4 ms·

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.

by 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.
- skywal_l 4y ago
  > 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) How is this a Ponzi Scheme ? Currently working people help sustain retired people the same way retired people help the retired people when they were working and the same way young people will sustain the currently working people when they retire. That's called generational solidarity. What European countries used to do at a family level, they do it at a national level now. One of the PROs of it is that if the cost of living change dramatically (which has been the case of the last 50 years) the pensions can adapt because they depend on current income instead of the pensioners relying on investments which sometimes are wiped out through no fault of their own. One of the CONs of course is the delayed effect of the baby boom. But one can expect that it was a particular historical artifact that might not occur again. You can disagree with the idea but calling it a Ponzi scheme is incorrect.
  - turkeysandwich 4y ago
    It's a Ponzi scheme when it's not sustainable. Social Security in the US, for example is not financially viable in its current form. Either the retirement age will need to be raised or its obligations will need to be abandoned, probably a bit of both. Some but not all European pension schemes are facing similar problems.
    - skywal_l 4y ago
      > It's a Ponzi scheme when it's not sustainable. That's such a general and undeveloped affirmation that you probably don't even believe it yourself. Here is the real definition from Wikipedia: > is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Pension systems are not a fraud. If you believe so, we do not live in the same reality. Taxpayers and pensioners are not investors. They are people who want to live a descent life. Not everything should be viewed as a financial market. Reducing everything in life into a spreadsheet makes you believe in fairy tales. People end up believing they are going to become millionaires by investing their hard earn dollars into actual Ponzi schemes like bitcoins and the like. Rich countries are producing many times more than what they need. There is plenty for everyone to go around, they just need to organize themselves a little better.
olabyne 4y ago
Hey french here. You are speaking of raw income, right? I don't think we are content with lower wages. It's just that you cannot really compare EU-US just like that. You need to compare cost of living, entirely. Paid leave. Public holiday. College fees. Working time. But also what I call 'peace of mind'. In Europe, you have retirement from the state. You will never have crazy, 6 figures hospital bills. My employer fires me ? I don't care, I will stay get paid through unemployment insurance. Getting sick ? Still paid. However, even if you can't compare US-EU numbers, in Europe engineers are underpaid, and it's good that you try to raise your voice through your colleagues. I think we are also a bit shy about sharing numbers in the office, which only benefits to the employer
- kf7njh 4y ago
  Exactly, gross salary. It's true you can't really compare directly like that, but just as an example let's normalize the data on the point of vacation/holidays. EU: 52 wk / yr * 5 day / wk = 260 days / yr 35 holiday / yr = 225 working / yr 260 / 225 * 65 = 75.1k per year normalized vs USA: 10 holiday / yr = 250 days / yr 260 / 250 * 160 = 166.4k per year normalized Here we can see how even when considering something like holiday: the difference is still not even remotely close. You're absolutely right about the 'peace of mind' aspect. This is something that I really love and will definitely miss... But let's not fool ourselves. For example it's common knowledge in Germany that the state retirement will only cover about 50% the cost of living. Not sure about the situation in France, but this means I still need to do a huge amount of self-saving and investing just to live at the bare minimum. In the end I completely hear your argument and can understand it.... It's just everything in life is pretty gray and situational. Note: if anything I have said is wrong, definitely let me know! Nobody is perfect!
  - peapicker 4y ago
    Seems US estimate may be low. I work in a large US tech company and I get 14 holidays (and we are typically dismissed 3 hrs early on afternoons before holidays, which adds up to another 5 days) and another 3-4 weeks of vacation I choose when to use during the year. I'm typically off about 35-40 business days a year when all taken together.

by kf7njh 4y ago

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.

skywal_l 4y ago
> 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) How is this a Ponzi Scheme ? Currently working people help sustain retired people the same way retired people help the retired people when they were working and the same way young people will sustain the currently working people when they retire. That's called generational solidarity. What European countries used to do at a family level, they do it at a national level now. One of the PROs of it is that if the cost of living change dramatically (which has been the case of the last 50 years) the pensions can adapt because they depend on current income instead of the pensioners relying on investments which sometimes are wiped out through no fault of their own. One of the CONs of course is the delayed effect of the baby boom. But one can expect that it was a particular historical artifact that might not occur again. You can disagree with the idea but calling it a Ponzi scheme is incorrect.
- turkeysandwich 4y ago
  It's a Ponzi scheme when it's not sustainable. Social Security in the US, for example is not financially viable in its current form. Either the retirement age will need to be raised or its obligations will need to be abandoned, probably a bit of both. Some but not all European pension schemes are facing similar problems.
  - skywal_l 4y ago
    > It's a Ponzi scheme when it's not sustainable. That's such a general and undeveloped affirmation that you probably don't even believe it yourself. Here is the real definition from Wikipedia: > is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Pension systems are not a fraud. If you believe so, we do not live in the same reality. Taxpayers and pensioners are not investors. They are people who want to live a descent life. Not everything should be viewed as a financial market. Reducing everything in life into a spreadsheet makes you believe in fairy tales. People end up believing they are going to become millionaires by investing their hard earn dollars into actual Ponzi schemes like bitcoins and the like. Rich countries are producing many times more than what they need. There is plenty for everyone to go around, they just need to organize themselves a little better.

olabyne 4y ago

Hey french here. You are speaking of raw income, right? I don't think we are content with lower wages. It's just that you cannot really compare EU-US just like that. You need to compare cost of living, entirely. Paid leave. Public holiday. College fees. Working time. But also what I call 'peace of mind'. In Europe, you have retirement from the state. You will never have crazy, 6 figures hospital bills. My employer fires me ? I don't care, I will stay get paid through unemployment insurance. Getting sick ? Still paid. However, even if you can't compare US-EU numbers, in Europe engineers are underpaid, and it's good that you try to raise your voice through your colleagues. I think we are also a bit shy about sharing numbers in the office, which only benefits to the employer

kf7njh 4y ago
Exactly, gross salary. It's true you can't really compare directly like that, but just as an example let's normalize the data on the point of vacation/holidays. EU: 52 wk / yr * 5 day / wk = 260 days / yr 35 holiday / yr = 225 working / yr 260 / 225 * 65 = 75.1k per year normalized vs USA: 10 holiday / yr = 250 days / yr 260 / 250 * 160 = 166.4k per year normalized Here we can see how even when considering something like holiday: the difference is still not even remotely close. You're absolutely right about the 'peace of mind' aspect. This is something that I really love and will definitely miss... But let's not fool ourselves. For example it's common knowledge in Germany that the state retirement will only cover about 50% the cost of living. Not sure about the situation in France, but this means I still need to do a huge amount of self-saving and investing just to live at the bare minimum. In the end I completely hear your argument and can understand it.... It's just everything in life is pretty gray and situational. Note: if anything I have said is wrong, definitely let me know! Nobody is perfect!
- peapicker 4y ago
  Seems US estimate may be low. I work in a large US tech company and I get 14 holidays (and we are typically dismissed 3 hrs early on afternoons before holidays, which adds up to another 5 days) and another 3-4 weeks of vacation I choose when to use during the year. I'm typically off about 35-40 business days a year when all taken together.