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Ask HN: Why is pay so much higher in the US? (or is it?)

65 points by petamask 4y ago

Even compared to other developed nations in Europe and most certainly compared to my country (Korea), the pay range I see for remote jobs from US seems to be in a totally different ball park. There must be numerous contributing factors, but I can't quite grasp how come. Or maybe not all jobs are paid so well or living costs compromise all that, but do they?

hopth 4y ago
I would also like to know why. I’m at the salary limit for my role essentially everywhere other than the US and so I’m considering a move.
trinovantes 4y ago
I think it's mostly culture. Compared to other regions, US favors innovation/risk taking and sees software developers as value creators rather than cost centers. There's also the fact that USD is the global reserve currency which makes it much easier to raise capital.
- mousetree 4y ago
  > USD is the global reserve currency which makes it much easier to raise capital. Could you explain more?
  - ochoseis 4y ago
    Because it's the global reserve currency it generally means: 1. There's more people around the world with USD who are interested in putting it to work. 2. The US government can easily print and borrow money denominated in USD, which leads to more USD floating around, which ends up in the hands of people from #1.
    - mousetree 4y ago
      Thanks. Could you explain how that leads to higher salaries in the US too?
      - ochoseis 4y ago
        I don’t have any references handy, but I suppose it’s a combination of the U.S. being a top destination for investment (because of the currency, risk-level, innovation and productivity), plus high demand for labor.
- neximo64 4y ago
  I doubt the global reserve piece is a major part of it, you could just as easily argue its cheaper to raise capital in Switzerland than the US, but devs are still paid more in the US. Even historically speaking when the US dollar was not the reserve currency, pay was still higher in the US. It probably comes down to productivity and the transmission of that to wages more than anything else.
- gnz11 4y ago
  Unless you are at a FAANG or similar company, programmers in the US are still seen as cost centers by c-suite people.
  - pwinnski 4y ago
    There are software companies outside of FAANG, and programmers at software companies, by and large, are seen as more essential that "just" cost centers.
- deleted 4y ago
  [deleted]
Mandatum 4y ago
Because that’s where all the money is. Seriously look at global GDP, maybe American citizens aren’t the wealthiest but the country and the businesses that run it sure as shit is.
- gigatexal 4y ago
  Haha pay is higher in the US because, sure, it's the world's largest economy. Though there are more millionares being minted in China than in the US every year. Nevertheless I'd sure as shit not want to build my business in China. I used to think this was because of relatively higher taxes in the EU than in the US but at the top end the highest wage earners are taxed rather heavily. A 500k salary is not 500k takehome. At least for me, I find the EU (Germany in particular), is hurting for talent enough that my mediocre skills (working on skilling up) are in demand and I'm relatively well paid >80k eur/yr.
  - abofh 4y ago
    So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to touch the 35% tax bracket on my last dollar earned this year, when you factor in the plethora of deductions, my effective tax rate is currently around 10%, and by year end will likely creep up to 17%. I've lived in a few EU countries over the years, generally under digital nomad programs that exempt from local taxes - but it's still helpful by way of comparison, that right now, if I were to pay at the same rate in my current country, I'd be much closer to 30% than 20%. Moreover, those earning substantially more than I am are largely not doing it as W2 (employees) or 1099 (contractors), but as investors earning capital gains - which themselves are taxed at a maximum of 20%. You can add to the US burden state taxes, but some states don't tax income at all (Texas), or they do their taxation based off the federal AGI, so all of your deductions kick in for the state stuff as well. If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth - because at the point where we're haggling over that much money, it's worth everyone's time to optimize even a 1% difference - by paying someone to do exactly that. So yes, a 500k salary isn't 500k take home, but without doing anything different than what I'm doing today, it'd be pretty close to a 400k take-home under US tax law.
BeenChilling 4y ago
What are the best ways to get hired in the US as a software engineer from the UK? I’ll be graduating with a masters in CS from a top university in 2023.
- phphphphp 4y ago
  Find a job with a US company that has a UK presence (a multinational like Google, Facebook etc.) and get promoted enough (e.g: to Engineering Manager) to be eligible for an L1 visa, then request to transfer from the UK to the US. The L1 visa process is the easiest, and has a path to citizenship. https://www.nnuimmigration.com/l1-visa-to-green-card/ https://www.nnuimmigration.com/l1-visa-to-green-card/ (UK salaries are competitive enough nowadays that it's not really worth it for financial reasons, given the financial risks associated with the US. If you want to go for non-financial reasons, have at it.)
  - toastal 4y ago
    Compensation is competitive now? Last I looked (couple years), anywhere outside London was really low.
    - deleted 4y ago
      [deleted]
  - spacejogger 4y ago
    How are UK salaries competitive? Even in London, salaries are, at best, 50% of what they are in Silicon Valley for 'typical' companies. At FAANG companies (e.g.: the Google/FB/etc London offices), they are about 70% of what they are in Silicon Valley. Cost of living is higher in SV, but not that much higher.
    - phphphphp 4y ago
      I believe that 70% is very, very competitive — I’d go as far as to say 70% of an SF salary, in London, is better. There’s a bunch of considerations, not just the cost of living, but things like healthcare, which allow for a high-earner to better leverage their earnings to improve their quality of life. There’s a higher density of well-funded companies in the US who can afford to pay high salaries, so it’s easier to find a high salary, but if you find a well-funded company in the UK (of which there are many, and growing) then you can earn comparably high amounts. If you have a £150k salary in the UK — which is easy enough at Google, Facebook etc. — you will have a very high standard of living, so much so, that moving to the US to earn $300k/year at the same company would have very little impact on quality of life.
fxtentacle 4y ago
I would say the peak 0.1% are paid much higher in the US. But the median pay might well be higher in Europe. (EDIT: Wow, look at the numbers cheschire linked to. Median wealth per adult: US is 26th place after Israel.) In my opinion, the cause is strong competition for the top talent worldwide. And because raising money is easier in the US and because taking risks is more common in the US, they will compete more strongly for the top talent, too. Also, some jobs just have to pay really well to make them acceptable. In the area where I live, $60k annually will pay for a very nice lifestyle for a small family with kids. Little house with garden, hiking in nature, free childcare, schools, university, etc. But if you have to live in San Francisco, $60k annually with kids is almost impossible. Rent over there is like 5x to what I pay, so it makes sense that people will need 3x the salary to do okay. And if you then add the cost for childcare, school, and university, you really need 5x the salary in San Francisco to get a comparable lifestyle to rural Europe.
grecy 4y ago
The US not having healthcare and higher education for all is a big factor. They also have worse infrastructure (condemned bridges in use...) So you get low taxes and lots of money into your pocket, but then you fork it out again. Remember, those grads landing a job at a FAANG have hundreds of thousands in student debt that is attracting interest to pay back. It’s also the cheapest developed country to buy “stuff” For similar reasons - cars, appliances, electronics. Even food, beer and cigarettes are drastically cheaper than other Developed countries.
- refurb 4y ago
  The US not having healthcare and higher education for all is a big factor. It's a big factor in wages? I mean my employer was paying $24,000/yr for my families healthcare plan on top of my salary. You'd think it would push wages down, not up. But regardless, there is plenty of healthcare (my friend's friend came from Thailand on a green card and signed up for free Medicaid right away) and higher education ($10k/yr for tuition at a top-ranked global school is pretty good in my opinion).
permo-w 4y ago
the outcomes of WW2 are a large part of the answer to this question
- gwbas1c 4y ago
  Which partially is because the US is an island nation with no threats at its borders. There is very little threat of ground war in the US. Historically, the border with Canada was a formality; and the border with Mexico is small.
- whiddershins 4y ago
  More realistically the Revolutionary War.
  - permo-w 4y ago
    I completely disagree
