093011GermanAnswer - September 30, 2011 Volume 18, No. 15...

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September 30, 2011 Volume 18, No. 15 The Germans Have A Model The United States Could Use To Revive Manufacturing And Its Middle Class, By Marko Slusarczuk By Marko Slusarczuk During the 20th century, millions of immigrants chose to live in major industrial cities like Detroit, Chicago and Pittsburgh because of their vibrant ethnic communities and the availability of jobs. These immigrants worked long hours on "the line" at highly repetitive, unskilled jobs that required only a marginal knowledge of English. The union-negotiated pay was excellent; the defined benefit plans provided for a comfortable retirement. On the foundation of these workers, the United States created a large, upwardly mobile middle class. Today, most of these jobs have moved offshore or do not have nearly as generous pay packages. Employers have cut benefits and underfunded or eliminated pensions. Union membership has declined. Most economists agree that the days of high-paying, unskilled jobs in the United States are over -- these jobs have gone overseas and are not coming back. With them, the backbone of the U.S. economy -- the middle class -- has declined and weakened. The disparity between the highly paid workers and those at the lower levels has widened significantly. For years, U.S. policymakers have struggled to come up with a substitute for the lost manufacturing jobs and with it, the basis for a resurgence of the middle class. Many have looked to the rise of China as the model of a global manufacturing superpower. They have tried to find ways to clone the China model in the United States with little success. Low-paying jobs and direct government subsidies do not fit into the U.S. business and policy model. Others have focused on innovation. Although Americans are prolific recipients of patents, second only to Japan, the United States only ranks eighth in the world in terms of innovation leadership. Germany, on the other hand, provides an interesting contrast. The average direct wage that German manufacturing workers earn is $26.90 per hour while those in the United States earn $23.03, and in China only $1.37. Social insurance costs are $10.37 per hour in Germany and $7.90 in the United States. Directly paid benefits are $9.24 in Germany and $2.60 in the United States, for a total compensation cost of $46.52 in Germany and $33.53 in the United States.
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This note was uploaded on 10/24/2011 for the course IE 334 taught by Professor Gard during the Spring '11 term at Lehigh University .

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093011GermanAnswer - September 30, 2011 Volume 18, No. 15...

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