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Ask HN: Why do companies outside the US pay so much less?
As a developer, I've found that it's just not worth it to respond to tech companies / recruiters seeking engineers, unless they're based in the USA. Companies based anywhere else, in my experience, expect to pay less than half the rate that US companies will pay.
Why is this? There are possible causes having to do with tax rates and culture, but has anyone really looked into it? How big a contributor is this (rather than, say, immigrants as percent of total population, or university quality) to the fact that the US has Google and Apple and Facebook and Twitter, and the rest of the world has… JustEat and Spotify?
- LeoSolaris 10y agoThere are a few reasons I have seen. The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies. We have a culture that doesn't require a business degree to open a business that investors would take seriously. As a result, companies pay highly skilled IT employees more to keep them happy enough to not start up their own business. There is more direct competition between deep pocketed firms for talent. High demand always skews the price, and it is faaaar easier for the US firms to hire US based workers. Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established. We also see that many of our outsourced maintenance IT jobs may be done cheaper, but they are often worth far less than what they charge. That negative impression reinforces the stereotype of US based IT professionals are more competent.
- egwor 10y ago> Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established. Not sure that I agree with that! Compare to the UK, I don't think this is at all true. Compared to say, India, then that was definitely true.
- LeoSolaris 10y agoI don't see is as a reality, merely a common perception. Having worked with several French software devs... I can say that the US devs are far more innovative. The impression that I have formed is that there is a major cultural difference in how the term expert is used. In the US, we tend to be willing to buck authority and expert opinion when we have facts to the contrary. Many of my French counterparts are not willing to even contradict their non-technical bosses over blatantly stupid things. It has lead to such a huge technical debt that it is drastically cutting into production. Now part of my experience is with a multinational manufacturing company not an IT company. That likely makes a major difference.
- thehardsphere 10y ago>The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies. This is partially true but I thought the cost of living in Europe was generally higher than in the US.
- CalRobert 10y agoEh, I don't have to own a car, I have cheaper health insurance, vacations cost less (but only because I used all of them to go to Europe before I moved here), and my rent is cheaper. Also, remember that you're getting at least a month off a year, by law, which even now relatively few US companies do.
- ntlk 10y agoThe cost of life is lower. Healthcare is included in taxes.
- UK-AL 10y agoIs it removed from your salary in the us? Or it assumed to be on top of your salary?
- mjn 10y agoIt's typically partly removed from your salary: you join a corporate health-insurance plan, whose premiums are partly but not fully subsidized by the company, with the remaining $x/month after subsidies coming from your paycheck. Some googling suggests that the average employee's share of the premium is $1100/yr for single people, and $5300/yr for those with dependent families. The actual numbers vary (quite a bit) by location and company.
- freddyc 10y agoIt's a little of both. If your employer doesn't cover 100% of the premium then your share is deducted from your pre-tax salary. Healthcare is often one of the factors up for negotiation in salary discussions. It's not a 1-to-1 ratio, but generally if you opt out of an employer's coverage you can try to use that to ask for a higher salary. I've found it's been far more successful the older I get! The reason is employers want young healthy people in their insurance census (young people are cheap to insure and lower the cost for everyone), not middle-aged people with kids.
- TheTrotters 10y agoThe cost of life argument makes no sense. By this logic we should be seeing janitors, or translators, or piano teachers in SV being paid much, much more then they are. If there was a coal mine near San Francisco I suppose the miners would be paid 100k/year as well?
- ivemadeahugem 10y agoProbably closer to $75K? If coal miner had a choice (most don't) of whether to work in Ohio for $50k or SF for $75k, I'm assuming they'd pick Ohio. Thats why someone wouldn't start a coal mine near SF. People are only going to be paid up to the point where a company still makes money from them. This has a high ceiling for software devs, a low ceiling for janitors.
- mjn 10y agoIf you're comparing to European jobs, one factor is that the U.S. has higher income inequality then many other countries, which means generally the highly paid jobs pay more, and the poorly paid jobs pay less. This will make U.S. salaries look good in some areas, and bad in others. (The median U.S. salary is also a bit higher than most other countries, but not by enough to explain the differences seen specifically in tech salaries.) I think there is also not as much of a general tech talent shortage in Europe, so it's not one of the most in-demand jobs outside of specialized areas (if you're a top deep-learning expert right now, yes, but not for general programming / SE jobs). Many European countries traditionally have very strong STEM education, in a number of cases actually overproducing highly skilled graduates in the field relative to the local industry's needs (which is why you see a lot of Spanish, Romanian, Greek, Italian, etc. STEM graduates working in other countries). Not quite as badly oversupplied in the "T" part of STEM as in the "M" part, but still, not a shortage. edit: Oh, another factor, for right now, that I should've mentioned is that the U.S. dollar is much stronger against the Euro and UK pound than it has been historically (even compared to a year or two ago), while salaries don't respond that quickly to currency movements. There are still significant differences if you use circa 2015 exchange rates, but smaller.
