3 ms·

The US has taxes too (and their government does plenty of throwing money at things.) And many companies there still pay for health insurance. I think this argum

The US has taxes too (and their government does plenty of throwing money at things.) And many companies there still pay for health insurance. I think this argument doesn’t really make sense: taxes or other costs of doing business don’t sufficiently explain the difference in pay.

teekert 5y ago
The wealth gap is a lot bigger in the US and here you can walk into a hospital even when you’re homeless and leave debt free. Anyone can apply for social security of about 1000 eur/month. People are only homeless when they have mental issues preventing them from following the steps to get them out and they can get help at any point. This is pretty different from the US.
- dan-robertson 5y ago
  I don’t disagree with what you wrote but I don’t understand what it has to do with differences in software engineer salaries between the US and the Netherlands.
  - Agingcoder 5y ago
    I think GP meant more taxes to cover for country infrastructure (roads, power, etc) , schools, universities, health insurance, pensions, ie the 'all inclusive for everyone' package which is more common in Europe than in the US. Some of these taxes are paid for by employers. Edit:and they cover costs for everyone, including non employees (they're generic taxes, not employer-funded health insurance). So you have 'not the whole population' funding the whole population. Basically, it's more expensive for the company to hire you, so you get less. I remember talking to a company which could hire me either in the US or in the EU. US paid better because cost of employment was lower, but at the expense of an overall less complete package for me and my family which I would have had to complete with my own money . In the end, you can't really compare raw salaries - you need to look at what's included, and what kind of cost of living you will incur.
    - dan-robertson 5y ago
      The GP suggested that wages are lower in Europe because of higher taxes. So to be clear, I am only arguing about the former thing and what the taxes are used for is basically irrelevant to me. My complaint is that the argument about tax just isn’t good at explaining the difference. Eg, choosing basically at random from a quick search[1], one might pay $100k in employee taxes on $265k gross (37%) in the Bay Area. I don’t have a good idea of the employer payroll taxes but if I guess about 8% that’s another $20k the employer needs to pay. Then they pay health insurance (rough guess at $20k per year, but not sure about this average numbers were like this including employee contributions so I’m assuming that plans are good but maybe employees are healthier than average and have smaller families bringing down the costs). So that comes out to $305k from the employer and $165k to the employee. Suppose a company spends the same amount in Berlin. That’s €260k. Let’s say there’s 20% or so of employer payroll taxes[2], and we’ll bump it up to 25% for extra private health insurance (no idea if that is reasonable; the 20% includes some compulsory insurance) giving a salary of €208k. And then at 50% effective tax rate[3] that comes to €104k = $120k net, which isn’t really so different from the Sam Francisco example. But you don’t (I think) see many salaries like that in Germany. They would look more like €100k gross[4], so where is all that other money going? I don’t believe there are 160% employer payroll taxes, and businesses generally pay taxes on profits not revenue. So there must be some increase in other costs for the business but I don’t understand what could explain such a big difference I think the actual argument must be about competition and demand for labour. But I