Salaries in the US vs Germany: Where Will You Make More?

The USA and Germany are the world leaders when it comes to the economy, quality of living, jobs, and education. However, salaries in those countries differ significantly. Which country should you consider as an international professional looking for a better future?

Salaries in the US are about twice higher than in Germany. In 2022, the median salary in the US is $54,132, and $46,526 in Germany. Yet, Germany provides better social security benefits and various free services for employees. In the US, people spend more money on retirement and healthcare. 

In this article, we have collected all data about income and salaries in Germany vs the US, cost of living, and reasons for a wage gap between these two large economies.

Salaries in Germany vs the US

The US and German salaries are among the highest globally, yet the US 100% wins in that battle. The salaries in the USA are high, and taxes are low. German wages are lower on average, but taxes are much higher. 

Unfortunately, German salaries are about half of the American ones. Plus, you will pay higher income taxes and social contributions. 

For example, even the highest sales tax in the USA is under 10%, and most US states have even lower taxes, whereas it’s 19% in Germany.

Furthermore, you can live on less (lower cost of living) in many states in the US than in most German cities. Overall, people in the US have more money in the bank at the end of the month.

But not everything is that clear between income in the US and Germany. In the latter, everyone can benefit from the well-established German social security and save a lot of money and nerves. 

Therefore, we need to dive more deeply into this topic to figure out where employees make more money and also have more money at their disposal.

Read a comprehensive article about salaries in the US.

How big is the difference in salaries?

In a nutshell, we can see some clear trends in the difference between German and American salaries. Generally, there are three job categories in both countries. 

1. Highly skilled, high-level professionals, e.g., Consulting, Banking, IT

In this job category, the difference in salaries that you get in Germany vs the US is very significant. Ultimately, that’s why all the best programmers and financial gurus go to work in the US.

One might get paid 3–5 times more in the US than in Germany. For example, a regular salary for a developer in Germany would be €50k. In Silicon Valley, it can easily be 150k. 

In the US, tech or finance companies have higher profit margins and are often backed by investors. Therefore, they can afford higher salaries. 

Plus, the cost of living in the location where they have offices are usually high, so they need to keep up with the standards.

2. Other highly skilled jobs (Electrical Engineering, Mechanical engineering, Chemical Engineering)

In this category, the salary can be even higher in Germany. Everything will depend on the size of the company and the applicant. People with years of experience and good educational backgrounds can get paid better than in the US. 

3. Low-skilled jobs – trade workers

Here, in fact, skilled trade professionals get higher salaries in Germany than in the US. Furthermore, people without any education have higher incomes in Germany than in the US. 

Salaries in Germany

Salaries in Germany are among the highest in European Union. However, there are few other countries in Europe with higher purchasing power than Germans. 

Thus, people living and working in the following countries can afford more:

• Liechtenstein
• Switzerland
• Luxembourg
• Island
• Norway
• Denmark
• Austria

Read about salaries in Europe vs in the US.

Why are salaries low in Germany?

While being one of the leading countries in the world in terms of GDPR, economic growth, and quality of life, Germany doesn’t offer incredibly high salaries.

You might ask yourself what’s the reason behind when it has everything for giving people the next level of income.

In general, a salary in Germany comprises more comprehensive social security and health insurance benefits. Half of which is paid by the employer.

Therefore, for the German company employing someone costs about 25% higher than their salary. In the US, this factor doesn’t exist. 

Employees in Germany get paid full salary also when they are: 

• on a sick leave 
• on a vacation
• care about the sick relative
• on a parental leave

Overall, employers in Germany spend more money on their employees than it’s in the US.

Furthermore, because taxes are high in Germany, everyone gets free healthcare, education, and financial support if needed. 

• Healthcare is free – well, in Germany, insurance pays for it. 

People have access to all specs of medicine at no additional costs. For example, get surgery without paying anything.

Everyone has a personal doctor (general practitioner) that they can visit for free anytime they want.

