Ask HN: Why do companies outside the US pay so much less? | Hacker News Reader

Ask HN: Why do companies outside the US pay so much less?

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As a developer, I've found that it's just not worth it to respond to tech companies / recruiters seeking engineers, unless they're based in the USA. Companies based anywhere else, in my experience, expect to pay less than half the rate that US companies will pay.

Why is this? There are possible causes having to do with tax rates and culture, but has anyone really looked into it? How big a contributor is this (rather than, say, immigrants as percent of total population, or university quality) to the fact that the US has Google and Apple and Facebook and Twitter, and the rest of the world has… JustEat and Spotify?

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A part of the gap can be explained by the way that work is organized in the US compared to Europe. Let's compare e.g. Germany and the USA:

https://data.oecd.org/germany.htm https://data.oecd.org/united-states.htm

If you scroll down to the Economic indicators, you will see that on average people in the US work around 1.700 hours a year, whereas people in Germany (and many other European countries) work only 1.400 hours. This alone can already explain 20 % of the wage gap between the two countries, and in fact if you look at the average salary per hour worked, it is almost identical (32 USD), which would support this theory. In addition, many things like education, housing, social security and health insurance are much cheaper in Europe, which leads to lower salaries (as they tend to follow the cost of living). Furthermore, regulations in Europe are stronger than in the US, which makes it more difficult (or sometimes even impossible) to fire people once they have been employed for some time. Hence the risk of losing your job is smaller, which should lead to a lower salary as well as companies face a higher risk when hiring someone, and employees have less risk.

And in extreme tech hot spots like SV or NY there should course be an additional effect due to the high demand of skilled IT professionals and the fact that people can usually find a new job very easily, which also makes it easier to negotiate a higher salary and forces companies to pay above average rates to attract talent, which is a self-reinforcing effect.

In Germany you also have to account that your employer by law has to pay into your non employment and retirement funds. This is about 21% of gross income on top. If you make 100k, your employer pays out 121k. They also have to pay half of your health insurance (also not counted in gross income numbers).

Employers in the US do the same thing. On top of your salary they pay ~7% for your retirement (social security, the public retirement), then taxes for your unemployment and a bunch of state taxes, and if you work in tech they pay for your health insurance (the one at my previous employer was $600/month). Usually they will also match money you'll put into your private retirement account. That's usually another $7-9k in good tech companies. I.e. When you're paid $100k in the US in tech, your employer pays at least $120k as well. So that doesn't explain the difference at all.

Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent.

You're not encouraged to rely on public unemployment insurance - the standard financial planning advice is to save and maintain 6 months of expenses in a liquid account.

If the public retirement and unemployment systems in other countries are actually sufficient, so you don't need to fund a private cover for them, that's easily 20% more ready cash.

> Money paid into social security is only for your retirement if you're scheduled to retire before social security is scheduled to become insolvent.

You'll get Social Security benefits after retirement for as long as the SSA is around. It may not be the exact that dollar your employer is putting away for you now, but you'll get back something.

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

But... You're not living in France. There are many people who would rather be making 3 times less and living in France.

It is a trade off, that's all there is to it, e.g. If you, God forbid, have get into a severe health condition in the US, you might very well be making 5x more, you're still going to get broke pretty soon because social healthcare is virtually nil.

Someone making 3x (as a programmer) can very easily afford very high quality health insurance. When you have it, it actually does work.

Chances are they are already covered by their employer though.

The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class - those salaries imply quality health insurance as part of the package.

Is it possible that due to some horribly unfortunate illness, one well-paid SV person loses their job? Let's say one has excellent insurance and a well-compensated job, but despite this fortune this person gets cancer and is out of work for a considerable time for medical reasons. Since California is an at-will state, this person may lose her job. Will she still have that great employer-provided insurance? Will the lack of affordable healthcare still not be a concern for her?

I think it's short-sighted to say that the lack of a social safety net is of no concern to a well-paid tech worker.

> The lack of "affordable" healthcare really isn't a concern for the six figure tech worker class

Isn't it? Let's do the math... A leukimia treatment drug that is virtually free in most advanced European healthcare will cost virtually 0 USD/year.

In india the same drug might as far as 2.5k/year. In the USA the same drug (patent hold by Novartis) costs 70k/year.

