Jobs: Increasingly Working for Each Other
One of the most important elements of our relationship is the extent to which jobs are created for both partners. The Embassy looked carefully at the range of available data on this important indicator. The data all point to one compelling conclusion: jobs in both economies are being created at a rapid rate, and the two economies increasingly need each other to fuel employment.
Sources indicate that nearly 1.5 million jobs and approximately 6,000 companies in both countries directly depend on the U.S.-German economic relationship. On the broader global level, the United States and Germany support the largest and second largest workforces worldwide through their foreign affiliates: U.S. affiliates employ 9
million workers worldwide and German affiliates employ 4.6 million.
U.S. Job Creation in Germany: 2,700 U.S. firms operating in Germany account for 800,000 German jobs. The manufacturing workforce of U.S. affiliates in Germany alone
totaled 385,000 in 2002, more than 80% larger than the number of manufacturing workers employed in China by U.S. affiliates. Jobs that are indirectly supported by U.S. investment activities (the so-called multiplier effect) are estimated to be roughly 1.3 to 2.6 times that amount, or up to 2 million German private sector jobs.
German Job Creation in the United States: There are more than 3,000 German companies in the United States, together creating more than 670,000 jobs. Germany is the second largest European employer of Americans. Indeed, one in every 200 Americans working in the private sector now works for a German firm. In 2005, German-owned business accounted for 11% of the employment of all foreign-owned business in the United States, and German affiliates employed 375,000 Americans in manufacturing jobs. In 2005, only Japan had a larger American workforce in manufacturing jobs. American workers for German firms enjoy high wages ($73,500 average compared to the $66,000 average for all foreign affiliates operating in the United States) and high labor and environmental standards.
The U.S. Embassy with the cooperation of a wide variety of institutions and individuals on both sides of the Atlantic has undertaken a study to capture both the depth and breadth of German-U.S. economic integration. The information in this booklet looks at the relationship from various levels of connectivity: investment, capital markets, trade, jobs, R&D, people-to-people, military and government. All of these factors (in sometimes less than obvious ways) have contributed to prosperity in the United States and Germany. Moreover, the connections are more profound than generally recognized.
Today, Germany and the United States have one of the largest and most important bilateral economic relationships in the world. Bilateral investment has reached stunning levels with more than $1 trillion in assets controlled by German companies in the U.S. and American companies operating in Germany. With the enormous size of our two way investment, more and more jobs in both of our countries depend on this relationship. Indeed, 670,000 Americans, or one in every 200 employed in the private sector, now works for a German company. Meanwhile, American companies in Germany employ nearly 800,000 Germans (one out of every 35 German private sector employees), and the multiplier effects of this employment support up to an estimated additional 2 million jobs for the German economy. Bilateral trade fuels and supports these enormous investment underpinnings. The United States is now the top export market for Bavaria, Baden-Württemberg and Berlin and ranks among the top five export markets for 13 of Germany's 16 Länder.
More importantly, these trade and investment trends are likely to grow at a rapid pace. Indeed, since German reunification, U.S. foreign direct investment (FDI) in Germany has quadrupled while German direct investment in the United States is roughly seven times what it was when the Berlin Wall fell. Not only has FDI grown rapidly, but so has the acquisition of stock equities. In 2007 alone, U.S. investors bought more German stocks than they had over the entire past decade. On the trade side, the United States exported nearly twice as much to Germany last year as it did five years before; it also imported 50% more during this same time frame.
Beyond these traditional measures of economic connectivity are many others that are perhaps less obvious but just as important. For example, R&D is now a core function of U.S. and German corporate affiliates. German affiliates in the United States account for almost 3% of all R&D spending in the United States, and Germany has become a critical trading partner in advanced technologies such as biotech and life sciences products.
Germany is among the top destinations in continental Europe for American tourists, and Americans are the second largest group of tourists to Germany. This means not only profits in tourism and creation of jobs in the tourist industry, but enormous spin-off effects in terms of cultural understanding and the development of relationships and language skills that lead to even deeper economic integration.
With the end of the Cold War and the reunification of Germany, the U.S. military presence in Germany has changed significantly. Yet the contributions of the U.S. military to German prosperity through the employment of Germans (about 20,000) and U.S. military expenditures ($5 billion a year, roughly half of expenditures during peak troop levels during the Cold War) remain important.