    - whiddershins 4y ago
      Then why don't Mexican software companies pay really extra well? Mexico wasn't damaged by WWII at all!
      - permo-w 4y ago
        it’s not that the US wasn’t damaged by WW2, it’s that it hugely benefited
sixhobbits 4y ago
Compared to Europe there is more upside and downside risk in the US. You can earn more but you are more likely to be financially wiped out if you get cancer or have an accident (high medical costs). Most countries in Europe have more social support built in at every level, not just healthcare, so its unusual to go from living comfortably to being on the street. Some argue the US way is good (more downward mobility is necessary for a lot of upward mobility) but it also leads to a lot of survivorship bias. The people who fall off do not get talked about much
- blackhaz 4y ago
  I live in London. Developed a persistent headache which goes on for a few months already. Just got appointment to a neurologist for August 2023. Today is September 2022. Although, is UK in Europe?...
  - badpun 4y ago
    Yep, that's how the coveted socialized health care system looks like in practice in many European countries. Sometimes the queue is short and you can use it. Sometimes it's not and you go to a private doctor instead. Sometimes, the nececessary drug is refunded and you get it for nearly free. Other times it's not and you buy it out of pocket. If it happens to be expensive, it will bankrupt your family just the same (or, more often, just die instead, because you don't want to do that to your family for an off chance of surviving the illness).
    - brnt 4y ago
      > Yep, that's how the coveted socialized health care system looks like in practice in many European countries. The NHS really stands out negatively in Europe, no matter how great the Brits think it is. Unfortunately, English-speakers living where they do, this is not really voiced in the English press. Out of all of the Anglophonic world, yes, the NHS is probably the best.
      - nabogh 4y ago
viraptor 4y ago
Things to keep in mind in comparisons like that: - Where in the us? SV will have absurd salaries, but also absurd cost of living. - What do you pay for in your country? How much is your health insurance? GP visits? Family education? - What's the environment like compared to a $random_us_location. For example do you need to own a car to survive and do you spend lots on daily driving? - What are your benefits? I've got twenty something days off and take even more. Had a paid months of leave as a parent. This is not common in the us.
- whiddershins 4y ago
  My US-based remote job pays for all these things.
  - viraptor 4y ago
    Yes, I'm sure there's non-zero amount of people who get lots of benefits. And you're likely aware how lucky you are. The point was: it's not common and not required at state/federal level.
    - whiddershins 4y ago
      But the question was literally about remote development work. Unclear why so many people decided to use it to make random criticisms of the US. Or perhaps it is very clear why.
      - viraptor 4y ago
        Remote is an overloaded term. I assumed "work from home in proximity of work in the us". If the OP meant US remote from Korea, that's different, but then we're also likely talking about contracting rather than employment. > to make random criticisms of the US It's not criticism, it's comparisons that matter to your enjoyment / impact the total compensation.
gwbas1c 4y ago
It's because the areas around the US that employ software developers are expensive to live. Software developer salaries are similar to what doctors and many other middle class people make. What pushes salaries into the higher part of middle class is demand and value: It's very hard to find good, trustworthy software engineers who can work without lots of supervision, and the overall value of the work to the company. I tend to point out that software is an "economic force multiplier." The value of what software implements (automates) is often many multiples of what the engineer is paid; so why would a software engineer accept a low pay to work on low value work?
jleyank 4y ago
The us is more of an individualistic than social country. And it’s only for certain jobs in certain areas. Some things, however, are the responsibility of the individual rather than “society” and I suspect raising children is one such area. There’s more to life than money, so consider all aspects of any transition to/from the us carefully. Edit: there are good comments on this thread. Props to the HN community on this one. Edit2: cars. City centres, for the most part, are not anywhere near as liveable as elsewhere. If you’re used to living on foot or on a bike, and shopping for food on the way home, etc, it’s not there.
bantunes 4y ago
When real estate is at such a premium in big cities (even with recent slides)[1], good schools free from teachers having to pay for their own materials expensive[2], and going to the emergency room potentially costing you thousands of dollars[3], you need a lot of money to attract and retain people. Also, profits are higher because companies pay less tax[4], so even with higher salaries it's still good business to pay more to attract higher talent. [1]: https://www.redfin.com/city/17151/CA/San-Francisco/housing-market https://www.redfin.com/city/17151/CA/San-Francisco/housing-m... [2]: https://newsdirect.com/news/teachers-spending-more-out-of-pocket-on-school-supplies-than-ever-before-852951135 https://newsdirect.com/news/teachers-spending-more-out-of-po... [3]: https://www.talktomira.com/post/how-much-does-an-er-visit-cost https://www.talktomira.com/post/how-much-does-an-er-visit-co... [4]: https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...
- ChuckNorris89 4y ago
  US tech workers have health insurance thought.
- badpun 4y ago
  Houses in for example Munich are more expensive than houses in SF (2.3 mil in Munich vs 1.5 mil in SF), while no one in Munich is making anywhere close to the FAANG salaries. The solution is that the coders don't live in houses, but rather in smallish appartments instead (or, if they want a house badly enough, they live far away from the city and have long commutes). Western Europe is basically poor-ish compared to the US, and US people who imagine average W. European to be as well off as average American (but with better security, free healthcare etc.) are deluded. They overall standard of living is way lower over here, we're just used to it so we don't complain.
bpfrh 4y ago
I would say it is because of less social security. In my country your pay will be significantly lower, but we get "free" healthcare are insured against unemployment&unable to work because of injury/sicknes, have a pension and have various social programms, etc.
- refurb 4y ago
  It's not like the US doesn't have that, or at least California. During Covid my friend got $4,000USD per month in unemployment for over a year. A relative of another friend immigrated from SE Asia and signed up for Medicaid when she arrived. Pretty much free healthcare. If you get injured, you can qualify for SSI payments and healthcare. I mean, we have a "crisis" right now because of all the disable men who no longer work and live off of government payments. I mean, you can argue that maybe the US isn't quite as generous as Europe, but it's not like there is no social safety net. The federal government spends 50% of tax revenue on social programs.
  - bpfrh 4y ago
    I would argue that covid was a special occasion, or is that always the case? Afaik medicare only allows you to be insured if your income is less than X? I don't know how your SSI payment structure compares to the one in my country, but isn't there a big problem with healthcare and the things and doctors it covers? I don't think the US has no safety net, but I think on average it has a worse one than my country. If you compare Europe as a whole I don't know, as Europe is very diverse in how they handle social care issues.
ivolimmen 4y ago
I would really advise you to look into how stuff is organised in the US compared to your country. I once did and came to the conclusion that it looks like they earn more. I pay a really low healthcare insurance fee compared to the US. Their system for pension is also completely different from other countries. They have a 401K. In my case my company pays for my pension. I am Dutch from my stance it would be unwise to move to the USA. Certainly if you take in account that (in my POV) the country is moving backwards (Gun violence, abortion, right-wing, etc. etc.)
- chrisseaton 4y ago
  > They have a 401K. What would you prefer? Defined-benefits, dependent on your company managing your pension? Most people would rather it was independent and invested.
  - ivolimmen 4y ago
    Well I am kind of unique and have a pension that is paid by my employer, and I have a personal pension (sort of a 401K). Do keep in mind that pension fund in the Netherlands are really well guarded (loads of laws). An employer or intermediary could never withdraw anything (neither can you unless you are at pension age).
    - chrisseaton 4y ago
      What happens in 20 years if the company hasn’t invested enough to pay your pension? A big downside of corporate pensions is when they fall short. For example British Airways has like a 3 billion deficit. I bet they wish they just got their money invested by a third party instead!
