Conservatives have blamed unions for almost every economic problem in America yet the German auto industry is a powerful counter-example to their agit-prop.
A tale of two systems
Original Reporting | By Kevin C. Brown
Dec. 21, 2011
REMAPPING DEBATE
American autoworkers are constantly told that high-wage work is an unsustainable relic in the face of a hyper-competitive, globalized marketplace. Apostles of neo-liberal economic theory — both in the public and private sectors — have stressed the message that worker adaptation is necessary to survive.
But the case of German automakers — BMW, Daimler, and Volkswagen — tells a different story. ... the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.
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.
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