Let's say you are living in SF. You get paid anywhere between 80 and 120k/year at a top IT company and you have to give 70k/year away: 120-70 = 50k. Are 50k/year enough to live in SF, Silicon Valley or the Bay Area?

Generally speaking good healthcare (insurance) is going to cover the majority of the cost of the drugs for the person that has it.

To be honest I didn't take that into account but I guess you're right.

Yes, assuming one remains employed and still has this great employer-paid health insurance while needing this hypothetical $70k/year drug while fighting leukemia.

I really do wonder though, since there's zero guarantee in the US that one would remain employed through all of this.

For posterity, the 70k/year is a real[1] number.

[1] https://www.theatlantic.com/health/archive/2013/04/why-chemo...

That's the great thing about the internet, if you like France, stay in France! You can work anywhere. I prefer the USA compared to Europe because I can practice my favorite sport (competitive shooting) without any hassle.

Each place has their pros and cons.

I've found that there are very few "remote-working" companies in the United States who consider applicants from outside of the US - most of them have an "must be eligible to work in the US" disclaimer.

I guess this is part of why I'm able to make this comparison; I'm a US citizen living in Europe, so I can apply for "able to work in the US" gigs as well as "able to work in Europe" ones.

Well I'd wager this is probably due to the high demand of programmers (supposing you're working as a programmer) in the US and the fact that you're very good at what you're doing.

You still need to pay much more for housing, healthcare, services. And if you have a severe illness, healthcare will pay for the treatment but you can still lose your job. Add to that less holidays (in France you'll usually have 30+ days/yr), higher contributions to private pensions, and you'll quickly end up at a much smaller difference.

SV can still pay much better than France, but you don't get the ease of mind of working in a system that takes care of you if you're less fortunate or can't do your job anymore at some point.

Anecdotal data.

I'm guessing you don't get 6 weeks vacation either.

I don't really care how much someone in USA earns.

As a software engineere in germany you are earning good money.

There are no killings in cities, affordable health care, high quality living standards, university costs 150$ for 6 month, no donald trump, 30 days real holiday (i take them, everyone does, every year), seldom over hours, parental leave.

Btw. IT is more than google, apple, facebook and twitter.

And no we do not have anywhere in germany rent prices like in NY or in SF. Perhaps, only, if even in the middlest of the centere.

...can I come over?

I agree, in most part of Europe is possible to live better with less, compared with USA.

I think it's a bit insane that a lot of companies in USA doesn't allow parental leave, pressure employers to don't take any vacations, etc etc

All great points. Just to put in the "con" perspective: 1. It's good money, not insanely great money for software engineering field. You can not hope to earn 200k USD as a senior engineer ever and hence even a few folks from Germany seem pretty keen to have a 4-5 year stint in the US to earn some quick bucks. (also the exchange rate nowadays is killing it for Euro). You can see the effect in terms of how much you percentage of your salary you pay as rent and from my personal experience it was a lot (close to 30-40% of your entire paycheck, some germans in not so blessed fields pay almost 50%). The social security aspects covers for it as far as you enjoy it. 2. Jobs are secure as soon as you sign a permanent contract and get over the "Probzeit" period and there are seldom any "at-will" employment contracts. The flipside? startup culture never really kicked off until recently, hiring is slow and firing is even slower(harder) leading to plenty of dead-beat employees hanging around in corner offices in some organizations. You have copy-cat IT companies like Rocket Internet whose sole business model is to copy ideas from the US and implement them in Europe. So the variety of jobs are definitely not more than what the US provides. 3. As a result, the general lifestyle is living "frugally". If you like that it's fantastic. But everything is comparatively "expensive" than the US apart from certain things like Beer. e.g. Branded clothes like Timberland, Levis etc are sold at a premium where you can get those for 40 bucks in an outlet mall in the US. So buy IKEA/H&M/C&A with your software salary.

You do have countries where salaries are high like Switzerland but you also have insanely high living costs.

>> university costs 150$ for 6 month.

This is not a German miracle, its simple demographics, most of the Germans are in their productive years of 40s and 50s and their population in teens and 20s is tiny, so their investments are low even though at per-capita level they look tremendous. This is the reason why Germany's hope is automation. They are demographically not in a great place. of course, this will come home to roost in 20 years or so.