• Employees have more than 30 days of paid vacation per year.
• Employees are entitled to paid sick leave. 

Below you can see the income distribution of German residents. Only 1,56% of the population makes over 125k per year. Consequently, Germany has much fewer high earners than the US. 

What is actually a good salary in Germany?

Curious about the differences between life in Germany and the US? Read about living in the US vs Germany in this article.

Salaries in the US

Firstly, salaries in the US range a lot. You can earn as little as 20k and up to 300k in a top position. 

Furthermore, professionals in management earn much more in the US than in Germany or many other developed countries. If you are willing to pursue a career, American companies can provide great opportunities and a very high income.

Why are salaries in the US so high?

Well, similar to the German issue with a low income, the US offers higher pay-check for a reason. 

But not all is as bright as it seems. For example, a 21 years old couple living in California, with a $100,000 yearly gross salary (or $8,333 monthly), will pay in taxes:

• Federal withholding taxes $1,200
• Social Security taxes $516
• Medicare $120
• California taxes $586
• CA SDI $75 
• Monthly Net Pay $5,833.70 

Consequently, the monthly net pay ends up at $5,833. 

And following obligatory expenses:

• Flat in San Francisco $2,000–3,000
• Health insurance $360
• Debt payments

This couple will most likely end up with about $2,000 at the end of the month before paying for a debt.

People need to remember that the US doesn’t have an excellent social security system as Germany does. The state won’t take care of everything. You even will need to take care of your retirement. 

Consequently, a person living in the US needs to have enough savings to provide for themselves in case of any difficult situation such as: 

• losing the job
• health issues

Plus, education isn’t free as it’s in Germany. Hence all parents must have enough money for their kids to go to school, and university. 

What salary is considered good in the US? Read here.

Facts about salaries in the US:

1. Salaries in the US also vary by factors such as gender, education, and more.
2. Jobs in large metropolitan cities, which have higher living costs, also tend to pay more than jobs in more rural and suburban areas.
3. Workers with a certificate or diploma earn, on average, 17% more than their peers who only reached the high school level.
4. Employees who earned a Bachelor’s Degree earn 24% more than those who only managed to attain a certificate or diploma.
5. Professionals who attained a Master’s Degree are awarded salaries that are 29% more than those with a Bachelor’s Degree.
6. PhD holders earn 23% more than Master’s Degree holders on average while doing the same job.

We shouldn’t forget about the tax obligations employees have in Germany and the US. Read the full comparison here.

Highest paying jobs

In the US and in Germany, some professions tend to be better paid, and some have lower salaries. 

Germany

A good annual average salary in Germany is between €64,000 and €81,000. The gross salary depends on your profession, industry, and education.

According to the 2022 report made by Salary Atlas, senior doctors earn the most in Germany. The jobs have been ranked by median income, and the average salary for each job you can see in brackets.

1. Head of physicians – €196,251 (€212,808)
2. Senior physician – €121,748 (€129,697)
3. Sales control / Sales management – €94,796 (€103,836)
4. Regional sales manager – €90,812 (€96,868)
5. Commercial manager – €90,661 (€101,900)
6. IT manager – €88,610 (€96,076)
7. Fund manager – €83,641
8. (Key) account manager – €75,671
9. Regional sales manager – €74,528

Source: iamexpat.de

In Germany, you can earn the highest salary when working and living in the Baden-Württemberg region. Companies there offer about 8% more than the national average. Executive professionals make the most in the state of Hesse, in Frankfurt in particular. 

Here are top paying German regions:

1. Baden-Württemberg – €46,620
2. Hesse – €46,329
3. Hamburg – €45,571
4. Bavaria – €45,124
5. North Rhine-Westphalia – €43,829

Furthermore, these German cities pay the most to the skilled workers and executives:

1. Stuttgart – €54,012
2. Munich – €53,662
3. Düsseldorf – €50,626
4. Wiesbaden – €49,611
5. Hamburg – €45,780

Check out the most demanded jobs in Germany in 2022.

