Salaries USA vs Germany: Where Will You Make More?

Oct 8, 2021Banking and Finance, Living in Germany, Move to Germany, Work in Germany

The USA and Germany are the world leaders when it comes to the economy, quality of living, job, 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. Yet, Germany compromises on salaries to provide better social security benefits and various free services for employees. Whereas in the US, people spend more money on retirement and health care. 

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

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.

Check how much you can earn in Germany (for all professions).

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 EUR. 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 background can get paid better than in the US. 

3. Low skilled jobs – 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

Check salaries in Germany yourself

Use this free tool to check average salaries in Germany. You can add filters like location, experience, skills, size of the company, and others to see the most accurate numbers!

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 health care, education, and financial support if needed. 

  • Healthcare is free – well, 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 for 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. 

Gross annual incomeAmount of taxpayers%
Income above 1.000.000 €15.5670.04 %
500.000 € – 1.000.000 €34.9290.10%
250.000 € – 500.000 €139.7850.38 %
125.000 € – 250.000 €568.9901.56 %
100.000 € – 125.000 €451.7151.24 %
90.000 € – 100.000 €316.2070.87 %
80.000 € – 90.000 €461.9931.27 %
70.000 € – 80.000 €692.2561.90 %
60.000 € – 70.000 €1.097.3323.01 %
50.000 € – 60.000 €1.883.4985.17 %
45.000 € – 50.000 €1.422.6013.90 %
40.000 € – 45.000 €1.845.9225.07 %
35.000 € – 40.000 €2.412.6346.62 %
30.000 € – 35.000 €2.975.4418.17 %
25.000 € – 30.000 €3.273.9648.98 %
20.000 € – 25.000 €3.484.6639.56 %
15.000 € – 20.000 €3.749.55910.29 %
10.000 € – 15.000 €4.071.97411.17 %
5.000 € – 10.000 €3.624.2449.95 %
1 € – 5.000 €3.195.7978.77 %
Negative income719.9091.98 %

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 the 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 so 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, university. 

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 to €81,000. The gross salary depends on your profession, industry, and education.

According to the 2021 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 2021.

Wondering how much is the average salary for your profession? Check the Gehalt.de – the best German resource which provides information on all salaries in the country. You can add filters like location, experience, skills, size of the company, and others to see the most accurate numbers!

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:

Job titleGross median salary 2021
Physicians and SurgeonsEqual or more than $208
Obstetricians and gynecologistsEqual or more than $208k
General internal medicine physiciansEqual or more than $208k
AnesthesiologistsEqual or more than $208k
Chief executivesEqual or more than $185k
Finance managersEqual or more than $130k
Nurse anesthetistsEqual or more than $183k
Dentists, generalEqual or more than $158k
Airline pilots, copilots, and flight engineersEqual or more than $160k
Architectural and engineering managersEqual or more than $149k
Marketing managersEqual or more than $142k
Source: bls.gov

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).

The average salary in Germany vs US in 2021

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 2021, German employees earned a median of €43,200 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 2021 (Stepstone Gehaltsreport 2021) has indicated the average gross salary in Germany as €56,985.

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. 

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 2021 in different industries:

ProfessionAvg. Gross salary (2021)
Medicine (doctors)€89.539
Finance€73.847
Lawyer€68.642
Business Advice€64.173
Banking€62.744
Engineer€62.564
IT€60.563
Marketing, PR€60.174
Production€60.046
Distribution and Sales€59.591
HR€58.029
Construction€57.270
Research€56.399
Logistics€50.358
Design€48.574
Source: housinganywhere.com

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 EUR annually. 

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

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

Years of ExperienceAvg. Gross salary (2021)
Less than 1 year€38.932
1-2 years€41.518
3-5 years€48.058
6-10 years€56.229
11-25 years€66.686
25+ years€ 67.480
Source: housinganywhere.com

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 degree who earn €54,210 on average. 

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 $51,480 in the second quarter of 2021. At the same time, it was €43,200 ($49,960) in Germany. Therefore, the difference between median salary in 2021 in the US and Germany is only $1,520 or 2,95%. 

This insignificant difference is a result of the calculation of the median annual salary. All salaries across the country get combined, so it makes numbers unrealistic.