[edit] Demographics link: http://www.indexmundi.com/germany/age_structure.html

Or maybe they figured out that relying on population growth to drive the economy is a Ponzi scheme. Eventually you can't add more population so you have to reckon with aging one day, might as well solve the problem ASAP. Automation combined with exports allows you to grow your economy without adding humans.

If they still wanted to, they could turn on the migration spigot at anytime. Plenty of brilliant engineers and scientists to pick off out of Eastern Europe, Iran, etc. Labor has already come in on its own.

Interesting trivia:

If you are from a foreign country and come to Germany to study in the universities, you also pay only that amount. There is a lot of diversity here nation wise in the universities. Education is considered a human right.

So far population in Germany keeps increasing, as it is one of the most popular countries for immigrants worldwide (and I'm not talking about refugees), so there's a large influx of people from within the European Union as well as from outside of it. Currently there are around 200.000 more deaths each year than births, which is still easy to compensate through immigration. Concerning the birth rate Germany is maybe a bit ahead of the curve, but the problem is similar in most Western countries, even the US. Recently birth rates have been increasing again by the way, so it's not clear if the historically low rates will prevail in the long run.

Also, the fact that education is free isn't really related to demographics, in fact University education has always been free, and the only attempt to introduce a (very moderate) tuition fee in 2006 was fully reversed a few years later due to pressure from various organizations.

No, it's an economic decision. You pay for expensive university via higher costs for specialists. Healthcare is a good example. One reason that it's so expensive in the US is that the education is insanely expensive and doctors need to charge a certain amount to make sure it pays off. In Germany, nearly no one will have more than $10k debt after Uni, so the salary you need to earn as a lawyer or doctor is much lower. And as much of doctors' salary is paid by the state (directly or indirectly), it can be much cheaper to finance universities.

Yeah but there is a counterargument: We don't need more young people because the bip (Gross domestic product) per person is increasing as well. Lets see what will happen :)

But how does this compare to other professions say a lawyer or a medical doctor with the same experience.

I suspect in Europe and the UK in particular engineering is seen as a lower status profession - may be less so in Germany

In the UK when I tell people I'm a programmer, software engineer, web developer, systems engineer or whatever role I've had at the time, they usually ask me to fix their Windows machine... I guess that's the level of respect we get here.

In my experience that's not specific to the UK.

It's worth pointing out that, while health care in Germany is better than most of Europe, it is well below the standards Americans are accustomed to. Americans have a much higher survival rate for cancer and other serious diseases due to advanced diagnostic procedures and higher pay for physicians. Americans are comfortable asking doctors for more tests and services when the doctor doesn't think its necessary because the patient and their employer pay the doctor's salary. This leads to waste and higher costs but also allows for earlier detection of serious diseases and for better treatment.

If you're young, healthy, and your family doesn't have a history of cancer or heart disease, Germany's health care system might be a good deal. It's one of the best in Europe and, like the United States, people travel from all over the world to receive treatment there.

But you will want to move back to the United States when you get older. Per capita Germany performs about half as many MRIs, CT scans, c-sections, coronary bypasses, or knee replacements as the U.S. And, if you're over 65, you have very little value to the public system. Doctors will merely manage your pain rather than work to extend your life regardless of your age like they do in the U.S.

Germany has a good health system and Germans enjoy a life expectancy comparable to Americans but it's a system designed to please the young, healthy taxpayer. For me, a few extra vacation days and some beer in my youth aren't worth getting surprised by late-stage cancer or suffering with a bad knee when I get old.

Side note: More Americans need to know about Long-term Care Insurance. It's super cheap if you buy it when you're younger (50's) and it'll save your family a fortune when you get old.

Would you mind putting sources for these claims? There exist many contradictory claims [1].

1) https://blogs.scientificamerican.com/cross-check/cancer-spen...

Op's numbers are probably for those who can afford the treatment.

Heck, if even getting checked up might be a big spending for low earners I wonder how many people die without being correctly diagnosed.

I lived in the US until 2014 and moved back to Germany after that - from my personal experience and those of friends and colleagues it is quite the opposite of what you are saying.

Actually, I think you have this mixed up. I'm in Norway, and I never again want to fall victim of the US health care.

You actually have to afford the operation for cancer for them to give it to you - up until it becomes and emergency, anyway (this actually happened to someone with cervical cancer I knew). If you are lucky you can beg around and get it. It doesn't always matter that you have insurance, as a lot of folks can't afford it.

