Reality CheckAaron Bernstein
U.S. POLICYMAKERS SAY we've pulled ahead of our European rivals on the wage front. And that stands to make us a lot better off in the global marketplace. European officials chide their workers for making such high wages, blaming them for the European Community's economic ills. The average German factory worker earns $25.94 an hour in pay and benefits, a French worker $16.88. But their American cousin scrapes by with $16.17.
IN REALITY, much of America's advantage stems from exchange rates. If we returned to 1985 rates, when the U.S. had the stronger currency, our wages would be the higher. The German worker's current 40.51 marks an hour would be worth only $13.76. And a French worker would cost $9.95. Indeed,
European executives these days are sounding just like American honchos did back then, when an overvalued dollar made our $13.01 average seem way out of line. Lesson for all: Don't crow about advantages based on such fleeting conditions as foreign-exchange rates.