U.S. auto maker executives and their political allies have clamored for industry workers to accept wage cuts so American cars can become more competitive with foreign models.

 

But numbers out of Germany demonstrate that higher wages for auto workers does not cut into success for manufacturers. Last year, German car companies produced twice as many automobiles as American counterparts—5.5 million versus 2.7 million. Along the way, BMW and Mercedes-Benz posted healthy profits, of 3.88 billion and 4.65 billion Euros, respectively.

 

The Germans pulled this off while paying their workers an average hourly rate of 48.97 Euros ($67.14).

 

Meanwhile, Americans manning U.S. assembly lines made an average of $33.77 per hour, making the United States “a low-wage country” as far as German auto makers are concerned.

 

The Germans have particularly taken advantage of non-unionized states. Employees at the new Volkswagen assembly plant in Chattanooga, Tennessee, earn $14.50 an hour and those at the BMW plant in Spartanburg, South Carolina get $15 an hour.

-Noel Brinkerhoff

 

A Tale of Two Systems (by Kevin Brown, Remapping Debate)