My father had trouble affording insulin and at one point stupidly cut back, which was after he gave up anti-depressants and my mother wasn't seeing the doctor for other things.

If you don't have money, the american system is cruel. I'd much rather deal with the waiting times than to suffer due to lack of money. At least there is hope, and I no longer fear getting sick and winding up homeless because of it.

The healthcare is that good in many European countries. Netherlands, Norway, France, UK (NHS has an awful reputation but is actually quite good) are just some examples. It's rather rare to find a European country with expensive or inadequate healthcare.

The UK's NHS is in a bad situation because it's been underfunded for many years by all parties.

A lot of the current pressure is a combination of that chronic underfunding and the chronic underfunding of social care. We don't need more beds, we need better social care to allow us to use the beds we have more efficiently. (Except we do need more beds. In the last six years there's been a reduction of 1 in 16 acute beds and 1 in 5 MH beds).

It's a weird situation because UK gov spends less per capita on health care than the US gov. If we increased spending on certain things - social care; early intervention MH services; better drug and alcohol services - we'd save so much money.

>Per capita Germany performs about half as many MRIs, CT scans, c-sections, coronary bypasses, or knee replacements as the U.S. And, if you're over 65, you have very little value to the public system. Doctors will merely manage your pain rather than work to extend your life regardless of your age like they do in the U.S.

Some thoughts I don't necessarily have answers to:

- is the lower occurrence of these procedures due to a lower need? Maybe wider-spread healthcare throughout life means overall people are healthier and need less procedures later on in life. Maybe these procedures are over-performed in the US and not necessarily under-performed in Germany (patients like having tests done and receiving medication, doctors/labs happy to do so because it is profitable, etc; for example, nowhere in Europe will you see "ask your doctor about XYZ drug!" advertising and antibiotics are much less commonly prescribed).

- there may indeed be a cultural/philosophical difference in approach to end-of-life care. Is it right that life should be extended at any cost in the US? Is this something that's available to someone who is poor and has basic or no insurance, or is it only available to someone wealthy or with an exceptionally strong insurance plan?

Devil's advocate: US economy, startups, and so on are stronger than that of Europe's.

Do we know which % of US states are doing better than Europe? I'm sure it's not all of them.

(I think we should measure virtue by carbon footprint/chance of horrible death/crime/etc and not by GDP.)

That is really a weird blanket statement: Both places have their own weirdness.

You probably aren't going to do so well with a start-up in rural Mississippi or Indiana, mostly because folks don't have much money to spend on your wares, yet in some other areas it'll seem like they are doing well. Same thing with Europe. There are a lot of countries and economies and different regulations there and it is quite hard to compare with the overall thing.

eh that's true for any country on its own. Each country has both developed & tech savy areas and less/savy areas.

I agree. People stop reducing your life to dollars (or €).

That said, I think the USD is propped up in ways that others are not due to its status in the world. They'd an advantage for some, certainly. And Euro is weakened by rest of EU, if Germany were standalone their currency would be higher than now.

As a European, I think of Europe as being similar to the United States: Each country is it's own state and part of a whole.

In my opinion, saying that if Germany were standalone they would have a stronger currency is the same as saying "If California were standalone they would have a stronger currency".

The US has its Mississippi, Europe has its Greece.

If there was no Euro, Germany would have a much harder time selling their stuff to the rest of Europe that "it's weakening the Euro".

It's on purpose, part of the plan.

> There are no killings in cities

I mean yeah if you ignore all the people shooting up malls, attacking people with machetes, driving trucks into crowds etc, Germany's a really peaceful place.

That is just not true. Look at the numbers, and not on your feeling you get from the news. For I stance start with the number of bullets fired by police!

The statement was "There are no killings in cities", which is clearly not true - there ARE killings in cities. There are probably less overall than in America, but I really don't care enough to check.

"Probably"! The gun death rate is just over 10x higher in the US per capita (10/100000) v (1/100000), it's a massive difference.

Ok? Cool?

If you can be bothered to go back and re-read my last comment, you'll notice I never once mentioned guns or even expressed a passing interest in comparing gun death rates.

You literally said, "if you ignore people shooting up malls" in the context of Germany being peaceful.

Yeah it is.

Why the heck do i have to read such stupid comment @hn? Do you really mean this or did you just use it as a troll counter argument?

You act like everyone in the USA has to wear body armor, has to set broken bones themselves and lives in tent cities.