- civilian 10y agoUhhhhhhhh income inequality does not have that kind of effect. Income inequality may effect the taxes paid by people, but it doesn't change salaries the way that you're suggesting. America just has more highly paid jobs, because we've got some of the biggest companies and highest GDP per capita in the world. And this has the effect of creating a greater spread of income. It's a bigger, richer, pond.
- CamMacFarlane 10y ago>[USA] has the highest GDP per capita in the world Not quite, it has the 18th highest. Below Hong Kong, Switzerland, and Ireland all who pay less for engineering. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html https://www.cia.gov/library/publications/the-world-factbook/...
- rabble 10y agoSo i think it's partially values and markets. Enough US companies know the transformational effect tech can have on a business where that's not really understood elsewhere. Just having part of the market get it means it drives up all prices. In the US you are quoted a price before taxes, many countries quote offers post taxes (including after income tax is taken out). That can make US salaries look MUCH higher. Because the employer doesn't think about taxes, if you're outside the US as a contractor or freelancing, you can get a much better deal.
- GordonS 10y agoSince salaries are so much lower everywhere but the US, doesn't it make more sense to flip this argument around and instead ask: "why are software engineers' salaries so much higher in the US than everywhere else?"
- omouse 10y agoBecause devs get to keep more of what they earn? That should also be true for other workers but it isn't. It's really difficult to hide how much wealth is created through software. I always like to point out that even the most junior developer can automate a task and save a company hundreds of thousands of dollars.
- pmontra 10y agoTrue, but companies don't reward employees if they don't have to. If anybody can save them hundreds of thousands of dollars then they'll get a normal pay. They get so much because they'll be somewhere else instead. A race to higher salaries started at some point in the past and it's still going on. It's a difficult bubble to deflate until there are more jobs than people that can do them.
- potatolicious 10y agoConsidering that engineering salaries are within the ballpark of their EU equivalents throughout much of the US, I think the better question might be: Why are software engineers' salaries so much higher in major US tech hubs than everywhere else? What an engineer is paid in Columbus, OH, is very different than what they are paid in San Jose, CA. My guess is the existence of outlier companies in these places that force salaries up. You have a number of large companies that make serious revenue-per-employee that demand the best (see: Google, FB, Apple, etc). Their bottom lines support paying more to hire from the top of the pool, and so they do, and over time the averages move due to this effect at all levels. One of the defining things about these other job markets that pay considerably less, is the lack of major employers that are able to, and willing to, participate in this kind of price war with other employers. Some do not require top talent, and therefore there's no particular need to get into a bidding war with anyone else. Others simply can't afford to - since their revenue wouldn't support Bay Area-styled salaries.
- tracker1 10y agoA lot of it is cost of living in a given area can vary a lot in the US. Also, if you're looking for an EU job, that may well be post-tax, include better medical benefits (US contract jobs often don't), not to mention potentially better retirement options and last, but definitely not least upwards of 8-weeks of pto/year. A lot of US jobs, you're lucky to see even 2 weeks of PTO, and even then, if contracting, you don't see that. I wound up taking about a month and a half off due to a bad relocation/project cut experience last year, and that has a huge impact on your hourly/annual salary. The culture is just different and the tax models very different. In the US variety in income taxes at the state level, or cost of housing can vary a lot and you'll see similar variance in IT/Developer pay as well.
- YZF 10y agoSupply and demand? I think there's a large variance in the US as well between different geographical areas. I would expect you can find x2 differences even within one geography. There are a lot of factors in play: - In SV there's a lot of "easy" money and a shortage of people. - There's a lot of friction preventing this from equalizing. Immigration policies being one example. - There have been significant currency movements over the last couple of years and those take some time to reflect back to things like prices and salaries. The strength of the US dollar means that at least temporarily you make that much more if you work in the US. - Cost of living. If you have to pay more to own a house, pay for your kids education, commute, health, etc. then you can expect upwards pressure on salaries to make up for that. - Risk premiums. I think it's important to realize that these things can take a while to play out. When I look at today's salaries compared to 10 or 20 years ago I don't actually think they're very high but that's against a backdrop of erosion in other middle class salaries. Time will tell.
- cperciva 10y agoDon't underestimate the impact of social norms. If I were looking for work in the USA, I'd expect a salary which I would feel very uncomfortable asking for in Canada.
