A reader challenged my recent article about American financial insecurity. His point was simple: in Germany, workers often receive months of notice before losing a job. In the United States, many workers can be dismissed much faster.

He also argued that German workers retain health insurance when they become unemployed. The comparison deserves examination, although some of his claims about American coverage were too sweeping.

What interests me is the question beneath his comment. How much is a salary worth if a family cannot count on receiving it next month?

In America, dismissal can come quickly

Most US states follow some form of at-will employment. An employer can generally terminate employment without advance notice, provided it does not violate anti-discrimination laws, contracts or other protections. Union agreements can change the position. The federal WARN Act also requires notice for certain covered mass layoffs and plant closings.

American workers do not all leave with nothing. Severance arrangements and unemployment insurance may help. But neither several months of notice nor severance is a universal entitlement.

Germany gives many workers time to adjust

Under Section 622 of Germany’s Civil Code, the ordinary statutory notice period for employees is four weeks to the fifteenth or end of a month. Employer notice increases with service: two months to month-end after five years, four months after ten years and seven months after twenty years.

Exceptions matter. Probationary periods and collective agreements can change notice requirements. The Dismissal Protection Act provides additional safeguards where it applies, but economic dismissals remain possible. Nor does every dismissal automatically bring severance pay.

For a qualifying long-serving employee, several months of salary before departure can buy time to look for work and reorganise the family budget. The worker may still be required to work during that notice period.

Unemployment benefits replace only part of earnings

Germany’s unemployment insurance generally pays 60% of a legally calculated net earnings amount, or 67% for qualifying claimants with a child. Eligibility depends on insured employment and other conditions; contribution ceilings limit payments. Duration varies with age and contribution history.

US unemployment insurance also replaces part of lost earnings, but state rules determine the amount and ordinary duration. Many states offer up to 26 weeks, while some offer less. A high earner may receive far below the previous salary.

Neither system guarantees a household’s former standard of living. The practical question is how much of the family’s monthly bills can still be paid while the worker searches for another position.

Health insurance changes the calculation

The reader claimed Americans lose health insurance on their first day of unemployment. That is not universally true. Employer coverage may last until a later date. Eligible workers can use COBRA continuation coverage, often for up to eighteen months, though they may pay up to 102% of the full group premium. Loss of job-based coverage can also open a Marketplace special enrolment period. Medicaid or a spouse’s plan may provide alternatives.

Germany generally maintains statutory health insurance for qualifying recipients of unemployment benefit, with contributions handled through the public system. Private insurance and other individual circumstances require separate consideration.

The difference is not that Americans have no alternatives. It is that job loss can force an American family to replace an employer-subsidised insurance arrangement at the very moment its income falls.

Protection has a price

Germany’s greater employment and social insurance protections are not free. The OECD’s Taxing Wages 2026 reports a 2025 tax wedge of 49.3% in Germany and 30.0% in the United States for an average single worker without children. The measure includes employer contributions and is not the worker’s personal tax deduction.

For a two-earner married couple with two children, one earning the average wage and the other 67% of it, the OECD reports 42.6% for Germany and 24.6% for the United States. Family structure changes the comparison substantially.

Stronger dismissal rules may also influence employers’ hiring decisions, although the size and direction of that effect require evidence rather than assumption. The American labour market has different strengths, and an American worker with generous severance or substantial savings could be better protected than a German worker on a short contract.

The financial test begins when the pay stops

Imagine two households with enough accessible savings for three months of essential expenses. One worker is dismissed immediately, subject to whatever contractual and legal protections apply. The other has ten years’ service in Germany and receives the ordinary statutory four months’ notice to month-end.

These are illustrative cases, not representative national households. The German worker may continue drawing salary during notice, while the American worker might receive severance or find another job quickly. Both may qualify for unemployment benefits.

Yet the legal notice period changes the timing of the shock. One family may need its emergency savings immediately. The other may have months before its salary ends.

I began with the question of whether a good salary still buys economic security. The reader’s comment exposed something missing from a salary comparison: the protection built around employment.

A paycheck measures current income. A notice period determines how suddenly it can vanish. And the cost of keeping health insurance may decide how quickly a family’s savings disappear.

Before calling a worker financially secure, I would want to know not just what the job pays, but what happens on the day it ends.

Sources

German Civil Code §622; Dismissal Protection Act; Federal Employment Agency; US Department of Labor; HealthCare.gov; OECD Taxing Wages 2026.