      - ivolimmen 4y ago
        They have a payment obligation. Required by pension law. Employers are kept up to date by their pension funds (are required by law). Employers are always kept in the loop how their pension is doing and are offered the ability to add to it. There is even a limit into what you can add to it. We also have a pension that is paid by the government. So in the end you get a sum: monthly income = government pension + company pension + personal pension (if you want one)
cheschire 4y ago
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... It’s really interesting to sort that country list by median, then by mean, each time looking for the USA.
- lucumo 4y ago
  That's wealth though. OP is asking about income.
  - cheschire 4y ago
    Yes, so isn’t it interesting that all that high income isn’t translating into high median wealth?
    - whiddershins 4y ago
      not remotely interesting. Software developers aren't median, why would you expect them to move the median?
    - pwinnski 4y ago
      The question was specifically about software developers. It could be that the US underpays on average relative to the rest of the world, but they definitely overpay software developers relative to the rest of the world.
      - cheschire 4y ago
        Where did you infer OP was talking specifically about software development? The question states “remote jobs” which can refer to any number of knowledge worker positions.
pavlov 4y ago
Mainly because USA developed multiple geographic clusters where software developers are in high demand (Bay Area for consumer tech, New York for finance etc.) and the funding ecosystem is both deep-pocketed and culturally supports paying for talent. Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those startups don’t grow into big companies that would pay for talent. It’s worth noting that the meteoric rise of Bay Area software engineer salaries is a fairly new phenomenon. In the mid 2000s, salaries were actively suppressed by a wage cartel that included Steve Jobs. The companies paid out a $324M settlement to employees [1]. Mark Zuckerberg is often said to have been the crucial CEO who broke the cartel. Facebook started paying higher salaries and hiring aggressively from Google and others who had been suppressing wages. [1] http://www.equitablegrowth.org/aftermath-wage-collusion-silicon-valley/ http://www.equitablegrowth.org/aftermath-wage-collusion-sili...
- deleted 4y ago
  [deleted]
- badpun 4y ago
  Most coders don't work in tech or startups, but in regular businesses. An yet, they still make more in the US than in Europe. Perhaps it falls in line with general lower compensation in Europe - I mean, for example there are plenty job offers for accountants in London (super-expensive city) which advertise sub 30k pounds pay per year. I don't think there are a lot of accountants in NYC who would take a job for the equivalent $35k...
  - stingraycharles 4y ago
    Isn’t the cost of living in US, especially in the “clusters of high demand”, generally higher than Europe as well?
    - badpun 4y ago
      Not hugely so. Properties in top cities in Europe are probably as expensive as in top areas of US (NYC, SV). Rent is higher in US (that's because, if landlords charged SV/NYC rents in Europe, then the flats would just be empty, as the rent would be more than 100% of salaries of most people), but mortgage is comparable. Other typical cost of living expenses are somewhat higher in US (according to https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=France&country2=United+States&city1=Paris&city2=New+York%2C+NY https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...). Salaries, on the other hand, are massively higher in US than in Europe.
JohnJamesRambo 4y ago
https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL I think you could make a good case that like all things going up and up the past years, it is just money printed at the FED. Thinking long and hard on the implications of that can inform your moves in the coming decade.
deleted 4y ago
[deleted]
justsomehnguy 4y ago
> Cost of Living Comparison Between Seoul and San Francisco, CA > You would need around 12,056,794.18₩ (8,727.42$) in San Francisco, CA to maintain the same standard of life that you can have with 6,600,000.00₩ in Seoul (assuming you rent in both cities). This calculation uses our Cost of Living Plus Rent Index to compare cost of living. This assumes net earnings (after income tax). You can change the amount in this calculation. Seoul San Francisco, CA Preschool Full Day, Private, Monthly : 509,352.94 ₩ ( 368.70 $) 3,160,145.20 ₩ (2,287.50 $) +520.42 % Apartment (1 bedroom) in City Centre : 1,063,680.37 ₩ ( 769.95 $) 4,542,563.97 ₩ (3,288.18 $) +327.06 % Apartment (3 bedrooms) in City Centre : 3,410,888.38 ₩ (2,469.00 $) 8,160,113.43 ₩ (5,906.77 $) +139.24 % https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=South+Korea&country2=United+States&city1=Seoul&city2=San+Francisco%2C+CA&tracking=getDispatchComparison https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... Basically - in some parts of US people would be homeless and starve to death on the pay of the most European citizens. And if you don't know - there are way too many homeless people in US for a developed nation.
dougmwne 4y ago
I’ll assume you are talking about the average, which is a bit above $100k. You have probably seen plenty of eye-popping FAANG salaries, but those are basically outliers from monopoly companies in a top talent Cold War. There are some currency effects due to status of the USD as one of the most stable shelters of risk. But I don’t believe this is accounts for most of the difference. Mainly, the US does not have a high enough supply of tech workers. Other professions are not particularly well paid in comparison to the cost of living. But for tech, the size of the US tech industry combined with a restrictive immigration policy means that companies will pay a lot for most technical talent. Companies try to hire abroad as much as they can, but there are enough disadvantages to outsourcing that there will always be reasons to hire within the US. The tech industry fights against this high pay by encouraging more people to study IT degrees, lobbying for immigration reform, and even in the past by anti-poaching agreements that amounted to price fixing.
creamyhorror 4y ago
Many reasons, but the most basic factor is topline revenue: American tech companies earn revenue from both their local market as well as a huge swathe of the world. Without large enough topline revenue, the companies wouldn't have the ability to offer high wages to engineers. If you work for companies with smaller or less wealthy target markets, they simply won't be able to pay you as much (even if they wanted to). There's also the culture of compensating talent well, the dynamic startup scene that drives demand for tech workers, and high costs of living in key tech hubs driving up baseline pay. Those help justify paying out a greater chunk of overall revenue to tech workers.
buf 4y ago
I know this isn't an answer to the question, but an observation I'm seeing and experiencing personally. I spent my 20s and 30s gathering wealth in the US, helped built 2.5 unicorns, and saved enough for an early retirement. In my 40s, I'm living in Europe and enjoying more family-focused cultures.
edmcnulty101 4y ago
Because it's expensive as hell to live in the US.. Health insurance and rent alone is the typical salary in another country. And don't even think about having a major illness, it will bankrupt you. We have shitty public transportation so one needs a car. And we have shitty safety net so a huge chunk of your money goes to retirement or savings to avoid homelessness at all stages of life. We also have numerous levels of taxation, Fed, State, City, Municipal, Local, Sales, Property. We also have massive insurance requirements on everything from health to cars to housing which is almost like another tax. Then we have to pay for our college which is the most expensive in the world, or get massive loans to repay. After taxes rent utilities insurance car payment gas groceries savings retirement student loan you're looking at take home of like 20% of advertised salary. Then the average person spends 8 to 10 hours working and another 30 minutes to an hour commuting with like 2 weeks of vacation a year average.
Barrin92 4y ago
One factor for a minority of jobs is extreme profitability of large American companies, (FAANG mostly), but the bigger portion is that they need to pay that much. Friends I know in the US who make about 40k more than I do actually don't come out ahead because they pay thousands for private schooling (for a school on par with public education over here), daycare, two cars, high rent and so on. When I stayed in the US I paid 3.5k in rent for a one bedroom apartment, in a trendy part of Berlin you pay half that. Cost of living in the US where the popular jobs are is high. People seem to be unable to save a lot even if they earn 100k+ salaries. In many other countries social security, education, loans, healthcare etc is simply priced in publicly.
dudeofx 4y ago
infrastructure, it pays but we also have to pay for it
dvfjsdhgfv 4y ago