The US

In the US, the best-paying jobs include positions in healthcare, information technology, management, finance, engineering, and law.

Some of the well-paying jobs in the US are:

In which American city will you get paid the most?

Accordingly to the cost of living in the US, cities with the highest cost of living also have the highest salaries. Hence, residents of:

• Washington
• California
• New York

have the highest median annual income, with Washington D.C. on top ($82,604).

Learn how working in Germany differs from working in the US.

The average salary in Germany vs US in 2022

Well, the difference in salaries also lies in the difference between average income in Germany vs the US. For example, in the US, much more people earn above average, while in Germany, most people get paid more equally. 

Overall, in Germany, we can see more equality across salaries in different industries and jobs. 

Germany

In Germany, the average income is calculated as a mean value of the gross salaries of all employees in Germany covered by pension insurance. 

In 2022, German employees earned a median of €44,074 per year. Depending on location, annual incomes range by up to €19,000, and the differences between a salary in a small company and a large corporation are even bigger.

However, different resources show different numbers. So StepStone Salary Report 2022 (Stepstone Gehaltsreport 2022) has indicated the average gross salary in Germany as €51,009.

Overall, a good annual average salary in Germany is considered to be between €64,000 and €81,000. 

Whereas the average gross household income in Germany is €4,846 per month, the income of single people households is €2,812. 

At the same time, companies with over 5,000 employees pay an average salary of €59,280.

The average gross monthly income of the household is €5,086 in West Germany and €3,927 in East Germany.

The average salary in Germany in 2022 in different industries:

The average salary depends, of course, on the industry, position, and years of experience. The difference between different professions is still quite high, around €40,000 annually. 

Also read: Average salary of the mechanical engineer in Germany.

Read about salaries in Europe vs in the US.

Hence, in the table below, you can see the average salary depending on the years of experience. 

Furthermore, education is very valuable for your career in Germany. So academics receive an average salary of €58,058, whereas non-academics enjoy €49,346. 

Master degree holders can expect to make €61,906, compared to those with a bachelor’s degree who earn €54,210 on average. 

The US

According to the latest data on average American income levels from the US Bureau of Labor Statistics (BLS), in 2020, the average US income came in at $83,886 per year gross.

The median annual income of all full-time workers in the US was $54,132 in the second quarter of 2022. At the same time, it was €44,074 ($46,526) in Germany.

Therefore, the difference between the median salary in 2022 in the US and Germany is a considerable $7,606 or 14%. 

This significant difference is a result of the calculation of the median annual salary as well as the current value of the US dollar. Besides, all salaries across the country are combined, so it makes numbers less realistic.

Mostly due to the fact that there is a large gap between salaries in the US. For example, a casual worker makes $25,000, and an executive $150,000. 

The median income means that half of the nation has disposable income higher than this number, while the other half has less than that.

Facts about average salary in the US in 2022:

1. The average salary in the United States is $82,412 USD per year. The most typical earning is $52,000 USD. All data are based on 20,675 salary surveys. 
2. Men receive an average salary of $94,279 USD. Women receive a salary of $70,022 USD.
3. The most paid careers are Engineers & Technicians V, with an average income of $124,524 USD and Management & Business with $110,097 USD.
4. Based on education, the highest salaries received by people with Doctorate Degrees, with a salary of $125,922 USD. The second most paid education level is Masters’s Degree with a salary of $100,259 USD.
5. People with different experiences earn different salaries. Employees with 16-20 years of experience receive $98,926 USD. Professionals with 20+ years of experience receive a salary of $108,877 USD.
6. Salaries range from $24,000 (lowest average) to $423,000 (highest average)
7. The median salary is 92,800 USD per year, which means that half (50%) of the population earns less than 92,800 USD while the other half earns more than 92,800 USD. The median represents the middle salary value.

