German vs. American Auto Industry Production and Wages

he general criticism heard today about labor unions in the United States is that their high wages, benefits and demands for better working conditions increase the costs for businesses, making those businesses unable to compete in a global market. Many people even blame the decay of our Rustbelt cities like Detroit on labor unions. How fair are these criticisms?

However you feel about labor unions, having facts at hand will always contribute to a better discussion. Facts themselves are not conclusions, but are the means to which we arrive at conclusions. The intention of the Ramirez Group’s Daily Snippet is to provide more facts to improve public dialogue about issues.

Germany produces twice as many cars as the United States, while paying its workers twice as much.

That according to author Kevin C. Brown in an article published in Remapping Debate, a public policy e-journal. There are a variety of factors that may account for the disparity, some of which are discussed by Brown.

Again, however you feel about unions, the fact is that a strong union with even higher wages than those paid to American autoworkers has not prevented German automakers from competing and being profitable in a global market.

Brown, writes that “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.