- droopyEyelids 10y agoI haven't heard anyone suggest that overall demand for developers is higher in the USA. The US has more companies that can see how to make more money off tech talent.
- omouse 10y agoThat's also possible. They know how to herd the cats and get them to move in the right direction. In Canada for example, there are few companies that do this correctly and the best ones are influenced by the way US companies (especially Silicon Valley companies) work and manage their employees.
- TulliusCicero 10y agoThe latter implies the former. What do you think demand is?
- bsvalley 10y agoIf I were to make USD 200K/year as a Software Engineer in Bangladesh, I'd probably be richer than the CEO of that company. I believe you're referring to the ration salary/cost_of_living rather than comparing difference currencies, countries, politics, taxes, etc. In this case, I'd say that the ration is fairly even, minus stocks/bonuses. The base salary puts you in a similar spot in terms of buying power in your respective country if you're a software engineer. That's the beauty of this job... you can work anywhere in the world and maintain roughly the "same" buying power.
- kat 10y agoAs someone with Canadian and American work experience, I think US wages are higher because there is more capital in the States. Both Canada and the States struggle to find qualified software devs. The companies that can afford to pay more, get their pick of devs out of a very small pool, so the wages increase. However, in Canada, the companies won't/can't pay as much, so the devs end up making less, or moving south. Brain-drain is a problem in Canada for a lot of different industries (healthcare is hugely impacted). The cost of housing in Vancouver, Canada is right behind New York and San Fran. I don't think wages has anything to do with cost of living. In general I think Canadian investments are less risk tolerant, the market doesn't shift as fast as it does in the States, and therefore less cash flow. Also, its in the employers best interest to keep salaries down and convince their employees that living in Canada (Vancouver instead of San Fran) is better (how ever you define better).
- omouse 10y agoThere is more free floating capital. There are VCs in the US who are willing to invest in all sorts of things and willing to take chances. There are few VCs or banks in Canada that would take a chance on Facebook, Twitter, SnapChat or Uber. Brain-drain is a problem but the bigger problem is lack of capital. Also, its in the employers best interest to keep salaries down and convince their employees that living in Canada (Vancouver instead of San Fran) is better (how ever you define better). Yes, especially true. I've yet to see any Canadians who have actually received a raise in recent years. No one talks about it and no one knows whether their salary will be increased to at least meet inflation. It's a little messed up.
- kpil 10y agoThe free capital is probably a large factor, just as you say because there is a culture of investing in software development. I don't think you see that as much in say Japan or Germany or anywhere in EU. The northern European countries are more geared for industrial conglomerates, as is Japan, and I have no clue what they do in southern Europe, but it's not investing in software development. Other factors in Europe is probably as simple as historically less divergent incomes, less incentives for higher salaries due to higher and more progressive taxes, and a lower demand for really skilled developers due to the industrialist mindset that is hard to shake.
- ThrustVectoring 10y agoI suspect a partial cause from right-to-work laws. It's much harder to fire an employee in Europe, so companies are less willing to bid on employees, and so compensation is lower. Plus the employees themselves value the job security, which substitutes for wages when evaluating offers. For specific predictions from this model: 1. Public-sector programmers in general should get paid less than private-sector programmers, due to employees valuing the job security 2. The public/private gap should be larger in the US than in Europe, since there's a smaller job security gap 3. Public-sector programmers in the US should have higher wages than public-sector programmers in Europe, due to having to compete with more vigorous private-sector activity in the US
- thehardsphere 10y agoCalifornia, Massachusetts, New York, and Washington do not have right-to-work laws, yet software salaries in SF, Boston, New York, and Seattle are among the highest in the world. If that were the cause, Austin, TX should become the high-pay Mecca that every programmer would migrate to, because Texas is a right-to-work state.
- djrogers 10y agoYou're supporting the GP's thesis - he's saying that right-to-work laws depress wages...
- thehardsphere 10y agoGP's thesis is that Europe has no right-to-work laws, but America does, so America has higher wages than Europe.
- vonmoltke 10y agoGP is confusing "at will" with "right to work". All states, except Montana I believe, are at will, meaning employees can be let go without cause. Right to workis much less common, and prohibits things like closed shops where an employee is required to join a specific union as a condition of employment.