In the following table, you can see the average salary in the US for a particular position. Overall, the numbers are higher than in Germany.

The average salary in the US in 2022 among different jobs:

According to the statistics, income in the US is more unequal than in Germany, with a difference of $124,056 in average salaries among various jobs.

In fact:

• about 34,1% of Americans earn over $100,000
• 15,5% of the population makes between $100,000 and $149,999
• 8,3% of Americans makes between $150,000 and $199,999
• 10,3% of the US population has an annual salary over $200,000 

These numbers are unheard of in Germany.

However, not everyone earns that well in Germany. Here are some of the lowest-paying jobs in the US.

What about income taxes?

Well, the income taxes are also very different in the US and Germany. It’s important to know how much money will land in your bank account after all deductions.

See the full overview of Germany and American taxes here.

Cost of living in Germany vs the US

• The cost of living in the US is, on average, 6,41% higher than in Germany
• Rent in the US is, on average, 47,12% higher than in Germany

When talking about salaries, we shouldn’t forget about the cost of living in each of these countries. In fact, you might earn a lot but will spend it all by the end of the month. 

For example, this is pretty much the case with the US cities like New York and San Francisco. For example, New York is almost twice more expensive as Berlin or Hamburg. Workers need to have a high income to cover high living costs.

Moreover, the US is more expensive than Germany regarding childcare, housing, and education.

There are some commodities where the US is more affordable. But in general, the Americans still pay more for a comfortable life than the Germans.

Germany

According to the Federal Statistics Office, households spend an average of €2,704 per month, where €908 goes to housing, energy, and maintenance. Most Germans spend around €356 on groceries, €351 on transport, and €284 on leisure per month.

However, there is a somewhat significant difference between German regions and cities regarding the cost of living. For instance, the South is always more expensive, whereas the East is cheaper. 

Thus, you can expect to pay around €400-€500 for a room in central Berlin and around €600-€700 for a room in central Munich. 

Nonetheless, the cost of living in Berlin is estimated to be:

• 45% cheaper than New York
• 33% cheaper than London
• 26% cheaper than Singapore
• 22% cheaper than Paris

The US

The cost of living can look drastically different depending on where you live in the US. A single person needs about $29,118 a year ($2,426 monthly) to live in Brownsville, Texas, but in San Francisco, California, they will need more than double of it, $69,072 ($5,756 monthly) to keep up with the same lifestyle. 

Cost of living for a single person in different US cities:

• Austin, Texas $3,197
• Los Angeles $3,569
• New York $4,277

Mississippi is one of the cheapest states to live in, and Hawaii is the most expensive.

Consequently, a person will need almost the same amount of money in the US and Germany to maintain a similar lifestyle. Yet, in the US, it will strongly depend on the state and the city.

Housing

Germany

Housing is 49,4% more expensive in the US than in Germany. The overall average rental price is €700 for a one-bedroom apartment.

One-bedroom apartment rent in the largest German cities:

•  Leipzig €512
•  Cologne €730
•  Stuttgart €857
•  Berlin €879
•  Frankfurt €901
•  Hamburg €911
•  Munich €1,125

The US

The data shows that the average American spends $20,679 on housing every year, or about $1,723 per month. The average monthly rent for a one-bedroom apartment in 2021 was $1,098 a month.

Average prices for housing in two popular American cities:

Therefore, rent prices in the US vary significantly by state and by city. Some of the most expensive cities to rent in the United States are New York City, San Francisco, Los Angeles, Washington D.C., and Boston. 

Most expensive US states in regard to rental price for a one-bedroom apartment:

1. Hawaii ($1,617)
2. California ($1,503)
3. Maryland ($1,392)
4. New Jersey ($1,334)
5. Massachusetts ($1,282)
6. New York ($1,280)
7. Colorado ($1,271)
8. Washington ($1,258)
9. Alaska ($1,244)
10. Virginia ($1,234)

Utilities

Germany

If there is one thing that is more expensive in Germany, it’s definitely utilities. 