I live in Europe, work remotely and earn ca. €3000 (net, after taxes etc.), which is quite low by American standards. I had an offer from the USA but when I calculated the cost of living it turned out I could save less than here. Plus I'm a bit anxious about medical care. From what happened to my friends it seems that as long as your health is good or you have minor problems, everything is fine. But as soon as you need more complex help, things can go downhill.
dagw 4y ago
First look at the top N tech (and tech adjacent) companies in the US and work out their revenue pr employee. Now do the same for Europe and Korea. Second, look at how much VC money is invested into tech companies each year in the US, and compare that with Europe and Korea. A lot of US companies simply have a lot more money sloshing about, and as such can afford to pay a lot more money to attract talent, driving up the price for the whole market. So the real question is, why are European and Korean companies so bad at attracting investments and making money.
- DoingIsLearning 4y ago
  > why are European and Korean companies so bad at attracting investments and making money. - Taxes - Bureacracy - Smaller local markets (with less purchase power and more risk averse) - Harder access to bigger markets (US, China) - Extremely conservative local market VCs - US VCs are unlikely to invest in EU/Korea unless the company is incorporating in Delaware or something equivalent. - Talent is more risk averse, tends to prefer to stick around larger MAMAA companies or emigrate rather than risk running out of runway in a startup.
kf7njh 4y ago
As an American living in Germany for a few years now, this is something I really struggle with. In short, it's because Europeans are content with lower wages. I am in a "high-demand" job as an electrical engineer at a publicly traded medical company, and getting less than €65k. This is absolutely absurd in my opinion, but in discussions with friends/colleagues they feel it's overall typical. One colleague was in shock when I said I expect to break €100k within the next few years (Sr level)... But was also completely unaware of any basic public company financials (average value of employee is ~$350k), or salaries in our USA office (~$160k). Unfortunately, my value is not related to anything other than my cost of replacement--since my neighbor thinks €65k is acceptable, that's what I get. Company performance, employee benefits, healthcare, taxes, etc do play a role.... But it's nowhere near the salary gap. Help me spread the word OP. Tell all your friends. Start demanding more. Mercedes recently announced all employees would get raises matching inflation. It's a good start but honestly we need to recognize this as the bare minimum, not like they are heroic and progressive. Ps: Hope nobody minds me dropping numbers. I have no insecurities and don't care, but believe it can be a good help for the discussion.
- DoingIsLearning 4y ago
  You make a lot of good points. I agree it is a cultural problem but the other half of the problem is _Taxation_. Culturally most workers in EU markets (I am generalizing but lets exclude Executive, Finance, and Consulting positions) see an offer letter as the end of the recruitment process. People are not confident in negotiating an offer up because they are afraid employers will withdraw or walk-way (Which I have had happen so definitely not impossible). This also means that employers are more likely to see someone negotiating up (for a non-management position) as a 'difficult' IC. The costs per 'permanent' employee in terms of taxation/contributions is higher than in the US. The taxation on employee income is _way_ higher in most of Europe than in the US. This double stream of government income from employer and employee is needed to finance both the huge slice of government spending (Healthcare, Social Services, Infrastructure) as well as the Pension Systems that at this point are a Ponzi scheme where working taxpayers are paying for retiree income (Privatized Retirement is fairly limited in Europe and mostly optional on top of standard contributions). You see these two problems dissolve (Culture of content, and high taxation) when looking at the Contractor market, where employers are able to offer far higher rates very similar to the US market when ajusted to COL. Ultimately lower taxes for the average worker are not gonna happen in Europe because gov deficits would be rampant and nobody is willing to forsake the existing social safety nets.
whiddershins 4y ago
The biggest insight I am gaining from this thread is how many misconceptions about the US are rampant. Everyone: we have doctors in the US and if you have a job you get health insurance. Also we have paid leave, and software developers often have great benefits including for example paternity leave. And if you want a walkable city and not own a car we have New York. And if you want a good free education for your kids we have small towns and suburbs. True you can't combine those last two. Otherwise, the quality of life in the US for a professional worker is pretty awesome.
- TMWNN 4y ago
  >The biggest insight I am gaining from this thread is how many misconceptions about the US are rampant. Most of those spreading the nonsense here know that what they are spreading is false. It's mostly (not entirely) massive copium, because they have tried to get a US job and for whatever reason haven't been able to. They know very well that European salaries don't compensate for the "guaranteed leave" that is, along with "free healthcare", the favorite citation for why it's ackshually more expensive to live in the US than in Europe. That's not to say that there are those who sincerely prefer life in Europe for family, cultural, linguistic, or other reasons. But 90% of people here denying the naked truth about US paychecks and cost of living versus those of other advanced countries aren't coming from such perspectives.
creativenolo 4y ago
No mention of time off. Salaries might be higher in the US but how should the increased time off factor into the calculations? I'd love to work in the US. But the lack of days off is off putting. I have yet to come off a holiday wishing I'd been working instead — from a short, medium and long term perspective — even when work is great.
- refurb 4y ago
  If you're working for a SV tech firm, the vacation is comparable. I had 5.5 weeks off per year. I took 5 weeks off in a row one time. People who replied to emails on vacation were laughed at ("don't they have a life beyond work?").
  - hulitu 4y ago
    5.5 Weeks is 28 working days. That's what a begginer gets here in DE ( as engineer)
    - refurb 4y ago
      Right, so "comparable".
      - codegeek 4y ago
        5 weeks is not the average though. It is usually around 2 weeks if you are just starting out.
  - creativenolo 4y ago
    I know of many SV firms how don't do this, and one who does. Also, do you count sick days in this?
edmcnulty101 4y ago
The real question is why are salaries so low everywhere else? It's a highly technical job with a high knowledge base to do well. The problem is that in a country with a billion people the value of ones labor is next to nothing.
pkrotich 4y ago
Cost of living, demand & supply (not all places are paying well) and built in cost of at-will employment.
sys_64738 4y ago
In Britain you typically work 37.5 hours per week and get five weeks vacation. Over 47 weeks, those extra 2.5 hours an American works is three extra weeks of work. If you only get 10 days vacation per year then an American works 3 more weeks, for a total of 6 more weeks than a Brit.
- jacknews 4y ago
  But US salaries are much more than 12% higher.
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b20000 4y ago
cost of living in US metro areas is about 4x that of mainland europe. add to that the lack of social safety net and the cost of real estate, and generally high risks compared to being in europe (risk of getting sued, going from rich to poor in the blink of an eye etc).
altereds 4y ago
I see this as a chicken and egg situation. Even within any country if you see the salaries are higher in cities where you also have most job opportunities. This attracts workers who seek more opportunities and higher rewards. Those who are not able to compete or not interested to compete would not migrate to the city. Companies that operate in these places have to offer more to get the best among those available. Companies that need to get the best talent have to be ready to bear these higher costs to operate from these cities. Reading up on the history of California, I see from a long time back since the times of the gold rush it has been a place which attracted people seeking more opportunities and the best people would stay there when they are rewarded for moving there. There may be multiple such cities and locations in the US , but even within the US salaries would differ in different cities. I think the best answer may have to come from an economist who would understand these better.
yoav 4y ago
Working remotely for a US based or US funded company while living in a country that has a social safety net is really the sweet spot. My salary is roughly 2-3 times higher than I’d make working for a canadian company. SF salary in a not SF rent market.
- labarilem 4y ago
  Are you salaried or contracting? Also, I guess it might not be as easy for people in EU timezones.
labarilem 4y ago
Out of curiosity, has anyone managed to get into contracting with US clients while being physically based in EU?