- conductr 10y agoThe non-US companies either don't see the ROI potential or may actually have a capital problem. Or, they may know that world-wide they can get someone to do the work at 1/2 of what their US counterpart would pay. The US companies paying double what everyone else does could be caused by them having the capital and ROI to do so. But, I don't think so. Within the US, why do so many tech companies open shop in SV. They value the culture and team and integral parts that lead to success. They want top talent. Even when they hire out of the US, they don't want to subject the project to the risk of failure by being cheap and hiring cut rate developers. There's also a culture of paying sticker price. And perhaps, price ignorance. We know what things cost locally, but we aren't the best judges of knowing what a top developer should cost if they're based in another country. Maybe we pay them 75% of local rates and that's still 2X what they would get paid from a non-US company, we don't really know.
- thehardsphere 10y agoA possibly flawed analogy follows: Hollywood is the biggest city in the world for acting, followed by New York, and maybe Vancouver is in third place. I'm pretty sure people working as actors in any of those three cities are going to be paid more than actors working elsewhere, because there's greater demand in Hollywood/NYC/Vancouver than there is Omaha, Nebraska. The biggest cities for software are San Francisco, Boston, Seattle, New York, and Austin. Probably not in that order anymore, but that's where most of the action is. If you're not working in one of those places, you're probably not making as much because there's less demand in your area for software people. All of these cities are in the US and none of them are in Europe.
- astrange 10y agoThere's also video game industry, which produces software, and traditionally the only kind of software normal people enjoy using to the point of getting emulators for. It's a little more distributed: http://www.gameindustrycareerguide.com/best-cities-for-video-game-development-jobs/ http://www.gameindustrycareerguide.com/best-cities-for-video... I'm surprised SF comes up so much still. Isn't the rent an existential threat to the industry?
- thehardsphere 10y agoThe rent is a minor expense if it gets you access to a competitive labor market and venture capital you otherwise would not have. Plus, I imagine that many of those studios may have gotten their start before things like Unity and Steam made it possible for anybody with enough time on their hands to make and publish their own games very inexpensively.
- schmichael 10y agoI'm in the US and a friend just moved to The Netherlands to accept a much lower paying job. He swears he has more disposable income due to cheaper health care, Internet, transportation (no car required!), etc. The basic assertion being that the cost of living is higher in the US. I would love to see salary vs cost-of-living comparisons globally. I suspect this might account for the disparity, but I'm afraid I don't have the data to confirm or disprove this assertion. Update: Spent 5 minutes googling with no luck. Found some moving company (?!) sponsored data showing most of the EU having a very high cost of living. Makes me wonder if that takes into account free-or-cheaper-than-US health care, child care, transportation (owning a car is $$$), education (most US tech workers are paying a high student debt "tax"), and other lifestyle/political differences between the two regions.
- pmontra 10y agoYou could ask him where he was able to save more money by the end of the year. Maybe don't count the expenses for relocating to the Netherlands.
- schmichael 10y agoWe talk about this sort of thing regularly, but it's still just anecdotal. HN demands/deserves hard data. :)
- davimack 10y agoI've had friends move to the Netherlands & definitely they have more disposable income than I do. I've also worked in the UK (Scotland) where I made a hell of a lot less but where health care and prescription drugs were 100% free - that bit right there saved me 25K / year.
- rev_bird 10y agoIs/was your friend an American citizen? I've been fascinated by emigrating to Europe for a long time and am always looking for stories about how people pull it off.
- 10y ago
- nicomfe 10y agoDevelopers in Australia and New Zealand are really well paid.
- ojame 10y agoNot only that, (in Australia) we have free public healthcare, required superannuation (401k isn't a "perk"), a minimum of 4 weeks annual leave a year and around 12 public holidays. More generally, we have a pretty great country that has a decent minimum wage and pretty low living costs (Sydney is starting to get... high, though).
- plaguuuuuu 10y agoStill not paid nearly as much as US devs. Unless maybe I should start looking for my next job :|
- jimako 10y agoDo you know that for a fact, or are you assuming that is the case? Developer salaries, especially in the non-cubicle-dweller sphere, are really VERY high. Of course, most of the jobs are in Sydney or Melbourne where the cost of living is also very high, even after taking into account the universal health care.
- plaguuuuuu 10y agoThe majority of dev jobs here in AU probably are in the 'cubicle-dweller' sphere. I've looked around at various roles advertised in syd/melb and there are very few jobs in my are (.NET 5+ years experience) paying more than, say, AUD$120k, unless some specialised knowledge is required eg trading, machine learning, etc. That's the equivalent of US$92k which seems lower (like.. >50% lower) than in comparable cities in the US. Of course you'd then have to live in the US, which is a downside.
- lacampbell 10y agoCost of living is very high in NZ though - 15% sales tax on everything, including food. Not to mention the housing is very low quality - not up to US or Western European standards.