It includes: 

• electricity
• water
• heating 
• garbage

On average, the total utilities can be about $253 per month. In the US, you can expect to pay $162 for the same apartment type (85 sqm). This is 56% more expensive than in the US.

Furthermore, Germany is the 10th most expensive in the world when it comes to utilities. The US is ranked 44th. 

The US

Overall, utilities are cheaper in the US, except for broadband internet. Here people pay on average $60, and in Germany, it’s twice cheaper – around $30. 

Nonetheless, in the US, utility cost varies from state to state, so you will pay the least in Nevada and the most in Alaska. In Germany, the prices are quite equal throughout the country. 

Groceries

Some products are cheaper in the US some are in Germany. Overall, the prices are very similar.

Germany

In Germany average household spends €414 or $478 per month on shopping for food and drinks. 

The US

In the US, the average weekly grocery bill for two people between the ages of 19 and 50 is $148 or $592 monthly. One person on a moderate budget will spend $244 per month on groceries. 

Whereas the average cost of food per month for the typical American household is about $660. This includes food at home and eating out. People spend $288 on average on eating out and $372 on food at home.

Eating out

Price in the restaurants is also very similar in both countries. The only larger difference can be seen in cities like New York or San Fransisco, where the meal would cost significantly higher than in Germany.

Germany

In Germany, the average household spends €414 or $478 per month on shopping for food and drinks. The average German eats out in a restaurant 136 times a year. 

When taking the average cost of the meal and one drink – €10-15 (food) + €3-5 (drink), it will come to around 13*136=1,768 yearly on the low end or 20*136= 2,720 yearly on the high end. 

Therefore, the average spending for eating out for one person ranges between €147 ($170) and €226 ($261) per month. 

If you are curious about if one of the biggest shopping holidays exists in Germany, you can read about Black Friday in Germany here:

The US

Overall, the average American spends $232 per month eating out. Very similar to the German average.

Statistically, eating unhealthy is cheaper in the US. Fast food restaurants are 16% cheaper in the US than in Germany. 

Healthcare

Germany

In Germany, everyone with public health insurance pays the same amount, which is 14,6% of the gross monthly salary. The employer contributes half of it. Therefore, workers pay only 7,8% of their gross income.

Students pay a fixed rate of around €110. 

However, the private insurance rate isn’t based on income and varies from provider to provider. As a result, you might save a buck by getting private coverage instead of public. 

In Germany, you almost never have to pay additionally from your budget when using health insurance. It covers your medical bill completely in almost 100% of the cases. 

The US

In 2021, the average monthly cost of health insurance in the US is $495. In 2021, the average cost of individual health insurance for a 40-year-old across all policies is $495. 

Well, in this category Germany surely beats the US. Americans spend way more money on medical care. Plus, they pay wildly different monthly premiums for medical coverage.

Yet, the average insurance policy price in the US can be comparable to Germany. In Germany, someone with a gross salary of €50,000 will pay €608 per month for public insurance. 

However, in Germany, employers are obligated to pay half of it. Hence, the employee owns only €304 or $351 per month. The cheapest premium you can get in the US is $313. 

The main reason for high spending on healthcare in the US lies in self-contribution. Consequently, insurance holders are also paying out of pocket for the use of healthcare services in addition to the monthly insurance price.

For example, with the cheapest insurance coverage, you need to pay 40% of the medical bill on your own. And even when having the best and most expensive insurance, one should contribute 10% to the total bill when seeing a doctor. 

In Germany, you don’t have to contribute more than the monthly cost of the insurance policy. It will cover everything in case you need to use it.

However, as an expat in the US, you can sign up for private health insurance tailored to foreigners. Such insurances have international coverage and will save you money on healthcare.

Cigna is one of America’s best expat health insurance providers, with 74,000 employees, 200 years of experience, and more than 100 million customers globally.

Visit their website to learn more and choose the optimal coverage for your situation.

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