When the Federal Minister of Labor and Social Affairs, Hubertus Heil (SPD), initially announced the exact amount of the new standard rate for the citizen’s income from January 2024 at the end of August and the federal cabinet confirmed this by decree in mid-September, the outrage was great: the increase by 12% in some cases would mean that working in Germany would no longer be worthwhile – at least that was often the verdict. A criticism that is probably as old as the welfare state itself. In fact, the wage gap can be quite small from case to case. TradingForFuture.com has done the math.
Possible citizen’s income benefits
As of January 1, 2024, single and single-parent adults of legal age without a job will receive 563 euros a month in Standard Needs Level I, which is 57 euros, or 12%, more than they currently receive. This sum can be used for daily expenses, such as food, hygiene articles or a visit to the hairdresser, while the Jobcenter also bears the costs for the cold rent and heating costs. Meanwhile, the office sets an appropriate apartment size for this purpose. For a one-person household, this is 50 square meters2 and thus an average rent payment of 545 euros as well as heating costs averaging around 135 euros. Theoretically, this means that an unmarried recipient of the citizen’s allowance would receive about 1,243 euros per month.
| Single person / single parent | No children | One child | Two children |
|---|---|---|---|
| Standard requirement | 563 euros | 953 euros | 1,343 euros |
| Adequate apartment size | 50 qm2 | 65 qm2 | 80 qm2 |
| Average basic rent | 545 euros | 660 euros | 780 euros |
| Average heating costs | 135 euros | 175 euros | 215 euros |
| Total welfare | 1,243 euros | 1,788 euros | 2,338 euros |
For couples, it is 506 euros a month per recipient. For a child aged 0 to 5, the community will pay 357 euros from next year, for a child aged 6 to 13 390 euros and for a teenager up to 17 years old 471 euros, with the appropriate apartment size then also increasing with the size of the household and thus the allowances for housing and heating additionally increasing. A couple with two middle-aged children can thus collect almost 3,000 euros in citizen’s allowance.
| Two adults | No children | One child | Two children |
|---|---|---|---|
| Standard requirement | 1,012 euros | 1,402 euros | 1,729 euros |
| Adequate apartment size | 65 qm2 | 80 qm2 | 95 qm2 |
| Average basic rent | 660 euros | 780 euros | 940 euros |
| Average heating costs | 175 euros | 215 euros | 250 euros |
| Total welfare | 1,847 euros | 2,397 euros | 2,919 euros |
Average income vs. citizen’s income
According to the latest salary report from the job portal Stepstone, the gross median salary in Germany across all professions is 43,842 euros a year, which corresponds to around 3,650 euros a month. A 30-year-old from Bavaria thus receives a net payout of about 2,390 euros in tax bracket I. Minus the citizen’s income benefits for a single person, including housing and heating costs, he thus has about 1,147 euros more per month than the citizen’s income recipient. With one or two children, the wage gap drops continuously to as low as 659 euros in our sample calculation, despite child benefits and income tax class II.
| Single person / single parent | No children | One child | Two children |
|---|---|---|---|
| Gross income | 3,650 euros | 3,650 euros | 3,650 euros |
| Net income | 2,390 euros | 2,497 euros | 2,497 euros |
| + Child support | – | 250 euros | 500 euros |
| + Child supplement | – | – | – |
| + Housing subsidy | – | – | – |
| Total income | 2,390 euros | 2,747 euros | 2,997 euros |
| – Citizen’s Income Benefits | 1,243 euros | 1,788 euros | 2,338 euros |
| Lohnabstand | 1,147 euros | 959 euros | 659 euros |
With a two-person household and thus the slide into tax class IV per partner, a childless couple comes to a net income of around 4,780 euros. After deduction of the citizen’s benefits, this leaves both of them with 2,993 euros more. With one or even two children and thus additional child benefits, the wage gap decreases continuously.
