7 ms·

US salaries also have to include cost of healthcare.

by AS_of 5y ago

lotsofpulp 5y ago
The quoted salaries are 99% of the time excluding the employer paid portion of health insurance, which for an individual is typically at least 50% of the cost (~$2k to $6k depending on your age), but at a white collar tech firm, I would expect even more. For family coverage, the employers that pay well cover the other family members too so that can be added on as well, you might be looking at $20k+ in additional pre tax pay that isn’t mentioned when people state their nominal wages. Plus HSA contributions, 401k matching, dependent care FSA contributions, etc. The US has tons of tax advantage pay options for the well heeled employers. If someone says they’re earning $250k, and doesn’t specify if it’s total comp or not, I assume the employer is kicking in an extra $50k for various benefits.
munk-a 5y ago
Not in their dollar amount unless something really weird is going on - the effective cost of US employees is a lot higher than employees elsewhere in the world due to the overhead of health insurance - but US salaries remain pretty much at the top of major nations world-wide even ignoring that cost.
- labcomputer 5y ago
  > to the overhead of health insurance Not really. The ACA (Obamacare) caps overhead and profits at either 15% or 20% depending on market (google "medical loss ratio"). The dirty secret is that too many doctors go into medicine for the wrong reasons (making money, instead of helping people), and collude to limit the number of new doctors created each year. The AMA is by far the most effective union in the US.
  - munk-a 5y ago
    The profits may be capped but US healthcare is still insanely expensive compared to other first world nations. Articles on the internet seem to say that the US was 4-5 times as expensive in 2019 - but more reliable research from 2010[1] puts that number closer to 2 times as expensive. The issue is that the US's broken healthcare system just costs a lot more per patient than anything else - and a lot of companies take cuts of every dollar that goes into that cost while, in Canada, a lot of types of organizations: PBMs, Payers, Reimbursers - are all just the government, and it doesn't do that work for free, but it's a lot more efficient. 1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3024588/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3024588/
    - labcomputer 5y ago
      > The profits may be capped but US healthcare is still insanely expensive compared to other first world nations. Number 1: It's not the profits that are capped. Profits plus operating expenses are capped. Operating expenses (like paying folks in the call center to answer questions about coverage, adjudicating claims, etc.) come out of the insurance company's 15/20% (national/regional). If medical claims are less than 75/80% of premiums, the insurer is legally obligated to issue rebates. If the cost of administering the plan is more than 15/20%... too bad, so sad: the insurance company is legally obligated to loose money and (eventually, if they don't fix it) go bankrupt. Number 2: I never said that it wasn't more expensive in the US. Just that health insurance companies are not the reason it is so (which was the reason you cited for the US's high healthcare costs). Mathematically, even if you assume it's entirely graft and profit (and it's not--processing claims is not free), the very best you can do is a 20% reduction in costs. What accounts for the rest? Bear in mind that medical doctors in the USA earn as much as FAANG engineers. The average doctor salary across all specialties in the USA is $300k. Many earn 2x that. By way of comparison, it is unusual for a doctor in the UK to earn even as much as $200k, and the average is around $100k. Unless the UK is somehow finding people who will pay money to the NHS in exchange for the honor of answering phones and administering claims, I find it difficult to believe that health insurers are anywhere close to the biggest driver of healthcare costs in the US.
      - DanBC 5y ago
        > By way of comparison, it is unusual for a doctor in the UK to earn even as much as $200k, and the average is around $100k. $100k is about £71k. Starting salary for consultants in England is £82096.
        labcomputer 5y ago
        Sure, but: 1. Not every doctor is a consultant. Specialists range £41k to £76k. GPs range £61k to £91k. 2. The salary bands are fairly narrow. Consultants may start at £82k, but they only go up to £111k. Here you can have it from the horse's mouth: https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-doctors https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-d...
- dijit 5y ago
  I think a lot of people seem to forget that employers pay more than the base salary in Europe. For instance your “salary” in Sweden is 31.42% higher than what you’re told your base salary is, due to pension contributions, and social services. As an employer I would have to pay 78.852 if an employee had a base salary of 60.000. This is before personal income taxes, which are also very high. https://www.verksamt.se/web/international/running/employing-staff https://www.verksamt.se/web/international/running/employing-...
  - munk-a 5y ago
    I don't believe there's any country in the first world where your take home matches the employer's out of pocket - in the US you've got healthcare, retirement matching, payroll taxes, other employment fees and a few other employer-side taxes. Most other countries follow a similar logic, relying on offloading some of the income tax burden onto the employer to prevent a total loss of tax income from judgement proof folks - it's always why withholding and tax refunds are so encouraged. If you've got proper or overaggressive withholding setup with your employer than it isn't possible for you to find yourself with a 10k bill in April that you can't pay - instead the government will return any wrongfully withheld income and you get a "bonus check". In terms of the proportion 31% is relatively small honestly - employee charges in the US generally range somewhere in 40-60% but senior developers with families often have payroll overhead that can run upwards of 80k and can represent a much higher proportion of the employer's out of pocket employment expenses. These costs can be extreme at relatively hip progressive companies that employ some unskilled folks. Your 5k/month healthplan might be proportionally little on your 150k salary but if someone working in the mail room and earning 20k annual has the same benefits it'll work out to 300% their take home cost - this is why employers often segregate benefit packages to different pay ranges.
    - sgerenser 5y ago
      In the U.S. I don’t think it’s really possible to (legally) segregate benefit packages by pay range. What they do is segregate based on part time/full time, and barring that, use contractors for their low paid positions.