- ThePhysicist 10y agoA part of the gap can be explained by the way that work is organized in the US compared to Europe. Let's compare e.g. Germany and the USA: https://data.oecd.org/germany.htm https://data.oecd.org/germany.htm https://data.oecd.org/united-states.htm https://data.oecd.org/united-states.htm If you scroll down to the Economic indicators, you will see that on average people in the US work around 1.700 hours a year, whereas people in Germany (and many other European countries) work only 1.400 hours. This alone can already explain 20 % of the wage gap between the two countries, and in fact if you look at the average salary per hour worked, it is almost identical (32 USD), which would support this theory. In addition, many things like education, housing, social security and health insurance are much cheaper in Europe, which leads to lower salaries (as they tend to follow the cost of living). Furthermore, regulations in Europe are stronger than in the US, which makes it more difficult (or sometimes even impossible) to fire people once they have been employed for some time. Hence the risk of losing your job is smaller, which should lead to a lower salary as well as companies face a higher risk when hiring someone, and employees have less risk. And in extreme tech hot spots like SV or NY there should course be an additional effect due to the high demand of skilled IT professionals and the fact that people can usually find a new job very easily, which also makes it easier to negotiate a higher salary and forces companies to pay above average rates to attract talent, which is a self-reinforcing effect.
- MrDosu 10y agoIn Germany you also have to account that your employer by law has to pay into your non employment and retirement funds. This is about 21% of gross income on top. If you make 100k, your employer pays out 121k. They also have to pay half of your health insurance (also not counted in gross income numbers).
- bgia 10y agoEmployers in the US do the same thing. On top of your salary they pay ~7% for your retirement (social security, the public retirement), then taxes for your unemployment and a bunch of state taxes, and if you work in tech they pay for your health insurance (the one at my previous employer was $600/month). Usually they will also match money you'll put into your private retirement account. That's usually another $7-9k in good tech companies. I.e. When you're paid $100k in the US in tech, your employer pays at least $120k as well. So that doesn't explain the difference at all.
- rb808 10y agoOne reason right now is that the US Dollar is high right now. 10 years ago the Euro was 20% higher, GBP was 60% higher. AUD was 5% higher(but getting stronger). Despite forecasts I think in 5 years the USD is likely to fall back again.
- thinkloop 10y agoI wouldn't mind seeing a chart of effective salaries around the world. In the US, San Francisco is one of the lower paying hubs, Austin the highest: http://posts.thinkloop.com/top_tech_salaries_by_city_adjusted_for_cost_of_living/index.html http://posts.thinkloop.com/top_tech_salaries_by_city_adjuste...
- Mitchhhs 10y agoIt definitely seems to be to be a supply and demand issue (I guess by definition of market prices this is obvious). On the demand side, there are less venture capital dollars and the sheer volume of companies is lower. On the supply side, there are plenty of local qualified engineers (just look at upwork and how much you can get developers for in other countries). If you want to get a better idea of specific compensation at tech companies, check out https://www.transparentcareer.com https://www.transparentcareer.com We collect data in native currencies as well. Full disclosure, i'm the founder, but if you have any specific questions about data in other currencies i'd be happy to pull information for anyone who asks.
- solatic 10y agoIt may sound obvious, but most foreign companies will typically hire foreigners, rather than Americans, at least most of the time. If you're a foreigner, working for a company in your country of origin, compared to an American company, offers the following benefits: 1) The right to work in the first place - getting an American visa is rather hard 2) Not needing to pick up your life, your family's life, and move far away from extended family and friends 3) Work in the same time zone - have a job during normal work hours, without an expectation to show up to meetings late at night 4) A work environment where most communication happens in your native language Most development salaries are pretty high compared to the median salaries in the surrounding region, they're just low compared to American developer salaries, but few people abroad make American salaries, so people tend to be happy with their "I'm upper-middle-class compared to the people around me" salaries. And since American jobs aren't really under consideration, for the reasons listed above, foreign employers don't feel the need to boost salaries even further, to a level comparable with the US, since the labor pool doesn't apply for jobs with those salaries.
- FennNaten 10y agoHum, I don't know how the system works in the US, but in France a lot of money is taken from the salary to cover for health insurance, unemployment insurance and retirement plan. Plus we have 5 weeks paid vacation automatically included. And I think cost of life is lower than in the US, even in Paris which is the more expensive area. To go with numbers, I currently earn 50k€ per year (gross), which makes for 3k€ per month (net). I don't have a car (no need in Paris). This income is enough for me to live my life without any privation, going to bars, cinema, restaurant, weekend trips, etc whenever I want, and still save 10 to 40% of it each month. Last year I bought a new computer, a new phone, and 2 weeks vacation in Iceland without even touching my savings account. All that knowing that if I go unemployed, I stay at full pay several months, if I'm sick I'm covered, and when I reach 65 yo I'll get retirement rent until end of life. Oh, and I'm only in my early 30's, meaning I get to get paid more and more. After my next raise, which should occur this year considering I got a title upgrade, I'm even considering stopping asking for money and asking for additionnal time off instead. So, I don't know how your 100k+$ reflect on your life in the US, but sorry I don't feel any need for it :)
- rb808 10y agoIn NYC a decent 2 bed apartment in second tier areas (ie not in Manhattan) is 3k€ a month, I'm surprised Paris is cheaper.