don’t really have a strong argument. Salaries are higher not far away in Switzerland. There is some theory that salaries are high (at some companies) in the US outside of coastal cities because one could believably threaten to move to one, but Europeans can’t typically make such a threat. But many Germans could surely threaten to move to Switzerland, and many do commute across the border. So I don’t see how it works. Edit: I realise I picked Germany instead of the Netherlands. But I think tax rates are higher in Germany? [1] https://www.quora.com/How-much-tax-does-an-average-software-engineer-working-at-the-big-4-companies-in-the-SF-Bay-Area-pay https://www.quora.com/How-much-tax-does-an-average-software-... [2] https://en.m.wikipedia.org/wiki/Payroll_tax https://en.m.wikipedia.org/wiki/Payroll_tax [3] made this number up. I suspect it is actually hard even with a relatively high income to pay such a high effective tax rate. I tried pulling out an online tax calculator but there are a lot of options and I didn’t know what was reasonable. 50% feels like a reasonable overestimate to me. [4] this is mostly coming from HN. Maybe the Germans earning €200k don’t write comments complaining about salary differences between the US and Europe.
  - usrusr 5y ago
    Yes, pre-tax income is also different, even if you use "pre-tax" in the broadest sense (cost per employee, but without expenses like office space that happen to scale worth employee count but are not related at all to the contract). But if you look at cost per employee you still see much higher numbers in the US, that's what you were talking about, right? I think the explanation is that the US simply has enough global dominators in their field (e.g. Google basically eating up the non-Chinese ad market over the whole range from local business directories to the brand awareness stuff that used to make TV stations a big business) that they define the market, pulling up the bids of weaker bidders, whereas in other places outliers looks ASML are so much of an exception that the bids they need to get whoever they want hardly influences market rate.
    - teekert 5y ago
      Well to counter that, when comparing similar employees within my international company between the US and the EU, the US employees are about 1.5 times more expensive (this is the money that an FTE will cost a project). Not sure why that is, perhaps it is really an inequality issue and maybe the cleaners are cheaper in the same company in the US than in the EU? I don't know those details.
- southerntofu 5y ago
  > People are only homeless when they have mental issues Not to say there's not a relative greater share of the homeless population who has "mental issues", but it's definitely not the only factor at play. Many situations can lead to homelessness.
  - teekert 5y ago
    I "walked the city" with some former homeless people with my colleagues as part of a societally relevant activity. They explained us that most cities have places where you can get a free postal address, then you can ask for "bijstand" (lowest level of support here), and for rent subsidy and care subsidies. Then you can apply for a social rent housing, which by then you can definitely afford. But going through these steps requires some level of focus and dedication. What you see is that people with severe ADHD (and a plethora of other issues) for example, simply can't sleep in a public sleeping place (like at the Salvation Army), too much crowd and strange people. They prefer the streets. Often they don't trust the state or the healthcare system and avoid seeking help even with festering wounds. One woman we spoke with was a raging alcoholic, one of her kids murdered the other one. These are tragic, heartbreaking stories. These people are completely locked up in their trauma.