US salaries also have to include cost of healthcare.

by AS_of 5y ago

US salaries also have to include cost of healthcare.

The quoted salaries are 99% of the time excluding the employer paid portion of health insurance, which for an individual is typically at least 50% of the cost (~$2k to $6k depending on your age), but at a white collar tech firm, I would expect even more. For family coverage, the employers that pay well cover the other family members too so that can be added on as well, you might be looking at $20k+ in additional pre tax pay that isn’t mentioned when people state their nominal wages. Plus HSA contributions, 401k matching, dependent care FSA contributions, etc. The US has tons of tax advantage pay options for the well heeled employers. If someone says they’re earning $250k, and doesn’t specify if it’s total comp or not, I assume the employer is kicking in an extra $50k for various benefits.

munk-a 5y ago

Not in their dollar amount unless something really weird is going on - the effective cost of US employees is a lot higher than employees elsewhere in the world due to the overhead of health insurance - but US salaries remain pretty much at the top of major nations world-wide even ignoring that cost.

labcomputer 5y ago
> to the overhead of health insurance Not really. The ACA (Obamacare) caps overhead and profits at either 15% or 20% depending on market (google "medical loss ratio"). The dirty secret is that too many doctors go into medicine for the wrong reasons (making money, instead of helping people), and collude to limit the number of new doctors created each year. The AMA is by far the most effective union in the US.
- munk-a 5y ago
  The profits may be capped but US healthcare is still insanely expensive compared to other first world nations. Articles on the internet seem to say that the US was 4-5 times as expensive in 2019 - but more reliable research from 2010[1] puts that number closer to 2 times as expensive. The issue is that the US's broken healthcare system just costs a lot more per patient than anything else - and a lot of companies take cuts of every dollar that goes into that cost while, in Canada, a lot of types of organizations: PBMs, Payers, Reimbursers - are all just the government, and it doesn't do that work for free, but it's a lot more efficient. 1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3024588/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3024588/
  - labcomputer 5y ago
    > The profits may be capped but US healthcare is still insanely expensive compared to other first world nations. Number 1: It's not the profits that are capped. Profits plus operating expenses are capped. Operating expenses (like paying folks in the call center to answer questions about coverage, adjudicating claims, etc.) come out of the insurance company's 15/20% (national/regional). If medical claims are less than 75/80% of premiums, the insurer is legally obligated to issue rebates. If the cost of administering the plan is more than 15/20%... too bad, so sad: the insurance company is legally obligated to loose money and (eventually, if they don't fix it) go bankrupt. Number 2: I never said that it wasn't more expensive in the US. Just that health insurance companies are not the reason it is so (which was the reason you cited for the US's high healthcare costs). Mathematically, even if you assume it's entirely graft and profit (and it's not--processing claims is not free), the very best you can do is a 20% reduction in costs. What accounts for the rest? Bear in mind that medical doctors in the USA earn as much as FAANG engineers. The average doctor salary across all specialties in the USA is $300k. Many earn 2x that. By way of comparison, it is unusual for a doctor in the UK to earn even as much as $200k, and the average is around $100k. Unless the UK is somehow finding people who will pay money to the NHS in exchange for the honor of answering phones and administering claims, I find it difficult to believe that health insurers are anywhere close to the biggest driver of healthcare costs in the US.
    - DanBC 5y ago
      > By way of comparison, it is unusual for a doctor in the UK to earn even as much as $200k, and the average is around $100k. $100k is about £71k. Starting salary for consultants in England is £82096.
      - labcomputer 5y ago
        Sure, but: 1. Not every doctor is a consultant. Specialists range £41k to £76k. GPs range £61k to £91k. 2. The salary bands are fairly narrow. Consultants may start at £82k, but they only go up to £111k. Here you can have it from the horse's mouth: https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-doctors https://www.healthcareers.nhs.uk/explore-roles/doctors/pay-d...
dijit 5y ago
I think a lot of people seem to forget that employers pay more than the base salary in Europe. For instance your “salary” in Sweden is 31.42% higher than what you’re told your base salary is, due to pension contributions, and social services. As an employer I would have to pay 78.852 if an employee had a base salary of 60.000. This is before personal income taxes, which are also very high. https://www.verksamt.se/web/international/running/employing-staff https://www.verksamt.se/web/international/running/employing-...
- munk-a 5y ago
  I don't believe there's any country in the first world where your take home matches the employer's out of pocket - in the US you've got healthcare, retirement matching, payroll taxes, other employment fees and a few other employer-side taxes. Most other countries follow a similar logic, relying on offloading some of the income tax burden onto the employer to prevent a total loss of tax income from judgement proof folks - it's always why withholding and tax refunds are so encouraged. If you've got proper or overaggressive withholding setup with your employer than it isn't possible for you to find yourself with a 10k bill in April that you can't pay - instead the government will return any wrongfully withheld income and you get a "bonus check". In terms of the proportion 31% is relatively small honestly - employee charges in the US generally range somewhere in 40-60% but senior developers with families often have payroll overhead that can run upwards of 80k and can represent a much higher proportion of the employer's out of pocket employment expenses. These costs can be extreme at relatively hip progressive companies that employ some unskilled folks. Your 5k/month healthplan might be proportionally little on your 150k salary but if someone working in the mail room and earning 20k annual has the same benefits it'll work out to 300% their take home cost - this is why employers often segregate benefit packages to different pay ranges.
  - sgerenser 5y ago
    In the U.S. I don’t think it’s really possible to (legally) segregate benefit packages by pay range. What they do is segregate based on part time/full time, and barring that, use contractors for their low paid positions.