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Tangential to this article, but >pay outside of the US is often much lower for reasons that don’t really make sense to me). Can someone explain why salaries i

Tangential to this article, but >pay outside of the US is often much lower for reasons that don’t really make sense to me). Can someone explain why salaries in for example Europe are so much less? Out of uni salary for example seems to be around 38k in Europe, whereas in US everything under 90k seems very low. Just the difference in purchase power and costs?

somic 11y ago
Supply and demand.
loopbit 11y ago
I wish I could. Cost of living, taxes, benefits... even the "culture" of the country (for lack of a better word) all play a role, but when you are working in a distributed team for an american corp in a different country and see how different the salaries are even between team members doing the same job, it hurts. BTW, I think you'll find it difficult to find a fresh out of college job that pays you 38K€ in most of europe.
- djhn 11y ago
  3k€ per month + holiday extra or bonuses sounds pretty standard for most office work after any university degree (so by default MSc in Europe), I'd say 3.5 to 4 is reasonable with engineering, business, finance, etc. 4-5 in law, 5-7 in medicine.
  - loopbit 11y ago
    Good luck finding a entry-level job, any entry level job in Spain that pays you more than 900€ per month in Spain, Italy, Portugal... even France and maybe, Germany (although I have less information there). From what I see, you might get 2-2.5K€ per month in the rest of Europe. Ireland and UK are, AFAIK, where the highest salaries in IT are and even there you are going to get 2-3K€ per month at most. Most lawyers I know in Europe start their careers earning minimum wage. And they do that for a few years until they are promoted to full lawyers or open their own practice. Doctors usually spend their first years with temp contracts of 3-6 months in Hospitals for slightly more than minimum wage. This is after they finish their degrees and do the mandatory internships they need to do to get their MD degree.
    - mikekchar 11y ago
      I did quite a lot of research on salaries in the London area 2 years ago. Starting wage for a programmer out of school was around 3-3.5K€ per month. Some places paid up to 4K per month (90th percentile). 25th% percentile was 2.5K€ per month. I have heard that starting wages have gone up a bit in the last few years. Your numbers for the UK are more typical outside of London, though. Of course nothing like Bay area salaries, even though London is ridiculously expensive. Some Googling seems to indicate that the cost of living in SF is about 25% higher than London, so real earnings are quite a bit higher there for programmers it seems.
      - deleted 11y ago
        [deleted]
      - benmarten 11y ago
        Most starting salaries in Germany out of school for software engineers are between 40-60k€/year. I made 50k starting with a Bachelors. My brother with MSc. in Mechanical Engineering makes almost 60k€.
      - throwaway9090 11y ago
        Been working in London for a good 8 years. Started at £75k, and earning over £125k base now + fairly significant bonus (50 - 100%). Fintech mainly, but also worked at a tech company. throwaway for obvious reasons.
    - djhn 11y ago
      Oh yes, I should have qualified that! I was talking Nordics, GermanySwitzerland/Austria, Benelux countries, UK and Ireland.. Maybe France as well. Definitely not the whole Europe, but a significant chunk of the tech scene.
hyperpape 11y ago
I think there's also a geographical issue. New grads can't expect to earn $90k where I live (Raleigh), though $40k would be quite low.
seattle_spring 11y ago
I would trade my high salary for 6+ weeks of vacation and free healthcare.
- Ocerge 11y ago
  Yup. I don't even have that large a salary for a software engineer ($75k in Portland OR, which is plenty for a 26 y/o, kidless, single male), but I'd take half if it meant I wouldn't be as chained to the desk as I am now.
  - arh68 11y ago
    Would you work for the government? A lot of people don't even show up in December, let alone Fridays. Let me know if you're interested in swapping desks ;)
alain94040 11y ago
There is a huge difference between companies where software is the product (Google, Microsoft, Silicon Valley startups), and companies where software supports a business that has nothing to do with software (most IT jobs). When software is the product, you tend to consider your software developers as money makers and pay them better. When you think of your engineers as a necessary evil to sell other stuff, you tend to pay them as little as possible. Europe is full of the second scenario. That's the problem.
- devonkim 11y ago
  The majority of the world's software is the second case. It just so happens we have a lot of software product and services companies in the US. Also, just because you're a technology vendor doesn't mean that you'll treat your software developers well. There's tons of really mediocre software companies (large ones, even) that outsource developers constantly and shower sales with massive bonuses because they've failed to make a good business being good at technology, so they become a sales-oriented culture. This tends to happen at the majority of large (10k+ employee) software companies across the Fortune 500. Technology itself is a business few are actually capable of doing well in, most just mark up crap for other businesses and deliver "value" in areas that have nothing to do with good engineers of any sort.
Bahamut 11y ago
I always wondered that too - Europe isn't necessarily cheaper either, and electronics are much more expensive in general. But $90k is not the norm for starting in the US. I started at $50k in DC for example post-grad school. $90k is perhaps only the Bay Area.
- bigcothrowa 11y ago
  $90k isn't unheard of in Seattle, either (that was my starting salary, in Seattle, 4 years ago). My alma mater published self-reported salary data and $80k was probably the median at the time. Granted, it was one of the best CS schools in the area. Much of the east coast probably has >=$80k starting salaries as well. (Or at least, you'd expect the high salaries to be on the coasts.) Negotiate, negotiate, negotiate.
dragonwriter 11y ago
> Out of uni salary for example seems to be around 38k in Europe, whereas in US everything under 90k seems very low. Part of that may be because your view of the US is distorted by being limited to a particularly highly-paid slice of the field in a highly-paid geographical region; 90k is close to the median salary for the highest of the non-management programming occupation titles (software engineer -- software developer and computer programmer pay less) in the BLS salary survey, and therefore pretty high paying for the technology field as a whole, rather than the level where anything under it is low for the field.
andrest 11y ago
Remember, software has no (or very little) marginal cost. Software businesses only become insanely profitable at scale. The kind of scale Microsoft, Google and others have. A single percentage point improvement can pay your salary. In Europe we lack software companies of such scale. Why? Not too long ago going global from the middle of nowhere was not an option. Companies would saturate their local market and fail to grow across borders. I'd venture to say this is due to the (1) lack of international sales experience, (2) different laws / work practices elsewhere, and (3) language barriers. I know 3 companies doing accounting software in Estonia with a population of 1.4 million. These companies know the business better then anybody else and the market is too small for any of the big players to consider. Similar patterns can be seen across industries.

