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A 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.or

A 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 ago
In 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 ago
  Employers 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.
  - closeparen 10y ago
    Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent. You're not encouraged to rely on public unemployment insurance - the standard financial planning advice is to save and maintain 6 months of expenses in a liquid account. If the public retirement and unemployment systems in other countries are actually sufficient, so you don't need to fund a private cover for them, that's easily 20% more ready cash.
    - mywittyname 10y ago
      > Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent. You'll get Social Security benefits after retirement for as long as the SSA is around. It may not be the exact that dollar your employer is putting away for you now, but you'll get back something.
bgia 10y ago
My wage in the US is about 3 times what I'd be making home in France. 3 times. Trust me I'm not working 3 times as many hours as my friends over there. Actually it's quite the opposite.
- atmosx 10y ago
  But... You're not living in France. There are many people who would rather be making 3 times less and living in France. It is a trade off, that's all there is to it, e.g. If you, God forbid, have get into a severe health condition in the US, you might very well be making 5x more, you're still going to get broke pretty soon because social healthcare is virtually nil.
  - phil21 10y ago
    Someone making 3x (as a programmer) can very easily afford very high quality health insurance. When you have it, it actually does work. Chances are they are already covered by their employer though. The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class - those salaries imply quality health insurance as part of the package.
    - cr1895 10y ago
      Is it possible that due to some horribly unfortunate illness, one well-paid SV person loses their job? Let's say one has excellent insurance and a well-compensated job, but despite this fortune this person gets cancer and is out of work for a considerable time for medical reasons. Since California is an at-will state, this person may lose her job. Will she still have that great employer-provided insurance? Will the lack of affordable healthcare still not be a concern for her? I think it's short-sighted to say that the lack of a social safety net is of no concern to a well-paid tech worker.
    - atmosx 10y ago
      > The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class Isn't it? Let's do the math... A leukimia treatment drug that is virtually free in most advanced European healthcare will cost virtually 0 USD/year. In india the same drug might as far as 2.5k/year. In the USA the same drug (patent hold by Novartis) costs 70k/year. Let's say you are living in SF. You get paid anywhere between 80 and 120k/year at a top IT company and you have to give 70k/year away: 120-70 = 50k. Are 50k/year enough to live in SF, Silicon Valley or the Bay Area?

MrDosu 10y ago

In 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 ago
Employers 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.
- closeparen 10y ago
  Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent. You're not encouraged to rely on public unemployment insurance - the standard financial planning advice is to save and maintain 6 months of expenses in a liquid account. If the public retirement and unemployment systems in other countries are actually sufficient, so you don't need to fund a private cover for them, that's easily 20% more ready cash.
  - mywittyname 10y ago
    > Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent. You'll get Social Security benefits after retirement for as long as the SSA is around. It may not be the exact that dollar your employer is putting away for you now, but you'll get back something.

bgia 10y ago

My wage in the US is about 3 times what I'd be making home in France. 3 times. Trust me I'm not working 3 times as many hours as my friends over there. Actually it's quite the opposite.

atmosx 10y ago
But... You're not living in France. There are many people who would rather be making 3 times less and living in France. It is a trade off, that's all there is to it, e.g. If you, God forbid, have get into a severe health condition in the US, you might very well be making 5x more, you're still going to get broke pretty soon because social healthcare is virtually nil.
- phil21 10y ago
  Someone making 3x (as a programmer) can very easily afford very high quality health insurance. When you have it, it actually does work. Chances are they are already covered by their employer though. The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class - those salaries imply quality health insurance as part of the package.
  - cr1895 10y ago
    Is it possible that due to some horribly unfortunate illness, one well-paid SV person loses their job? Let's say one has excellent insurance and a well-compensated job, but despite this fortune this person gets cancer and is out of work for a considerable time for medical reasons. Since California is an at-will state, this person may lose her job. Will she still have that great employer-provided insurance? Will the lack of affordable healthcare still not be a concern for her? I think it's short-sighted to say that the lack of a social safety net is of no concern to a well-paid tech worker.
  - atmosx 10y ago
    > The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class Isn't it? Let's do the math... A leukimia treatment drug that is virtually free in most advanced European healthcare will cost virtually 0 USD/year. In india the same drug might as far as 2.5k/year. In the USA the same drug (patent hold by Novartis) costs 70k/year. Let's say you are living in SF. You get paid anywhere between 80 and 120k/year at a top IT company and you have to give 70k/year away: 120-70 = 50k. Are 50k/year enough to live in SF, Silicon Valley or the Bay Area?