Why more Germans can't afford life on their wages – DW – 06/27/2025
www.dw.com
German politicians are fond of saying, "Work must be worth it." But ever more full-time workers need state benefits, and the new minimum wage hike is seen as disappointing.

German politicians are fond of saying, “Work must be worth it.” But ever more people who work full-time need state benefits. And the new minimum wage hike is seen as disappointing.

  • geissi@feddit.org
    English
    0·
    2 days ago

    lifting the minimum wage, which wouldn’t bring much at all in the big picture, instead of reducing the enormous amount of various taxes that has to be paid from everybody’s salary

    Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.
    Also, higher minimum wage gives unions a better position to argue for higher wages for their members. That in turn can put pressure on the general non-unionized wage level through competition for qualified labor, which we are told is in such short supply (“Fachkräftemangel”).

    Reducing income tax on the other hand primarily benefits those who pay the highest income taxes, i.e. those with high income.
    Those people can afford not to spend their entire income but will instead put some if not most of these gains into personal savings, which effectively removes the money from economic circulation and does not help the economy.
    Also extremely low incomes do not even pay income tax and thus would not benefit at all.

    tl,dr Higher mix wage is good for everyone (at least everyone who lives off labor) and primarily helps the poor, lower income tax is only good for some and primarily benefits those with high income.

    None of the really “tax the rich”.
    Although I would argue that a higher general wage level can help redistribute wealth from the rich to the working class.

    • velanox@feddit.orgEnglish
      0·
      2 days ago

      Lifting the minimum wage directly impacts the available income of the lowest income classes, who in turn spend most of their income on consumption, increasing domestic demand and thus also helping the economy.

      …except when it doesn’t, because the ever-increasing contributions to the Rentenversicherung and Krankenversicherung just eat up all of the brutto increases, leaving people with effectively the same netto. Same applies for every wage increase for every other income class.

      Your points are valid, however please note I never advocated for just reducing the income tax alone, but rather the Abgabenlast that all workers have to carry. Primarily health insurance and pension insurance. These systems have become unsustainable (though I would argue they never really were, the issues were masked by a different age pyramid back in the day) and will have to be completely overhauled, the question is: will someone take the plunge and do this before everything collapses?