somic 11y ago

Supply and demand.

loopbit 11y ago

I wish I could. Cost of living, taxes, benefits... even the "culture" of the country (for lack of a better word) all play a role, but when you are working in a distributed team for an american corp in a different country and see how different the salaries are even between team members doing the same job, it hurts. BTW, I think you'll find it difficult to find a fresh out of college job that pays you 38K€ in most of europe.

djhn 11y ago
3k€ per month + holiday extra or bonuses sounds pretty standard for most office work after any university degree (so by default MSc in Europe), I'd say 3.5 to 4 is reasonable with engineering, business, finance, etc. 4-5 in law, 5-7 in medicine.
- loopbit 11y ago
  Good luck finding a entry-level job, any entry level job in Spain that pays you more than 900€ per month in Spain, Italy, Portugal... even France and maybe, Germany (although I have less information there). From what I see, you might get 2-2.5K€ per month in the rest of Europe. Ireland and UK are, AFAIK, where the highest salaries in IT are and even there you are going to get 2-3K€ per month at most. Most lawyers I know in Europe start their careers earning minimum wage. And they do that for a few years until they are promoted to full lawyers or open their own practice. Doctors usually spend their first years with temp contracts of 3-6 months in Hospitals for slightly more than minimum wage. This is after they finish their degrees and do the mandatory internships they need to do to get their MD degree.
  - mikekchar 11y ago
    I did quite a lot of research on salaries in the London area 2 years ago. Starting wage for a programmer out of school was around 3-3.5K€ per month. Some places paid up to 4K per month (90th percentile). 25th% percentile was 2.5K€ per month. I have heard that starting wages have gone up a bit in the last few years. Your numbers for the UK are more typical outside of London, though. Of course nothing like Bay area salaries, even though London is ridiculously expensive. Some Googling seems to indicate that the cost of living in SF is about 25% higher than London, so real earnings are quite a bit higher there for programmers it seems.
    - deleted 11y ago
      [deleted]
    - benmarten 11y ago
      Most starting salaries in Germany out of school for software engineers are between 40-60k€/year. I made 50k starting with a Bachelors. My brother with MSc. in Mechanical Engineering makes almost 60k€.
    - throwaway9090 11y ago
      Been working in London for a good 8 years. Started at £75k, and earning over £125k base now + fairly significant bonus (50 - 100%). Fintech mainly, but also worked at a tech company. throwaway for obvious reasons.
  - djhn 11y ago
    Oh yes, I should have qualified that! I was talking Nordics, GermanySwitzerland/Austria, Benelux countries, UK and Ireland.. Maybe France as well. Definitely not the whole Europe, but a significant chunk of the tech scene.

