Income Gap Narrows: Low Earners Catching Up

4/30/2024, 2:01 PM

Thanks to the minimum wage increase: Incomes of low earners rise more sharply than those of top earners.

In Germany, a positive trend in income distribution is evident: The wages of low-income earners have increased significantly more than those of top earners within a year. This development is primarily due to the increase in the statutory minimum wage, which rose from 9.82 euros to 12 euros per hour. This was reported by the Federal Statistical Office for the period from April 2022 to April 2023.

The data from the Federal Statistical Office show that income inequality between the highest and lowest incomes has slightly decreased. While the top ten percent of employees earned on average 2.98 times the income of the bottom tenth, this factor was previously at 3.28 a year before. The gross hourly wages of low-wage earners increased by 12.4 percent during the observed period, while wages at the upper end of the scale only increased by 1.9 percent.

This development has contributed to a slight equalization of incomes between low and high earners, a trend that is often demanded socially and politically. In April 2023, the gross hourly wage for low-income earners was 12.25 euros, while high-income earners had to earn at least 36.48 euros per hour.

"Although the median incomes have grown more slowly overall—with a nationwide increase of 4.3 percent—the trend shows that income disparity remains greater in the western part of Germany than in the east. There, wages are generally somewhat lower, but wage growth is more balanced, with a median income increase of 6.1 percent in the east compared to 4.2 percent in the west."

These statistics illustrate how regulatory interventions such as raising the minimum wage can have direct impacts on income distribution and contribute to reducing the income gap in the long term.

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