May 6, 2012

How Germany Builds Twice as Many Cars as the U.S. While Paying Its Workers Twice as Much

Interesting set of articles in Forbes about auto production and wages in Germany compared to the United States.

Frederick Allen wrote an excellent and extremely popular post here on Forbes back in December that asked how German auto companies can pay twice the wages that are paid in the USA and still be more successful. The basic proposition was this: the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. Yet Germany’s big three car companies—BMW, Daimler (Mercedes-Benz), and Volkswagen—are very profitable.
Some of the comments on the post cited national preferences – Germans know to buy German cars, higher levels of efficiency, union practices and so on. Der Spiegel, the leading German magazine, provides a  different set of insights this weekend in its international edition. The short answer is Germany doesn’t pay twice the wages. Under the headline: The High Cost of Germany’s Success, Der Spiegel picks apart the argument that German auto workers are uniformly well paid or that success rests on a fundamentally different economic model.