- FennNaten 10y agoDepends on what you call decent and how far from the center you go. I'm currently outside of Paris, having 15 minutes on foot plus 15 minutes on train plus 15 minutes in Subway to go to work. I share a large two bedrooms flat (73 square meters) with a friend, and my share is 700€. (this includes water, electricity, heating, garbage collection and unlimited internet connection) Sure if you insist on having a big flat right inside Paris it may go up to 3k, but if you tolerate commute time you can find better rates.
- JBReefer 10y agoDefinitely not, my rent is much less than that and I'm 10 minutes from the city in a nice part of Queens. Hip areas are expensive, but say, Staten Island is cheap af.
- sigi45 10y agoI don't really care how much someone in USA earns. As a software engineere in germany you are earning good money. There are no killings in cities, affordable health care, high quality living standards, university costs 150$ for 6 month, no donald trump, 30 days real holiday (i take them, everyone does, every year), seldom over hours, parental leave. Btw. IT is more than google, apple, facebook and twitter. And no we do not have anywhere in germany rent prices like in NY or in SF. Perhaps, only, if even in the middlest of the centere.
- rev_bird 10y ago...can I come over?
- pmcpinto 10y agoI agree, in most part of Europe is possible to live better with less, compared with USA. I think it's a bit insane that a lot of companies in USA doesn't allow parental leave, pressure employers to don't take any vacations, etc etc
- vikascoder 10y agoAll great points. Just to put in the "con" perspective: 1. It's good money, not insanely great money for software engineering field. You can not hope to earn 200k USD as a senior engineer ever and hence even a few folks from Germany seem pretty keen to have a 4-5 year stint in the US to earn some quick bucks. (also the exchange rate nowadays is killing it for Euro). You can see the effect in terms of how much you percentage of your salary you pay as rent and from my personal experience it was a lot (close to 30-40% of your entire paycheck, some germans in not so blessed fields pay almost 50%). The social security aspects covers for it as far as you enjoy it. 2. Jobs are secure as soon as you sign a permanent contract and get over the "Probzeit" period and there are seldom any "at-will" employment contracts. The flipside? startup culture never really kicked off until recently, hiring is slow and firing is even slower(harder) leading to plenty of dead-beat employees hanging around in corner offices in some organizations. You have copy-cat IT companies like Rocket Internet whose sole business model is to copy ideas from the US and implement them in Europe. So the variety of jobs are definitely not more than what the US provides. 3. As a result, the general lifestyle is living "frugally". If you like that it's fantastic. But everything is comparatively "expensive" than the US apart from certain things like Beer. e.g. Branded clothes like Timberland, Levis etc are sold at a premium where you can get those for 40 bucks in an outlet mall in the US. So buy IKEA/H&M/C&A with your software salary. You do have countries where salaries are high like Switzerland but you also have insanely high living costs.
- drivingmenuts 10y agoWell, there's way more software out there than just the ones you mentioned - some companies you won't hear of unless they're hiring. As for the pay, a lot of it goes indirectly to Quality of Life. You might not be paid as much, but benefits are generated in other ways. Here in the US, if you have money, you can have a great QoL. Conversely, if you don't, well, you won't. Personally, I think I might like living in the EU (maybe The Netherlands), once I got over the culture shock. One commenter brought up the killings in the US. It's not like there's killing all around you every day - it's spread out over a very large geographical area. The USA Death Panels work to ensure that the killings are distributed according to an arcane metric that no one understands.
- madarco 10y agoThe main reason seems to be linked to the cost of living: salaries in EU are lower only numerically. 50K€ have the same purchasing power of 150k$ in SF (EU devs pay rent, a car, savings, have holidays, etc.) However the really STRANGE thing is that only a few USA companies exploit that by hiring EU devs for remote working. (ie: paying only 30% of a USA salary for an almost as good developer)
- djrogers 10y ago> 50K€ have the same purchasing power of 150k$ in SF You can't compare the entire EU to one of the most expensive cities in the world - in spite of what the media may have you believe, most people in the US don't live in San Francisco or New York.