65 points by petamask 4y ago

hopth 4y ago

I would also like to know why. I’m at the salary limit for my role essentially everywhere other than the US and so I’m considering a move.

trinovantes 4y ago

I think it's mostly culture. Compared to other regions, US favors innovation/risk taking and sees software developers as value creators rather than cost centers. There's also the fact that USD is the global reserve currency which makes it much easier to raise capital.

mousetree 4y ago
> USD is the global reserve currency which makes it much easier to raise capital. Could you explain more?
- ochoseis 4y ago
  Because it's the global reserve currency it generally means: 1. There's more people around the world with USD who are interested in putting it to work. 2. The US government can easily print and borrow money denominated in USD, which leads to more USD floating around, which ends up in the hands of people from #1.
  - mousetree 4y ago
    Thanks. Could you explain how that leads to higher salaries in the US too?
    - ochoseis 4y ago
      I don’t have any references handy, but I suppose it’s a combination of the U.S. being a top destination for investment (because of the currency, risk-level, innovation and productivity), plus high demand for labor.
neximo64 4y ago
I doubt the global reserve piece is a major part of it, you could just as easily argue its cheaper to raise capital in Switzerland than the US, but devs are still paid more in the US. Even historically speaking when the US dollar was not the reserve currency, pay was still higher in the US. It probably comes down to productivity and the transmission of that to wages more than anything else.
gnz11 4y ago
Unless you are at a FAANG or similar company, programmers in the US are still seen as cost centers by c-suite people.
- pwinnski 4y ago
  There are software companies outside of FAANG, and programmers at software companies, by and large, are seen as more essential that "just" cost centers.
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Mandatum 4y ago

Because that’s where all the money is. Seriously look at global GDP, maybe American citizens aren’t the wealthiest but the country and the businesses that run it sure as shit is.

gigatexal 4y ago
Haha pay is higher in the US because, sure, it's the world's largest economy. Though there are more millionares being minted in China than in the US every year. Nevertheless I'd sure as shit not want to build my business in China. I used to think this was because of relatively higher taxes in the EU than in the US but at the top end the highest wage earners are taxed rather heavily. A 500k salary is not 500k takehome. At least for me, I find the EU (Germany in particular), is hurting for talent enough that my mediocre skills (working on skilling up) are in demand and I'm relatively well paid >80k eur/yr.
- abofh 4y ago
  So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to touch the 35% tax bracket on my last dollar earned this year, when you factor in the plethora of deductions, my effective tax rate is currently around 10%, and by year end will likely creep up to 17%. I've lived in a few EU countries over the years, generally under digital nomad programs that exempt from local taxes - but it's still helpful by way of comparison, that right now, if I were to pay at the same rate in my current country, I'd be much closer to 30% than 20%. Moreover, those earning substantially more than I am are largely not doing it as W2 (employees) or 1099 (contractors), but as investors earning capital gains - which themselves are taxed at a maximum of 20%. You can add to the US burden state taxes, but some states don't tax income at all (Texas), or they do their taxation based off the federal AGI, so all of your deductions kick in for the state stuff as well. If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth - because at the point where we're haggling over that much money, it's worth everyone's time to optimize even a 1% difference - by paying someone to do exactly that. So yes, a 500k salary isn't 500k take home, but without doing anything different than what I'm doing today, it'd be pretty close to a 400k take-home under US tax law.

BeenChilling 4y ago

What are the best ways to get hired in the US as a software engineer from the UK? I’ll be graduating with a masters in CS from a top university in 2023.

phphphphp 4y ago
Find a job with a US company that has a UK presence (a multinational like Google, Facebook etc.) and get promoted enough (e.g: to Engineering Manager) to be eligible for an L1 visa, then request to transfer from the UK to the US. The L1 visa process is the easiest, and has a path to citizenship. https://www.nnuimmigration.com/l1-visa-to-green-card/ https://www.nnuimmigration.com/l1-visa-to-green-card/ (UK salaries are competitive enough nowadays that it's not really worth it for financial reasons, given the financial risks associated with the US. If you want to go for non-financial reasons, have at it.)
- toastal 4y ago
  Compensation is competitive now? Last I looked (couple years), anywhere outside London was really low.
  - deleted 4y ago
    [deleted]
- spacejogger 4y ago
  How are UK salaries competitive? Even in London, salaries are, at best, 50% of what they are in Silicon Valley for 'typical' companies. At FAANG companies (e.g.: the Google/FB/etc London offices), they are about 70% of what they are in Silicon Valley. Cost of living is higher in SV, but not that much higher.
  - phphphphp 4y ago
    I believe that 70% is very, very competitive — I’d go as far as to say 70% of an SF salary, in London, is better. There’s a bunch of considerations, not just the cost of living, but things like healthcare, which allow for a high-earner to better leverage their earnings to improve their quality of life. There’s a higher density of well-funded companies in the US who can afford to pay high salaries, so it’s easier to find a high salary, but if you find a well-funded company in the UK (of which there are many, and growing) then you can earn comparably high amounts. If you have a £150k salary in the UK — which is easy enough at Google, Facebook etc. — you will have a very high standard of living, so much so, that moving to the US to earn $300k/year at the same company would have very little impact on quality of life.

fxtentacle 4y ago

I would say the peak 0.1% are paid much higher in the US. But the median pay might well be higher in Europe. (EDIT: Wow, look at the numbers cheschire linked to. Median wealth per adult: US is 26th place after Israel.) In my opinion, the cause is strong competition for the top talent worldwide. And because raising money is easier in the US and because taking risks is more common in the US, they will compete more strongly for the top talent, too. Also, some jobs just have to pay really well to make them acceptable. In the area where I live, $60k annually will pay for a very nice lifestyle for a small family with kids. Little house with garden, hiking in nature, free childcare, schools, university, etc. But if you have to live in San Francisco, $60k annually with kids is almost impossible. Rent over there is like 5x to what I pay, so it makes sense that people will need 3x the salary to do okay. And if you then add the cost for childcare, school, and university, you really need 5x the salary in San Francisco to get a comparable lifestyle to rural Europe.

grecy 4y ago

The US not having healthcare and higher education for all is a big factor. They also have worse infrastructure (condemned bridges in use...) So you get low taxes and lots of money into your pocket, but then you fork it out again. Remember, those grads landing a job at a FAANG have hundreds of thousands in student debt that is attracting interest to pay back. It’s also the cheapest developed country to buy “stuff” For similar reasons - cars, appliances, electronics. Even food, beer and cigarettes are drastically cheaper than other Developed countries.

refurb 4y ago
The US not having healthcare and higher education for all is a big factor. It's a big factor in wages? I mean my employer was paying $24,000/yr for my families healthcare plan on top of my salary. You'd think it would push wages down, not up. But regardless, there is plenty of healthcare (my friend's friend came from Thailand on a green card and signed up for free Medicaid right away) and higher education ($10k/yr for tuition at a top-ranked global school is pretty good in my opinion).

