Can We Learn from the Success of Germany's Working People?

RobbieHunter-crop1.jpgAugust 2014 - Some time ago, I realized that I was hearing and reading lots of news about Germany, its surging economy, its incredibly productive work force, and the vastly improved quality of life of its working people.

During tough times for American workers, German workers were doing better than ever. Why? I wanted to know more. What can we learn from the success of Germany’s working people to help our own workers do better?

For example, there was a piece in the Los Angeles Times that told the story of a middle-class German working couple in their 50s, Volkmar and Vera Kruger, who enjoyed a standard of living that would be out of reach for Americans who aren’t rich.

The Krugers were typical beneficiaries, the Times reported, of wise government policies intensely focused on high production, top-notch training, good wages, and extensive social services. “That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany’s job-training system and heavy subsidies for university education,” the newspaper explained.

The Krugers’ two children made different choices: one for an affordable university education, the other for a vocational diploma that included schooling, on-the-job training and pay. German labor unions and businesses partner with the government to provide those apprenticeship programs, resulting in minimal unemployment among young people, who quickly become contributors to the expanding economy, the story explained.

In Germany, the article continues, serious medical conditions don’t mean serious financial hardship. For example, Volkmar’s out-of-pocket cost for stomach surgery and a 10-day hospital stay was $13 a day.

Those minimal costs allowed the Krugers to spend their resulting disposable income, during their six weeks of annual paid vacation, on travel and recreational interests, again feeding the strong German economy.

In a similar analysis, the New York Times noted that while American leaders were doing battle with labor unions, the opposite was happening in Germany. “Unlike what happened here, German laws and regulators have prevented the decimation of their labor unions. The clout of German unions, at individual companies and in the political system, is one reason the middle class there has fared decently in recent decades,” the story states.

Even the conservative, pro-business Forbes Magazine felt compelled to investigate why German automobile manufacturers are able to produce twice as many vehicles as their American counterparts, while employing all unionized workers and paying them twice as much as American auto workers make, while becoming hugely profitable companies. A researcher concluded: “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.”

Although other European nations had greater struggles, the benefits of Germany’s policies still rippled through neighboring economies. “Indeed, Germany was the only major Eurozone nation to escape the credit downgrades that have hit its neighbors. And the country continues to anchor the continent’s economy,” the L.A. Times reported.

In other words, a streamlined, highly skilled, expertly trained, well paid work force results in much higher productivity, and greater industrial output, generating handsome profits for businesses and a better standard of living and quality of life for workers.

That is every bit as true in the building and construction trades as it is in auto manufacturing. But too many states here in America are pursuing exactly the opposite course, assuming wrongly that businesses only succeed when workers suffer and are squeezed, despite Germany’s proof to the contrary. Some states pursue the destruction of the highly-trained unionized construction work force by dismantling construction apprenticeship and driving wages to the bottom. Thankfully, California is doing better today than those other states, but we still remain far behind Germany, and can learn much from their example.

Or, as the headline on the L.A. Times story put it: “Germany’s economic strengths make it like the U.S. of yesteryear.”

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