| Two adults | No children | One child | Two children |
|---|---|---|---|
| Gross income | 7,300 euros | 7,300 euros | 7,300 euros |
| Net income | 4,780 euros | 4,780 euros | 4,780 euros |
| + Child support | – | 250 euros | 500 euros |
| + Child supplement | – | – | – |
| + Housing subsidy | – | – | – |
| Total income | 4,780 euros | 5,030 euros | 5,280 euros |
| – Citizen’s Income Benefits | 1,847 euros | 2,397 euros | 2,919 euros |
| Salary gap | 2,993 euros | 2,663 euros | 2,361 euros |
Minimum wage vs. citizen’s income
If you work 40 hours a week for the minimum wage, you will end the month with a gross salary of around 2,150 euros at the end of the month from January 1, 2024. After deducting all taxes and social security contributions, 1,545 euros of this amount ends up in the bank account. After deducting the citizen’s allowance, this results in a wage gap of 302 euros, which makes the work worthwhile, at least on paper. With one child and thus additional entitlement to child benefit and even housing benefit as well as a better income tax bracket, the gap to the citizen’s income drops to only 154 euros. If you have two children, you have only 44 euros more in your pocket at the end of the month than the person who does not work.
| Single person / single parent | No children | One child | Two children |
|---|---|---|---|
| Gross income | 2,150 euros | 2,150 euros | 2,150 euros |
| Net income | 1,545 euros | 1,632 euros | 1,632 euros |
| + Child support | – | 250 euros | 500 euros |
| + Child supplement | – | – | – |
| + Housing subsidy | – | 60 euros | 250 euros |
| Total income | 1,545 euros | 1,942 euros | 2,382 euros |
| – Citizen’s Income Benefits | 1,243 euros | 1,788 euros | 2,338 euros |
| Salary gap | 302 euros | 154 euros | 44 euros |
With two minimum wage recipients, there is again more left over at the end of the month than with the citizen’s income, but less than with the median earner.Particularly perfidious: Even a couple on minimum wage is entitled to housing benefit and must receive additional support.In the end, the wage gap is still between 1,382 euros and 1,158 euros.
| Two adults | No children | One child | Two children |
|---|---|---|---|
| Gross income | 4,300 euros | 4,300 euros | 4,300 euros |
| Net income | 3,090 euros | 3,090 euros | 3,090 euros |
| + Child support | – | 250 euros | 500 euros |
| + Child supplement | – | – | 236 euros |
| + Housing subsidy | 30 euros | 215 euros | 475 euros |
| Total income | 3,120 euros | 3,555 euros | 4,301 euros |
| – Citizen’s Income Benefits | 1,847 euros | 2,397 euros | 2,919 euros |
| Salary gap | 1,273 euros | 1,158 euros | 1,382 euros |
All on paper
On paper, work pays off compared to the citizen’s income.However, it remains a case-by-case decision, depending on earnings, working hours, tax bracket, additional benefits and, above all, the environment. The average cost of rent is not the same everywhere: In eastern Germany, the cost of living is significantly lower than in southwestern Germany, or even in Bavaria, with its particularly expensive city of Munich. Employees who calculate with average rents, as in our example, will probably not be able to beat the citizen’s income. Even with a minimum wage, it is difficult to pay for an apartment in the Bavarian capital in the size considered appropriate by the authorities. This does not include further expenses for insurance or electricity.
Another factor contributing to the individual case decision is that any costs for a job ticket or car would have to be deducted from the remaining wage gap. After all, you can’t get to your job without them. Of course, this may also be favored in the end by the wage tax equalization, but no one has to work 40 hours a week in order to have paid a few euros in wage tax at the end, as in the case of the couple with minimum wage and two children.44 euros difference is ridiculous. In addition, the job center pays for other expenses, such as the broadcasting fee, any additional heating costs or education and participation for the offspring. If the washing machine breaks down, the citizen’s income pays for the repair or even the replacement. An employee must pay all of this out of his or her own pocket. In addition, you should never convert your pay gap into an hourly wage or break it down to individual household members one at a time.
If you earn at least the median wage and have perhaps already built up your assets, you should never ask yourself whether work is worth it compared to the citizen’s income. Work is worth it for him in any case. However, it is always advisable to demand a salary adjustment.
Addendum
Following a letter from an attentive reader, the child supplement was additionally included in the above tables. In fact, however, this only affects one case in the case studies and thus has no effect on the final result and the conclusion.
However, it is also justified to point out that the citizen’s income is only intended for those who cannot work. Those who do not want to work have to reckon with penalty deductions even in the case of the citizen’s income and are worse off at the bottom line.