- eb0la 10y agoThere is a chart in Piketty's book, Capital in the 21st century, a that shows GDP PER CAPITA for several countries, including the US. I guess US companies pay well because their share of the global GDP is higher (although it is decreasing slowly from he peak in the 50s). Before seeing that I just thought it was that way because the US makes stuff (now intellectual property not physical goods), thus making profit of whatever is produce outside its borders.
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- jrmurad 10y agoEveryone throwing around "free" healthcare as a valid explanation for this wage gap needs to account for taxation levels too. using estimates via Google: "average programmer salary usa" -> $84,360 "average programmer salary in sweden" -> $54,264 According to http://www.economist.com/blogs/graphicdetail/2012/10/focus-4 http://www.economist.com/blogs/graphicdetail/2012/10/focus-4, average effective taxes in the USA (including social security) are 25%... but 35% in Sweden. Even if those particular numbers are off, the point is that higher taxes may further expand the gap with lower pre-tax foreign salaries. So the Swede keeps $35k and gets state-sponsored healthcare. The American keeps $63k and probably has decent health coverage from his employer. I'm not sure about this but I suspect that the American can use a fraction of that $28,000 difference to upgrade the health insurance to Swedish levels or better. (There are also smaller but still significant expenses like housing, affected by property taxes, and consumption taxes like New York City's 8.875% relatively-high-for-the-USA sales tax vs Sweden's 25% VAT.)
- ted_dunning 10y agoThe averages don't work well when you divide. You need to look to medians for the income and then compute average tax rate forthat* income.
- jrmurad 10y agoThat's true. I didn't look into how exactly Swedish rates are computed. A 25% effective rate sounded about right to me for a single-filer US salary in that range in most states which have income taxes on top of the federal+FICA. A Nordic country having 10+% higher effective rates likewise seemed reasonable but I certainly don't know for sure.
- bjourne 10y agoYour number for Sweden is (sadly :)) incorrect. This site (http://www.lonestatistik.se/loner.asp/yrke/Systemutvecklare-1000 http://www.lonestatistik.se/loner.asp/yrke/Systemutvecklare-...) puts the median at 396,000 kr -> $44,800. But unless the site adjusts for salary increases, the estimate is probably on the lower side. Salary also depends on your title. So web developers earn less than system developers who in turn earn less than system architects even though they may all do essentially the same work.
- mallipeddi 10y agoIt's simply due to the competitive hiring environment for the best software engineers in USA. The difference in pay cannot merely be explained simply by the difference in cost of living. I have personally worked in Singapore as a software engineer before moving to USA (worked for companies in SF & Seattle). A very good senior software engineer in SG might make SGD100-120k/yr with 10 years of experience. Singapore is a world-class city but it's also a very expensive place to live. In USA, the same engineer could be making USD400-500k/yr with 10 years of experience provided they work for top-tier companies like Google/FB/Apple/Amazon. These numbers obviously include stock-based compensation. The key is to be in the 95th percentile - I think the difference in pay (between USA vs world) is less drastic if you are just in the 50th percentile.
- calvinbhai 10y agoOther than the cost of living, (compared to India) I think one of the reasons is that most US jobs are "at will" where an employer can fire any time or an employee can leave anytime, with no notice. But often, employer/employee gives adequate notice (2 weeks) in US as a courtesy. In India, most jobs are tied up to a contract. If you have a 2 yr contract with an employer, and you want to leave after 18 months, you have to pay the 6 months salary to the employer. If you dont, you wont get the next job, because the next employer expects a "relieving letter" from the previous one, which is given on completion of the contract or on paying the fine. Sounds atrocious right? Such practices, bring down the salaries or at least keep them from going up, unlike in US. I dont know how often such contracts are enforced in India, especially when companies were going on a poaching spree.
- praving5 10y agoTo me, it is just currency difference and does not matter on engineer or skill. For example, when I was offered to move to the US from India, I was offered 3 times my Indian Salary to suit US expenses. Basically, the pay you get should match your expenses. So, if you earn in Dollars, you spend in Dollars providing your net savings be same as someone who earns in GBP and spends in GBP. If you choose to work remotely, the story is different. You may want to negotiate to suit your local expenses and then it is up to the hiring company to decide if it can match your local expenses.
- thinkloop 10y agoThe way to calculate pay is: (monthly salary + equity) - (studio apartment rent + tax + health care + 30 cappuccinos + 8 steaks + 50 lbs of tomatoes) edit: times 12
- miguelrochefort 10y ago(4000 + 0) - (800 + 1000 + 0 + 150 + 150 + 150) = $1750 CAD = $1336 USD
- thinkloop 10y agoTimes 12 is $16,032 - sad face - need to triple the $4k.