permo-w 4y ago

the outcomes of WW2 are a large part of the answer to this question

gwbas1c 4y ago
Which partially is because the US is an island nation with no threats at its borders. There is very little threat of ground war in the US. Historically, the border with Canada was a formality; and the border with Mexico is small.
whiddershins 4y ago
More realistically the Revolutionary War.
- permo-w 4y ago
  I completely disagree
  - whiddershins 4y ago
    Then why don't Mexican software companies pay really extra well? Mexico wasn't damaged by WWII at all!
    - permo-w 4y ago
      it’s not that the US wasn’t damaged by WW2, it’s that it hugely benefited

sixhobbits 4y ago

Compared to Europe there is more upside and downside risk in the US. You can earn more but you are more likely to be financially wiped out if you get cancer or have an accident (high medical costs). Most countries in Europe have more social support built in at every level, not just healthcare, so its unusual to go from living comfortably to being on the street. Some argue the US way is good (more downward mobility is necessary for a lot of upward mobility) but it also leads to a lot of survivorship bias. The people who fall off do not get talked about much

blackhaz 4y ago
I live in London. Developed a persistent headache which goes on for a few months already. Just got appointment to a neurologist for August 2023. Today is September 2022. Although, is UK in Europe?...
- badpun 4y ago
  Yep, that's how the coveted socialized health care system looks like in practice in many European countries. Sometimes the queue is short and you can use it. Sometimes it's not and you go to a private doctor instead. Sometimes, the nececessary drug is refunded and you get it for nearly free. Other times it's not and you buy it out of pocket. If it happens to be expensive, it will bankrupt your family just the same (or, more often, just die instead, because you don't want to do that to your family for an off chance of surviving the illness).
  - brnt 4y ago
    > Yep, that's how the coveted socialized health care system looks like in practice in many European countries. The NHS really stands out negatively in Europe, no matter how great the Brits think it is. Unfortunately, English-speakers living where they do, this is not really voiced in the English press. Out of all of the Anglophonic world, yes, the NHS is probably the best.
    - nabogh 4y ago

viraptor 4y ago

Things to keep in mind in comparisons like that: - Where in the us? SV will have absurd salaries, but also absurd cost of living. - What do you pay for in your country? How much is your health insurance? GP visits? Family education? - What's the environment like compared to a $random_us_location. For example do you need to own a car to survive and do you spend lots on daily driving? - What are your benefits? I've got twenty something days off and take even more. Had a paid months of leave as a parent. This is not common in the us.

whiddershins 4y ago
My US-based remote job pays for all these things.
- viraptor 4y ago
  Yes, I'm sure there's non-zero amount of people who get lots of benefits. And you're likely aware how lucky you are. The point was: it's not common and not required at state/federal level.
  - whiddershins 4y ago
    But the question was literally about remote development work. Unclear why so many people decided to use it to make random criticisms of the US. Or perhaps it is very clear why.
    - viraptor 4y ago
      Remote is an overloaded term. I assumed "work from home in proximity of work in the us". If the OP meant US remote from Korea, that's different, but then we're also likely talking about contracting rather than employment. > to make random criticisms of the US It's not criticism, it's comparisons that matter to your enjoyment / impact the total compensation.

gwbas1c 4y ago

It's because the areas around the US that employ software developers are expensive to live. Software developer salaries are similar to what doctors and many other middle class people make. What pushes salaries into the higher part of middle class is demand and value: It's very hard to find good, trustworthy software engineers who can work without lots of supervision, and the overall value of the work to the company. I tend to point out that software is an "economic force multiplier." The value of what software implements (automates) is often many multiples of what the engineer is paid; so why would a software engineer accept a low pay to work on low value work?

jleyank 4y ago

The us is more of an individualistic than social country. And it’s only for certain jobs in certain areas. Some things, however, are the responsibility of the individual rather than “society” and I suspect raising children is one such area. There’s more to life than money, so consider all aspects of any transition to/from the us carefully. Edit: there are good comments on this thread. Props to the HN community on this one. Edit2: cars. City centres, for the most part, are not anywhere near as liveable as elsewhere. If you’re used to living on foot or on a bike, and shopping for food on the way home, etc, it’s not there.

bantunes 4y ago

When real estate is at such a premium in big cities (even with recent slides)[1], good schools free from teachers having to pay for their own materials expensive[2], and going to the emergency room potentially costing you thousands of dollars[3], you need a lot of money to attract and retain people. Also, profits are higher because companies pay less tax[4], so even with higher salaries it's still good business to pay more to attract higher talent. [1]: https://www.redfin.com/city/17151/CA/San-Francisco/housing-market https://www.redfin.com/city/17151/CA/San-Francisco/housing-m... [2]: https://newsdirect.com/news/teachers-spending-more-out-of-pocket-on-school-supplies-than-ever-before-852951135 https://newsdirect.com/news/teachers-spending-more-out-of-po... [3]: https://www.talktomira.com/post/how-much-does-an-er-visit-cost https://www.talktomira.com/post/how-much-does-an-er-visit-co... [4]: https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...

ChuckNorris89 4y ago
US tech workers have health insurance thought.
badpun 4y ago
Houses in for example Munich are more expensive than houses in SF (2.3 mil in Munich vs 1.5 mil in SF), while no one in Munich is making anywhere close to the FAANG salaries. The solution is that the coders don't live in houses, but rather in smallish appartments instead (or, if they want a house badly enough, they live far away from the city and have long commutes). Western Europe is basically poor-ish compared to the US, and US people who imagine average W. European to be as well off as average American (but with better security, free healthcare etc.) are deluded. They overall standard of living is way lower over here, we're just used to it so we don't complain.

bpfrh 4y ago

I would say it is because of less social security. In my country your pay will be significantly lower, but we get "free" healthcare are insured against unemployment&unable to work because of injury/sicknes, have a pension and have various social programms, etc.

refurb 4y ago
It's not like the US doesn't have that, or at least California. During Covid my friend got $4,000USD per month in unemployment for over a year. A relative of another friend immigrated from SE Asia and signed up for Medicaid when she arrived. Pretty much free healthcare. If you get injured, you can qualify for SSI payments and healthcare. I mean, we have a "crisis" right now because of all the disable men who no longer work and live off of government payments. I mean, you can argue that maybe the US isn't quite as generous as Europe, but it's not like there is no social safety net. The federal government spends 50% of tax revenue on social programs.
- bpfrh 4y ago
  I would argue that covid was a special occasion, or is that always the case? Afaik medicare only allows you to be insured if your income is less than X? I don't know how your SSI payment structure compares to the one in my country, but isn't there a big problem with healthcare and the things and doctors it covers? I don't think the US has no safety net, but I think on average it has a worse one than my country. If you compare Europe as a whole I don't know, as Europe is very diverse in how they handle social care issues.

ivolimmen 4y ago

I would really advise you to look into how stuff is organised in the US compared to your country. I once did and came to the conclusion that it looks like they earn more. I pay a really low healthcare insurance fee compared to the US. Their system for pension is also completely different from other countries. They have a 401K. In my case my company pays for my pension. I am Dutch from my stance it would be unwise to move to the USA. Certainly if you take in account that (in my POV) the country is moving backwards (Gun violence, abortion, right-wing, etc. etc.)

chrisseaton 4y ago
> They have a 401K. What would you prefer? Defined-benefits, dependent on your company managing your pension? Most people would rather it was independent and invested.
- ivolimmen 4y ago
  Well I am kind of unique and have a pension that is paid by my employer, and I have a personal pension (sort of a 401K). Do keep in mind that pension fund in the Netherlands are really well guarded (loads of laws). An employer or intermediary could never withdraw anything (neither can you unless you are at pension age).
  - chrisseaton 4y ago
    What happens in 20 years if the company hasn’t invested enough to pay your pension? A big downside of corporate pensions is when they fall short. For example British Airways has like a 3 billion deficit. I bet they wish they just got their money invested by a third party instead!
    - ivolimmen 4y ago
      They have a payment obligation. Required by pension law. Employers are kept up to date by their pension funds (are required by law). Employers are always kept in the loop how their pension is doing and are offered the ability to add to it. There is even a limit into what you can add to it. We also have a pension that is paid by the government. So in the end you get a sum: monthly income = government pension + company pension + personal pension (if you want one)

cheschire 4y ago

https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... It’s really interesting to sort that country list by median, then by mean, each time looking for the USA.

