is probably not particularly happy, because she is at the mercy of other people, isolated, and unable to participate in many kinds of activities. Or a student living on air can be very happy if s/he expects to end in a great, high-paying career after graduation. Lots of WW II vets could tell that story.
Now, getting good measures of happiness is not straightforward. But, for example, Japan has lower self-reported happiness than many nations, at 64. Germany is at 70 after adjustment for inequality. The US is at 63. Mexico, with all its problems is at 64! Japan has also trended slightly downward. The surveys are not without their problems, of course, so I don’t want to make a lot out of them.
But I think that Fingleton starts from the wrong place and I don’t trust his conclusion. As for Japan having reined in its rich people, I think that’s simply wrong. Look at the response to Fukushima. A powerful industry absolutely controls news about the worst nuclear disaster since Chernobyl, one that is potentially far more dangerous because the population density in Japan is so much higher. And there’s no evidence that an effective national policy to replace reactors is proceeding, despite the fact that there’s a reactor north of Osaka/Nagoya called Monju, that should make anyone with ten cents worth of brains scared out of his/her mind.
Phoenix Woman said
Points taken. That said,Japan’s rich people haven’t gone into full-on oncological-model capitalism the way the US ones have. The distance between rich and poor is merely a canyon’s distance; it’s not quite light-years apart the way it is here.
Andreas said
Greeks work more hours? and retire later? Same as germanys productivity rate isnt so high as many think (i think italy has a higher?)
Because think about this. There are ALOT more woman working in germany(for example because the communists in east-germany wanted that everyone woman works) then it is in greece,spain,italy, Woman work very often part time! and they retire alot earlier because they get for example years for there retirement pension for raising the kids.
Woman often work in those not so productive jobs as stores,teachers,social stuff,medical stuff,
Men work mostly in those very high productive jobs(atleast in germany’s case) engineering,industry,etc.
and these is the beef of the german economy.
So if you would check just the data for menfolk then germans work more hours, retire alot later, and are propably the most productive per head in Europe.
Again the german economy relies mostly on branches were 85% are man.
Service Economys like maybe England there it is alot different!
Just think about how many woman study engineering,electronic,compuer science,
and how many study something social,languages, etc.
And no im not a macho but germany is big in complicated machinery, high end tools, production plants, etc. oh also cars.
there most workers are not woman. think about this a minute, wish all readers here and phoenixwoman a nice slide into 2012
oh maybe this interests some of you.
http://blogs.reuters.com/macroscope/2011/11/07/euro-zone-crisis-its-germanys-fault/
read also the comments
and watch maybe this video.
at the end also interesting for americas economy.
Charles II said
Andreas, thanks for some interesting links.
The ultimate source for PhoenixWoman’s comment about hours worked is OECD figures. These show 2100 hours/year for Greeks, and about 1400 hours/year for Germans. What you say about the mix of workers between men and women in the workforce is probably a factor.
But through 2009, the employment/population ratio is not all that different between the two countries. Germany is around 54%, Greece around 50%. So participation of women causing a 4% difference in E/P ratio cannot be large enough as a factor to account for a 50% difference in average hours worked.
I don’t think you’d get any arguments on this blog that the crisis was caused by German dominance of the European financial system. Krugman says that it’s caused by the fixed exchange rate. I am skeptical, because the US has a fixed exchange rate among states, and doesn’t end up with this sort of regional crisis (we tend to get system-wide crises, though we have had regional crises during, for example, the defense cutbacks of the early 1990s). Relocation in Europe is somewhat more difficult than in the US, in part because of language barriers, and I think this is an important factor.
But the main factor, I think, is the same as the factor driving the US crisis: the unwillingness of the government to deal with the primary problem, namely the insolvency of major banks. In the US, that’s the result of mortgages not getting paid off. In Europe, it’s the result of declining values of sovereign debt plus regional real-estate driven crises (for example, Spain, Ireland and Iceland). Fixing insolvency is actually pretty easy when it’s caused by mortgages. Give mortgagees enough money to pay the mortgage. Boom, crisis fixed. My personal favorite is extracting concessions equally from banks, mortgage holders, and the taxpayer. But whatever it takes to keep the liquor flowing.
Andreas said
look into the percentage of people 16to65 that even work. i bet its alot higher in germany as it is in greece. because in greece alot woman work 0,0 because you just talk about the employment ratio. look into the unemployed not working. but working age.
The thing is america has HUGE HUGE HUGE trade shortfalls. and you know why america can do this and europe not ? because $ is the world currency and oil is traded in $ thats why america has so much debt they can just press a button and create OIL to pay for the trade deficite. thats why america was in afghanistan/iraq. saddam wanted to sell in a different currency this would make americas living standard and militiary power = FUCKED. living standard as the chinese. so be proud of your army they fight for your living standard never forget this. (atleast for the rich$ living standard)
Andreas said
And please dont compare the wages of Mercedes Benz workers and GM(almost bankrupt) workers
Its the same as you could compare Google wages and Walmart wages.