- miguelrochefort 10y agoIt's impossible over here (Montreal).
- tedmiston 10y agoFive things: 1. We are taxed on income heavily in the US. 2. Insurance is expensive here. 3. In the hubs, rent is very expensive. Take-home pay after considering these three things is a lot less than you might think. And also: 4. Generalizing the salary of positions across the whole US is misleading. An average engineering job in the midwest or outside of a hub can pay half the salary of SF or NYC. 5. It really depends (1) where the company you're considering is based and (2) if it's a remote gig, whether they adjust your comp based on your location. One example of this is Buffer's extremely transparent salary calculator [1]. The holy grail is to geoarbitrage by getting paid by a company in a location that pays highly while living remotely somewhere the cost of living is much lower. [1]: https://buffer.com/salary https://buffer.com/salary
- tropo 10y agoIncome tax varies quite a bit, and you have lots of control over it. You can completely avoid state income tax: Texas, Florida, New Hampshire, Alaska... You can chop down the federal income tax quite a bit. For example, you could have a dozen kids. For most software developers, that eliminates the income tax. So, there you go. Zero income tax.
- Veen 10y ago> The holy grail is to geoarbitrage by getting paid by a company in a location that pays highly while living remotely somewhere the cost of living is much lower. Yes. I work remotely for a US company, and live in Hungary. I'm British. It's a great arrangement. Hungary is a modern country but much less expensive than the U.K.
- wyclif 10y agoI also work remotely for a US company, but live in the Philippines right now. It's quite inexpensive to live here on the US dollar. Now, the big difference between your situation and mine is that I'm in a developing country that is struggling to become modern in the sense you're referring to and that developers are accustomed to. So I pay a premium for fiber internet fast enough to enable remote work, and I'm healthy and don't need maintenance-level health care. I wouldn't want to do this if my children were college age, if I were retirement age, or someone in my family had persistent health issues. But for right now, it's great. Especially for those who enjoy island hopping and beach bumming.
- d0m 10y agoIn Montreal, with 70k (53k USD), you can have a nice house, free healthcare and send your kids to the university.
- lacampbell 10y agoI somewhat doubt that. Care to break down the numbers? By "have a nice house", do you mean mortgage one for decades?
- LoonyBalloony 10y agoI'm an outsider to a lot of the tech world, and not a tax guru, but could it be because US corporations have such low taxes to pay?
- yeruba8 10y agoHear the cuckold. Do you like to be dominated and have your wife/gf fucked by refugees? Oh wait.. you are German. So that must be why.
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- bgia 10y agoTech companies in the US are extremely profitable and there is a stronger demand vs lower supply than in Europe. A typical tech company in France usually manage to make $100k of revenue per employee, so it is understandable that they can't pay them more than $60k on average. Then it's "market rate". Foreign companies just have to pay what local companies do.
- Karlozkiller 10y agoIn Sweden as far as I know the percentage paid on top of your salary by companies is around 33%, and I'm not sure that includes all of the fees and taxes related to hiring someone. From what other people write here that's a quite high number even compared to European standards, but it sure does explain why the salary paid to an employee would be lower here than in the US.
- ddorian43 10y ago............................................................................ these countries still pay remote contractors like shit. They don't get "free healthcare" or whatever shitty free thing you get in there, and also get the lesser pay.
- b__d 10y agoIt doesn't make any sense to compare salaries solely by numbers and without comparing the buying power related to the salary in the given country. This is the most basic economic understanding. It just does not work out, no matter what you take in account to "justify" the the higher or the lower one.
- cwcwcw 10y agoSo a lot of the comments have argued the relative merits of one economy over another, or simply invoked "supply and demand" or "availability of capital" to explain the difference. What I very often see in Europe isn't a marketplace of employers saying "We will pay X" and then finding a developer who will work for that. Rather, it often is a company desperate to hire a talented engineer, but when quoted a totally-not-outrageous-by-US-standards salary, respond with "Oh, we'd never pay that". I suppose in some cases the employer literally couldn't pay that, but to me it seems more like there's some kind of cultural block, like "engineers make this amount and that's all there is to it". Managers/executives don't seem to have any such restriction, again based on what I've been privy to, so I don't think that it's (completely) a case of just "salaries are lower here"
- mbrodersen 10y agoYour salary is irrelevant. What matters is your buying power in the country you live. Plus safety, health, vacation time, racism, culture etc. etc. It is a complex issue. In the same way that choosing a job based on salary only is a big mistake.