Why Germany’s Economy is So Strong

August 26, 2014

by Marianne Brunet

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After spending more than a month this summer living in a rural part of Eastern Germany, I discovered that the source of Germany’s economic strength extends far beyond the fields at the World Cup.

In speaking with locals and with students from all over the country, I learned that the German middle class is much larger and has better working conditions than in the U.S. According to recent income data, approximately 51% of German households are in the middle class. In contrast, less than 34% of U.S. households are in the middle class.1

Although it can certainly be argued that the reason Germany’s sizable middle class enjoys a high quality of life is because of its strong social safety net, there is another very important reason that is not as commonly discussed.

Germany does a better job educating and training its workforce. It has remained a competitive industrial country in an era of globalization because its workforce is properly trained for employment positions that are in demand.

I will compare the role of private and public universities in the U.S. and in Germany and the prominence of practical training in Germany. I will also discuss the government infrastructures that give German workers financial security.

Education

The reputability and affordability of Germany’s public universities has largely helped strengthen the German middle class.

In contrast, the U.S. advanced education system contributes to growing levels of inequality.

The German middle class is strengthened by its public university system. All individuals in Germany can get a high-quality undergraduate education from a public university at no cost. University graduates generally enter the workforce without debt and with skills desired by employers.

By stressing the importance of learning by doing and providing affordable higher education programs, Germany has maintained a robust middle class and low levels of unemployment regardless of global economic conditions.

In the U.S., a degree from a private college is generally much more highly regarded than a degree from a public university. That is, we can assume that graduates from Connecticut College have better job prospects than graduates from the University of Connecticut.

  1. This is based on the generally accepted definition for the middle class: the percentage of households whose net disposable income per adult equivalent is between 75% and 150% of the median income.

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