And you cant just calculate how much is the € wage in $ think about alot higher taxes and that everything cost alot more gasoline! for example. its alot less buying power than that.
Charles II said
The financial problems of US car manufacturers are almost completely due to the fact that we don’t have cheap, socialized medicine. As a percentage of GDP, the US is spending roughly 7% more than Germany, amounting to roughly a trillion dollars. The vast majority of this is waste or insurance company/pharmaceutical company profits.
Andreas said
Again because of the american $ why do you think the chinese backed this they hold alot of $ and dont wanted that it gets worthless.
in germany medicine is not cheap! you pay big if you earn. if not for the poor its socialized.
Andreas said
there is no data how many of the working are woman. And in catholic italy and spain it is for sure alot less woman who work!
find these statistics before that dont write something like that the guy who wrote the study about germany has no clue about germany he also writes about the higher education percentage etc. that its in greece and spain as high as in germany but he doesnt even mention apprenticeship system(dual system) that makes germany completely different there. An french expert on germany that speaks no germany and has just seen a few airports and hotels.
Andreas said
speaks no german not germany ;)
I can believe that southern europeans are not as lazy as many say or think.
And the problem is germany had maybe a higher productivity level in the 80s as greece has 2010.
bitter truth.
But still its not true that the average german work 25 hours a week thats bullshit.
Charles II said
Andreas, please do not spam multiple comments when one will do. Please do not use abusive language if it can be misunderstood. I am trying to discuss this with you respectfully, and would like you to reciprocate.
Getting the exact details on who works how much is very difficult. But the employment to population ratio is the best approximation we have to understanding how many adults who could potentially be working actually are working. These data simply do not support your assertion that “look into the percentage of people 16to65 that even work. i bet its alot higher in germany as it is in greece.” The ratio is slightly higher in Germany. According to this paper, 11.4 million German women work. According to this source, there are 40.3 million German employees total. That makes German women 28% of the German workforce. According to this source, women are 37% of the Greek workforce. So, it’s a good thing you didn’t bet, because you would have lost.
As for the US paying for its trade deficit by printing dollars, it’s a more complicated story than that: 1) The US dollar has weakened, making imports more expensive. In 1970, oil cost $3.39/barrel. Now it’s roughly $85/barrel. Correcting for inflation, it is almost 4 times more expensive. While most of that rise is due to cost of production, it’s also true that the weakness of the dollar contributes 2) Americans are denied necessary services as a consequence of paying $450B in interest on the national debt, 3) America pays the price for the trade deficit in higher unemployment. 4) the rest of the world has benefited greatly by having America as a reliable market. Just as Germany has used Greece as an export market and become wealthy, the US has served as an export market for Japan and China and many other countries. If, as seems likely, the American economy suffers a serious crash, every country will suffer.
I don’t excuse the recklessness with which this country has conducted its wars on a credit card. But American workers work very long hours, suffer high unemployment with poor benefits and often no medical care, and face great uncertainty in old age, as pensions are slashed and medical costs continue to soar. There is terrible suffering here, though it is carefully hidden.
The people who are benefiting from the reckless budgeting are not people like you and me, but the very wealthy. And these are the same people benefiting in Germany, in Japan, in China, and so on.
Andreas said
Yes okay sorry, true mostly the richer get richer.
Every paper currency has devalued not just the $. Yes but America is a reliable market because the $ = Oil ,
Greece Euro’s are bursting loans.
And because of greece if this numbers are right
maybe greece woman work like men. (fulltime)
pensions are slashed in germany to higher pension entry age minimum but nobody makes it because nobody employes so old people so you have to take a big cut.
The wages did go down the last 10 years.
look at this german export against german consume
http://www.konicz.info/wp-content/uploads/2010/12/02-export-und-konsum4.jpg
Charles II said
No question that German wages, especially if one considers benefits, have been under pressure. But the graph you link actually shows a small rise in consumption. One would have to know whether it is corrected for inflation and whether population has increased to know whether this represents an actual decline in wages. Reports like this one suggest that wages are stagnant or declining, whileOECD figures on household incomelean toward stagnant rather than declining. .
Also no question that in the last few years, most nations are trying to devalue their currencies to gain an export advantage. But I am talking about the longer term. If you look at this chart on a 30 year time span (set time scale to monthly and duration to 30 years), one can see a decline of roughly 20%. This is hard to see because of the huge run-up in the value of the dollar prior to the 1986 Plaza Accord and then the appreciation of the dollar in the Clinton-9/11 period, but at least my mental least squares says that the trend is down.