hyperpape 11y ago

I think there's also a geographical issue. New grads can't expect to earn $90k where I live (Raleigh), though $40k would be quite low.

seattle_spring 11y ago

I would trade my high salary for 6+ weeks of vacation and free healthcare.

Ocerge 11y ago
Yup. I don't even have that large a salary for a software engineer ($75k in Portland OR, which is plenty for a 26 y/o, kidless, single male), but I'd take half if it meant I wouldn't be as chained to the desk as I am now.
- arh68 11y ago
  Would you work for the government? A lot of people don't even show up in December, let alone Fridays. Let me know if you're interested in swapping desks ;)

alain94040 11y ago

There is a huge difference between companies where software is the product (Google, Microsoft, Silicon Valley startups), and companies where software supports a business that has nothing to do with software (most IT jobs). When software is the product, you tend to consider your software developers as money makers and pay them better. When you think of your engineers as a necessary evil to sell other stuff, you tend to pay them as little as possible. Europe is full of the second scenario. That's the problem.

devonkim 11y ago
The majority of the world's software is the second case. It just so happens we have a lot of software product and services companies in the US. Also, just because you're a technology vendor doesn't mean that you'll treat your software developers well. There's tons of really mediocre software companies (large ones, even) that outsource developers constantly and shower sales with massive bonuses because they've failed to make a good business being good at technology, so they become a sales-oriented culture. This tends to happen at the majority of large (10k+ employee) software companies across the Fortune 500. Technology itself is a business few are actually capable of doing well in, most just mark up crap for other businesses and deliver "value" in areas that have nothing to do with good engineers of any sort.

Bahamut 11y ago

I always wondered that too - Europe isn't necessarily cheaper either, and electronics are much more expensive in general. But $90k is not the norm for starting in the US. I started at $50k in DC for example post-grad school. $90k is perhaps only the Bay Area.

bigcothrowa 11y ago
$90k isn't unheard of in Seattle, either (that was my starting salary, in Seattle, 4 years ago). My alma mater published self-reported salary data and $80k was probably the median at the time. Granted, it was one of the best CS schools in the area. Much of the east coast probably has >=$80k starting salaries as well. (Or at least, you'd expect the high salaries to be on the coasts.) Negotiate, negotiate, negotiate.

dragonwriter 11y ago

> Out of uni salary for example seems to be around 38k in Europe, whereas in US everything under 90k seems very low. Part of that may be because your view of the US is distorted by being limited to a particularly highly-paid slice of the field in a highly-paid geographical region; 90k is close to the median salary for the highest of the non-management programming occupation titles (software engineer -- software developer and computer programmer pay less) in the BLS salary survey, and therefore pretty high paying for the technology field as a whole, rather than the level where anything under it is low for the field.

andrest 11y ago

Remember, software has no (or very little) marginal cost. Software businesses only become insanely profitable at scale. The kind of scale Microsoft, Google and others have. A single percentage point improvement can pay your salary. In Europe we lack software companies of such scale. Why? Not too long ago going global from the middle of nowhere was not an option. Companies would saturate their local market and fail to grow across borders. I'd venture to say this is due to the (1) lack of international sales experience, (2) different laws / work practices elsewhere, and (3) language barriers. I know 3 companies doing accounting software in Estonia with a population of 1.4 million. These companies know the business better then anybody else and the market is too small for any of the big players to consider. Similar patterns can be seen across industries.