lucumo 4y ago
That's wealth though. OP is asking about income.
- cheschire 4y ago
  Yes, so isn’t it interesting that all that high income isn’t translating into high median wealth?
  - whiddershins 4y ago
    not remotely interesting. Software developers aren't median, why would you expect them to move the median?
  - pwinnski 4y ago
    The question was specifically about software developers. It could be that the US underpays on average relative to the rest of the world, but they definitely overpay software developers relative to the rest of the world.
    - cheschire 4y ago
      Where did you infer OP was talking specifically about software development? The question states “remote jobs” which can refer to any number of knowledge worker positions.

pavlov 4y ago

Mainly because USA developed multiple geographic clusters where software developers are in high demand (Bay Area for consumer tech, New York for finance etc.) and the funding ecosystem is both deep-pocketed and culturally supports paying for talent. Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those startups don’t grow into big companies that would pay for talent. It’s worth noting that the meteoric rise of Bay Area software engineer salaries is a fairly new phenomenon. In the mid 2000s, salaries were actively suppressed by a wage cartel that included Steve Jobs. The companies paid out a $324M settlement to employees [1]. Mark Zuckerberg is often said to have been the crucial CEO who broke the cartel. Facebook started paying higher salaries and hiring aggressively from Google and others who had been suppressing wages. [1] http://www.equitablegrowth.org/aftermath-wage-collusion-silicon-valley/ http://www.equitablegrowth.org/aftermath-wage-collusion-sili...

deleted 4y ago
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badpun 4y ago
Most coders don't work in tech or startups, but in regular businesses. An yet, they still make more in the US than in Europe. Perhaps it falls in line with general lower compensation in Europe - I mean, for example there are plenty job offers for accountants in London (super-expensive city) which advertise sub 30k pounds pay per year. I don't think there are a lot of accountants in NYC who would take a job for the equivalent $35k...
- stingraycharles 4y ago
  Isn’t the cost of living in US, especially in the “clusters of high demand”, generally higher than Europe as well?
  - badpun 4y ago
    Not hugely so. Properties in top cities in Europe are probably as expensive as in top areas of US (NYC, SV). Rent is higher in US (that's because, if landlords charged SV/NYC rents in Europe, then the flats would just be empty, as the rent would be more than 100% of salaries of most people), but mortgage is comparable. Other typical cost of living expenses are somewhat higher in US (according to https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=France&country2=United+States&city1=Paris&city2=New+York%2C+NY https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...). Salaries, on the other hand, are massively higher in US than in Europe.

JohnJamesRambo 4y ago

https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL I think you could make a good case that like all things going up and up the past years, it is just money printed at the FED. Thinking long and hard on the implications of that can inform your moves in the coming decade.

deleted 4y ago

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justsomehnguy 4y ago

> Cost of Living Comparison Between Seoul and San Francisco, CA > You would need around 12,056,794.18₩ (8,727.42$) in San Francisco, CA to maintain the same standard of life that you can have with 6,600,000.00₩ in Seoul (assuming you rent in both cities). This calculation uses our Cost of Living Plus Rent Index to compare cost of living. This assumes net earnings (after income tax). You can change the amount in this calculation. Seoul San Francisco, CA Preschool Full Day, Private, Monthly : 509,352.94 ₩ ( 368.70 $) 3,160,145.20 ₩ (2,287.50 $) +520.42 % Apartment (1 bedroom) in City Centre : 1,063,680.37 ₩ ( 769.95 $) 4,542,563.97 ₩ (3,288.18 $) +327.06 % Apartment (3 bedrooms) in City Centre : 3,410,888.38 ₩ (2,469.00 $) 8,160,113.43 ₩ (5,906.77 $) +139.24 % https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=South+Korea&country2=United+States&city1=Seoul&city2=San+Francisco%2C+CA&tracking=getDispatchComparison https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... Basically - in some parts of US people would be homeless and starve to death on the pay of the most European citizens. And if you don't know - there are way too many homeless people in US for a developed nation.

dougmwne 4y ago

I’ll assume you are talking about the average, which is a bit above $100k. You have probably seen plenty of eye-popping FAANG salaries, but those are basically outliers from monopoly companies in a top talent Cold War. There are some currency effects due to status of the USD as one of the most stable shelters of risk. But I don’t believe this is accounts for most of the difference. Mainly, the US does not have a high enough supply of tech workers. Other professions are not particularly well paid in comparison to the cost of living. But for tech, the size of the US tech industry combined with a restrictive immigration policy means that companies will pay a lot for most technical talent. Companies try to hire abroad as much as they can, but there are enough disadvantages to outsourcing that there will always be reasons to hire within the US. The tech industry fights against this high pay by encouraging more people to study IT degrees, lobbying for immigration reform, and even in the past by anti-poaching agreements that amounted to price fixing.

creamyhorror 4y ago

Many reasons, but the most basic factor is topline revenue: American tech companies earn revenue from both their local market as well as a huge swathe of the world. Without large enough topline revenue, the companies wouldn't have the ability to offer high wages to engineers. If you work for companies with smaller or less wealthy target markets, they simply won't be able to pay you as much (even if they wanted to). There's also the culture of compensating talent well, the dynamic startup scene that drives demand for tech workers, and high costs of living in key tech hubs driving up baseline pay. Those help justify paying out a greater chunk of overall revenue to tech workers.

buf 4y ago

I know this isn't an answer to the question, but an observation I'm seeing and experiencing personally. I spent my 20s and 30s gathering wealth in the US, helped built 2.5 unicorns, and saved enough for an early retirement. In my 40s, I'm living in Europe and enjoying more family-focused cultures.

edmcnulty101 4y ago

Because it's expensive as hell to live in the US.. Health insurance and rent alone is the typical salary in another country. And don't even think about having a major illness, it will bankrupt you. We have shitty public transportation so one needs a car. And we have shitty safety net so a huge chunk of your money goes to retirement or savings to avoid homelessness at all stages of life. We also have numerous levels of taxation, Fed, State, City, Municipal, Local, Sales, Property. We also have massive insurance requirements on everything from health to cars to housing which is almost like another tax. Then we have to pay for our college which is the most expensive in the world, or get massive loans to repay. After taxes rent utilities insurance car payment gas groceries savings retirement student loan you're looking at take home of like 20% of advertised salary. Then the average person spends 8 to 10 hours working and another 30 minutes to an hour commuting with like 2 weeks of vacation a year average.