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 2021

  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 receive people with Doctorate Degree with a salary of $125,922 USD. The second most paid education level is Masters Degree with a salary of $100,259 USD.
  5. People with different experiences earn a different salary. Employees with 16-20 years of experience receive $98,926 USD. Professionals with 20+ years of experience receive 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 earn less than 92,800 USD while the other half earn 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 2021 among different jobs:

Job titleGross annual salary 2021
CEO$160,662 USD
Doctor$160,527 USD
Director$150,103 USD
General Manager$126,189 USD
Other Engineer Career$125,618 USD
Engineering Manager$122,328 USD
Lawyer$117,757 USD
Finance Manager$111,042 USD
IT Manager$109,553 USD
Program Manager$107,639 USD
Software Engineer$107,389 USD
Construction Manager$106,357 USD
CPA – Certified Public Accountant$104,434 USD
IT Project Manager$101,918 USD
Manager$97,413 USD
Other Management Career$95,589 USD
University Professor$95,188 USD
Operations Manager$94,731 USD
Construction Project Manager$93,563 USD
Business Manager$93,396 USD
Other IT Career$93,228 USD
Project Manager$92,937 USD
Human Resources Manager$92,174 USD
Other Sales Career$91,462 USD
Marketing Manager$91,343 USD
Software Developer$91,332 USD
Other Finance Career$88,675 USD
Other Human Resource Career$85,935 USD
Engineer$82,546 USD
System Analyst$82,008 USD
Salesmen or Saleswomen$80,996 USD
Financial Analyst$80,729 USD
Healthcare Management$80,452 USD
Human Resource$78,658 USD
Electrical Engineer$77,767 USD
Account Manager$76,255 USD
Registered Nurse$75,210 USD
Architect$72,989 USD
Other Public Sector Career$72,746 USD
Mechanical Engineer$72,166 USD
System Administrator$71,625 USD
Manufacturing$70,253 USD
Other Manufacturing Career$67,653 USD
Other Medical Career$66,253 USD
Senior Accountant$65,369 USD
Technician$64,144 USD
Other Constr. & Labor Career$63,578 USD
IT Coordinator$63,091 USD
Office Manager$61,427 USD
Teacher$60,019 USD
Accountant$58,918 USD
Other Education Career$57,243 USD
Restaurant Manager$56,995 USD
Customer Service Manager$54,880 USD
Staff Accountant$49,870 USD
Other Service Career$47,051 USD
Call Center$37,860 USD
Administrative Assistant$36,606 USD
Source: www.averagesalarysurvey.com

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.

Fitness Instructor$31,720
Personal Trainer$31,720
Photographer$31,200
Dancer$30,720
Furniture Salesman$30,000
Gymnast$30,000
International Aid Worker$30,000
Glass Blower$29,790
Medical Assistant$29,370
Pharmacy Technician$29,000
Butcher$28,660
Esthetician$28,640
Furniture Maker$28,440
Woodworker$28,440
Daycare Worker$28,377
Tailor$28,000
Preschool Teacher$27,130
Sanitation Worker$27,000
Bartender$26,000
Gardener$26,000
Zookeeper$26,000
Beautician/Cosmetologist$25,000
Florist$24,750
Security Guard$23,970
Landscaper$23,940
Tour Guide$23,770
Baker$23,140
Taxi Driver$22,820

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 on your bank account after all deductions.

See the full overview of Germany and American taxes here.

Cost of living Germany vs the US

  • 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

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

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 2020 was $1,098 a month.

Average prices for housing in two popular American cities:

Type of the housingNew YorkSan Francisco
One-bedroom apartment (city center)$3,003$3,273
One-bedroom apartment (outside of city center)$1,896$2,542
Three bedroom family home (city center)$5,832$6,478
Three bedroom family home (outside of city center)$3,318$4,501

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. 

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 EUR or $478 per month on shopping for food and drinks. 

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 for 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 EUR or $478 per month on shopping for food and drinks. Average German eats out in a restaurant 136 times a year. 

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

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

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. 

Health care

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 EUR. 

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. 

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 premiums monthly 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 EUR will pay 608 EUR per month for public insurance

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

The main reason for high spending for health care in the US lies in self contribution. Consequently, insurance holders are also paying out of pocket for the use of health care 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.

Recommended products and services in Germany:

This post contains affiliate links. The affiliate link means I may earn an advertising/referral fee if you make a purchase through my link, without extra cost to you. It helps to keep this blog afloat. Thanks for your support. 

Related Posts

Follow Us