teekert 5y ago

The wealth gap is a lot bigger in the US and here you can walk into a hospital even when you’re homeless and leave debt free. Anyone can apply for social security of about 1000 eur/month. People are only homeless when they have mental issues preventing them from following the steps to get them out and they can get help at any point. This is pretty different from the US.

dan-robertson 5y ago
I don’t disagree with what you wrote but I don’t understand what it has to do with differences in software engineer salaries between the US and the Netherlands.
- Agingcoder 5y ago
  I think GP meant more taxes to cover for country infrastructure (roads, power, etc) , schools, universities, health insurance, pensions, ie the 'all inclusive for everyone' package which is more common in Europe than in the US. Some of these taxes are paid for by employers. Edit:and they cover costs for everyone, including non employees (they're generic taxes, not employer-funded health insurance). So you have 'not the whole population' funding the whole population. Basically, it's more expensive for the company to hire you, so you get less. I remember talking to a company which could hire me either in the US or in the EU. US paid better because cost of employment was lower, but at the expense of an overall less complete package for me and my family which I would have had to complete with my own money . In the end, you can't really compare raw salaries - you need to look at what's included, and what kind of cost of living you will incur.
  - dan-robertson 5y ago
    The GP suggested that wages are lower in Europe because of higher taxes. So to be clear, I am only arguing about the former thing and what the taxes are used for is basically irrelevant to me. My complaint is that the argument about tax just isn’t good at explaining the difference. Eg, choosing basically at random from a quick search[1], one might pay $100k in employee taxes on $265k gross (37%) in the Bay Area. I don’t have a good idea of the employer payroll taxes but if I guess about 8% that’s another $20k the employer needs to pay. Then they pay health insurance (rough guess at $20k per year, but not sure about this average numbers were like this including employee contributions so I’m assuming that plans are good but maybe employees are healthier than average and have smaller families bringing down the costs). So that comes out to $305k from the employer and $165k to the employee. Suppose a company spends the same amount in Berlin. That’s €260k. Let’s say there’s 20% or so of employer payroll taxes[2], and we’ll bump it up to 25% for extra private health insurance (no idea if that is reasonable; the 20% includes some compulsory insurance) giving a salary of €208k. And then at 50% effective tax rate[3] that comes to €104k = $120k net, which isn’t really so different from the Sam Francisco example. But you don’t (I think) see many salaries like that in Germany. They would look more like €100k gross[4], so where is all that other money going? I don’t believe there are 160% employer payroll taxes, and businesses generally pay taxes on profits not revenue. So there must be some increase in other costs for the business but I don’t understand what could explain such a big difference I think the actual argument must be about competition and demand for labour. But I don’t really have a strong argument. Salaries are higher not far away in Switzerland. There is some theory that salaries are high (at some companies) in the US outside of coastal cities because one could believably threaten to move to one, but Europeans can’t typically make such a threat. But many Germans could surely threaten to move to Switzerland, and many do commute across the border. So I don’t see how it works. Edit: I realise I picked Germany instead of the Netherlands. But I think tax rates are higher in Germany? [1] https://www.quora.com/How-much-tax-does-an-average-software-engineer-working-at-the-big-4-companies-in-the-SF-Bay-Area-pay https://www.quora.com/How-much-tax-does-an-average-software-... [2] https://en.m.wikipedia.org/wiki/Payroll_tax https://en.m.wikipedia.org/wiki/Payroll_tax [3] made this number up. I suspect it is actually hard even with a relatively high income to pay such a high effective tax rate. I tried pulling out an online tax calculator but there are a lot of options and I didn’t know what was reasonable. 50% feels like a reasonable overestimate to me. [4] this is mostly coming from HN. Maybe the Germans earning €200k don’t write comments complaining about salary differences between the US and Europe.
- usrusr 5y ago
  Yes, pre-tax income is also different, even if you use "pre-tax" in the broadest sense (cost per employee, but without expenses like office space that happen to scale worth employee count but are not related at all to the contract). But if you look at cost per employee you still see much higher numbers in the US, that's what you were talking about, right? I think the explanation is that the US simply has enough global dominators in their field (e.g. Google basically eating up the non-Chinese ad market over the whole range from local business directories to the brand awareness stuff that used to make TV stations a big business) that they define the market, pulling up the bids of weaker bidders, whereas in other places outliers looks ASML are so much of an exception that the bids they need to get whoever they want hardly influences market rate.
  - teekert 5y ago
    Well to counter that, when comparing similar employees within my international company between the US and the EU, the US employees are about 1.5 times more expensive (this is the money that an FTE will cost a project). Not sure why that is, perhaps it is really an inequality issue and maybe the cleaners are cheaper in the same company in the US than in the EU? I don't know those details.
southerntofu 5y ago
> People are only homeless when they have mental issues Not to say there's not a relative greater share of the homeless population who has "mental issues", but it's definitely not the only factor at play. Many situations can lead to homelessness.
- teekert 5y ago
  I "walked the city" with some former homeless people with my colleagues as part of a societally relevant activity. They explained us that most cities have places where you can get a free postal address, then you can ask for "bijstand" (lowest level of support here), and for rent subsidy and care subsidies. Then you can apply for a social rent housing, which by then you can definitely afford. But going through these steps requires some level of focus and dedication. What you see is that people with severe ADHD (and a plethora of other issues) for example, simply can't sleep in a public sleeping place (like at the Salvation Army), too much crowd and strange people. They prefer the streets. Often they don't trust the state or the healthcare system and avoid seeking help even with festering wounds. One woman we spoke with was a raging alcoholic, one of her kids murdered the other one. These are tragic, heartbreaking stories. These people are completely locked up in their trauma.