Barrin92 4y ago

One factor for a minority of jobs is extreme profitability of large American companies, (FAANG mostly), but the bigger portion is that they need to pay that much. Friends I know in the US who make about 40k more than I do actually don't come out ahead because they pay thousands for private schooling (for a school on par with public education over here), daycare, two cars, high rent and so on. When I stayed in the US I paid 3.5k in rent for a one bedroom apartment, in a trendy part of Berlin you pay half that. Cost of living in the US where the popular jobs are is high. People seem to be unable to save a lot even if they earn 100k+ salaries. In many other countries social security, education, loans, healthcare etc is simply priced in publicly.

dudeofx 4y ago

infrastructure, it pays but we also have to pay for it

dvfjsdhgfv 4y ago

I live in Europe, work remotely and earn ca. €3000 (net, after taxes etc.), which is quite low by American standards. I had an offer from the USA but when I calculated the cost of living it turned out I could save less than here. Plus I'm a bit anxious about medical care. From what happened to my friends it seems that as long as your health is good or you have minor problems, everything is fine. But as soon as you need more complex help, things can go downhill.

dagw 4y ago

First look at the top N tech (and tech adjacent) companies in the US and work out their revenue pr employee. Now do the same for Europe and Korea. Second, look at how much VC money is invested into tech companies each year in the US, and compare that with Europe and Korea. A lot of US companies simply have a lot more money sloshing about, and as such can afford to pay a lot more money to attract talent, driving up the price for the whole market. So the real question is, why are European and Korean companies so bad at attracting investments and making money.

DoingIsLearning 4y ago
> why are European and Korean companies so bad at attracting investments and making money. - Taxes - Bureacracy - Smaller local markets (with less purchase power and more risk averse) - Harder access to bigger markets (US, China) - Extremely conservative local market VCs - US VCs are unlikely to invest in EU/Korea unless the company is incorporating in Delaware or something equivalent. - Talent is more risk averse, tends to prefer to stick around larger MAMAA companies or emigrate rather than risk running out of runway in a startup.

kf7njh 4y ago

As an American living in Germany for a few years now, this is something I really struggle with. In short, it's because Europeans are content with lower wages. I am in a "high-demand" job as an electrical engineer at a publicly traded medical company, and getting less than €65k. This is absolutely absurd in my opinion, but in discussions with friends/colleagues they feel it's overall typical. One colleague was in shock when I said I expect to break €100k within the next few years (Sr level)... But was also completely unaware of any basic public company financials (average value of employee is ~$350k), or salaries in our USA office (~$160k). Unfortunately, my value is not related to anything other than my cost of replacement--since my neighbor thinks €65k is acceptable, that's what I get. Company performance, employee benefits, healthcare, taxes, etc do play a role.... But it's nowhere near the salary gap. Help me spread the word OP. Tell all your friends. Start demanding more. Mercedes recently announced all employees would get raises matching inflation. It's a good start but honestly we need to recognize this as the bare minimum, not like they are heroic and progressive. Ps: Hope nobody minds me dropping numbers. I have no insecurities and don't care, but believe it can be a good help for the discussion.

DoingIsLearning 4y ago
You make a lot of good points. I agree it is a cultural problem but the other half of the problem is _Taxation_. Culturally most workers in EU markets (I am generalizing but lets exclude Executive, Finance, and Consulting positions) see an offer letter as the end of the recruitment process. People are not confident in negotiating an offer up because they are afraid employers will withdraw or walk-way (Which I have had happen so definitely not impossible). This also means that employers are more likely to see someone negotiating up (for a non-management position) as a 'difficult' IC. The costs per 'permanent' employee in terms of taxation/contributions is higher than in the US. The taxation on employee income is _way_ higher in most of Europe than in the US. This double stream of government income from employer and employee is needed to finance both the huge slice of government spending (Healthcare, Social Services, Infrastructure) as well as the Pension Systems that at this point are a Ponzi scheme where working taxpayers are paying for retiree income (Privatized Retirement is fairly limited in Europe and mostly optional on top of standard contributions). You see these two problems dissolve (Culture of content, and high taxation) when looking at the Contractor market, where employers are able to offer far higher rates very similar to the US market when ajusted to COL. Ultimately lower taxes for the average worker are not gonna happen in Europe because gov deficits would be rampant and nobody is willing to forsake the existing social safety nets.

whiddershins 4y ago

The biggest insight I am gaining from this thread is how many misconceptions about the US are rampant. Everyone: we have doctors in the US and if you have a job you get health insurance. Also we have paid leave, and software developers often have great benefits including for example paternity leave. And if you want a walkable city and not own a car we have New York. And if you want a good free education for your kids we have small towns and suburbs. True you can't combine those last two. Otherwise, the quality of life in the US for a professional worker is pretty awesome.

TMWNN 4y ago
>The biggest insight I am gaining from this thread is how many misconceptions about the US are rampant. Most of those spreading the nonsense here know that what they are spreading is false. It's mostly (not entirely) massive copium, because they have tried to get a US job and for whatever reason haven't been able to. They know very well that European salaries don't compensate for the "guaranteed leave" that is, along with "free healthcare", the favorite citation for why it's ackshually more expensive to live in the US than in Europe. That's not to say that there are those who sincerely prefer life in Europe for family, cultural, linguistic, or other reasons. But 90% of people here denying the naked truth about US paychecks and cost of living versus those of other advanced countries aren't coming from such perspectives.

creativenolo 4y ago

No mention of time off. Salaries might be higher in the US but how should the increased time off factor into the calculations? I'd love to work in the US. But the lack of days off is off putting. I have yet to come off a holiday wishing I'd been working instead — from a short, medium and long term perspective — even when work is great.

refurb 4y ago
If you're working for a SV tech firm, the vacation is comparable. I had 5.5 weeks off per year. I took 5 weeks off in a row one time. People who replied to emails on vacation were laughed at ("don't they have a life beyond work?").
- hulitu 4y ago
  5.5 Weeks is 28 working days. That's what a begginer gets here in DE ( as engineer)
  - refurb 4y ago
    Right, so "comparable".
    - codegeek 4y ago
      5 weeks is not the average though. It is usually around 2 weeks if you are just starting out.
- creativenolo 4y ago
  I know of many SV firms how don't do this, and one who does. Also, do you count sick days in this?

edmcnulty101 4y ago

The real question is why are salaries so low everywhere else? It's a highly technical job with a high knowledge base to do well. The problem is that in a country with a billion people the value of ones labor is next to nothing.

pkrotich 4y ago

Cost of living, demand & supply (not all places are paying well) and built in cost of at-will employment.

sys_64738 4y ago

In Britain you typically work 37.5 hours per week and get five weeks vacation. Over 47 weeks, those extra 2.5 hours an American works is three extra weeks of work. If you only get 10 days vacation per year then an American works 3 more weeks, for a total of 6 more weeks than a Brit.

jacknews 4y ago
But US salaries are much more than 12% higher.

deleted 4y ago

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b20000 4y ago

cost of living in US metro areas is about 4x that of mainland europe. add to that the lack of social safety net and the cost of real estate, and generally high risks compared to being in europe (risk of getting sued, going from rich to poor in the blink of an eye etc).

altereds 4y ago

I see this as a chicken and egg situation. Even within any country if you see the salaries are higher in cities where you also have most job opportunities. This attracts workers who seek more opportunities and higher rewards. Those who are not able to compete or not interested to compete would not migrate to the city. Companies that operate in these places have to offer more to get the best among those available. Companies that need to get the best talent have to be ready to bear these higher costs to operate from these cities. Reading up on the history of California, I see from a long time back since the times of the gold rush it has been a place which attracted people seeking more opportunities and the best people would stay there when they are rewarded for moving there. There may be multiple such cities and locations in the US , but even within the US salaries would differ in different cities. I think the best answer may have to come from an economist who would understand these better.

yoav 4y ago

Working remotely for a US based or US funded company while living in a country that has a social safety net is really the sweet spot. My salary is roughly 2-3 times higher than I’d make working for a canadian company. SF salary in a not SF rent market.

labarilem 4y ago
Are you salaried or contracting? Also, I guess it might not be as easy for people in EU timezones.

labarilem 4y ago

Out of curiosity, has anyone managed to get into contracting with US clients while being physically based in EU?