Rich Germans, satisfied Germans

Income in Germany is growing, so the Germans are satisfied. But inequality is also growing. There are very special reasons for this.

This is how it can be endured: Germans hardly worry about their own economic situation any more.

Dhe Germans are more satisfied with their income than they have been in a long time. Even among the poorest ten percent of Germans, satisfaction with income was higher in 2017 than in 2007 and 1997 – according to researchers at the German Institute for Economic Research.

The data comes from the Socio-Economic Panel, an annual survey of more than 30,000 Germans. They also show that Germans hardly worry about their own economic situation any more. Almost 40 percent say they have “no worries” – Germany never even achieved such a figure in the 1990s. Only 15 percent of Germans are “very worried”, as Markus Grabka, Jan Goebel and Stefan Liebig asked.

This may also have something to do with the fact that most Germans have increased their incomes. The situation in Germany is therefore different from, for example, the United States: Although incomes are increasing there overall, practically only the rich benefit from it. In contrast, the incomes of the average American are barely increasing.

Income does not increase evenly

In Germany, however, these incomes are also increasing. This can be seen in the median, i.e. the value above and below which half of Germans are in each case. The median income has increased particularly rapidly since 2013, namely by around eight percent. Disposable income is measured, i.e. net income after all taxes and social benefits.

However, incomes in Germany are not increasing evenly. The top ten percent of the population got richer particularly quickly. They are now getting a third more than in 1991. Their income growth happened mainly between 2001 and 2007, but also in the good years from 2014 onwards. In the meantime, however, all other income groups are also benefiting from the increase in income – with the exception of the poorest tenth. But that does not have to mean that the poor people in Germany actually have less income now.

A purely statistical effect is measured here: because refugees have come to Germany and earn little money here at first, new people with low incomes are joining the poorer end of the statistics. Overall, this means that income inequality in Germany is growing when measured against the Gini coefficient. On a scale from 0 (completely equal) to 1 (completely unequal), the Gini coefficient now stands at 0.29, the highest it has ever been since it was measured.