I have amazing dental, health, and eyecare. Free routine health checkups such as physicals, heck I even get a free gym membership. I drive a 350HP luxury sedan. Oh and I've never shot anyone, had to shoot anyone, or been the victim of a crime other than petty theft where my car was broken into one time. But I do have the freedom to participate in shooting sports (and I do) whenever the heck I want and I don't need to ask mommy for permission.

If that's not high quality living standards, you must make 500k a year and be rich because I don't know what is. I think your media has drastically altered your perception of what America is and is not. Tech workers are well compensated and I'd rather be making six figures in America. I'm sure your country is very nice as well, but there is not enough freedom.

This is turning into a pissing contest.

Every $COUNTRY v $COUNTRY or $CITY v $CITY turns into a pissing contest because no one wants to admit they made the wrong choice in settling down somewhere, and end up presenting the best of their place and burying the worst.

"But my city has a better system for burying the worst than yours!"

>I think your media has drastically altered your perception of what America is and is not.

You're doing well for yourself, but aren't you also presenting an altered perception of America? Very, very few people in America are as fortunate as you.

Freedom to do what?

> I have amazing dental, health, and eyecare.

I do have it too, albeit the only one I pay for is the dental one - but more importantly, the barista at my favourite coffee shop has them too. At the same quality level.

> Free routine health checkups such as physicals,

My doctor calls me to get those done. They chase me! for free! but more importantly, they also chase the barista guy :)

> heck I even get a free gym membership.

Incidentally I do. I don't think the barista does. Gym fees are between £10 and £30 around here. Of course you an always splash out for David Lloyd's and pay 12x that...

> I drive a 350HP luxury sedan.

I either cycle 10 minutes or take a bus for 15 minutes. Why would I need a 350HP luxury sedan? I am already wasting money having a 170BHP Alfa Romeo hatchback parked in front of my house 24x7.

> Oh and I've never shot anyone, had to shoot anyone, or been the victim of a crime other than petty theft where my car was broken into one time.

Same here. Even better, I don't even think about it. Even better, as anyone is allowed to free healthcare there is less desperate people.

> But I do have the freedom to participate in shooting sports (and I do) whenever the heck I want

You can play shooting sports. My uncle does it regularly. Part of my family are actually hunters.

> and I don't need to ask mommy for permission.

Please, don't be disrespectful.

> If that's not high quality living standards, you must make 500k a year and be rich because I don't know what is.

Those are everyone's quality standards in great part of Europe. You are missing the point.

> I think your media has drastically altered your perception of what America is and is not.

Oh, our media - and I thought we all read TechCrunch, Gizmodo, CNN, BBC, ...

Luckily we have you to open your eyes. THANK GOD.

> Tech workers are well compensated and I'd rather be making six figures in America.

Good for you, but I am making six figures in Europe. Anecdotal data is anecdotal.

But even better, the guy not making six figures has free healthcare too.

> I'm sure your country is very nice as well, but there is not enough freedom.

I guess your freedom to play shooting sports (which you can in Europe too) is more important that your freedom to get free or affordable healthcare should you be in a rough spot.

You are privileged, I am privileged. However, I might not be who I am without free healthcare, cheap public nurseries, free quality schools, almost free universities, ... All paid by taxes of those who can, for those who can't. Remember you can be in one of those groups today and in the other tomorrow.

I think you took a negative tone to my post when it was not meant that way. A number of the things you pointed out are just facts of living in America vs Europe. I have to drive a car because everything is spread out. European cities were built over many centuries before cars were a thing.

I think it's safe to say tech workers are well compensated in both places, which was my point. The OP was acting very arrogant as if American tech workers didn't have healthcare, vacations, etc.

> You can play shooting sports. My uncle does it regularly. Part of my family are actually hunters.

I think you're deluding yourself. No offense, but I don't need to justify my gun ownership through the guise of "hunting" like you do in Germany or other European countries. I don't shoot animals, only paper and steel. I like guns so I own them. Also you would be outmatched in gun competitions such as 3 gun races simply because you are not allowed to purchase modern firearms like AR15s. You will just tire out faster than the guy carrying a 5LB AR15.

> You are privileged, I am privileged. However, I might not be who I am without free healthcare, cheap public nurseries, free quality schools, almost free universities, ... All paid by taxes of those who can, for those who can't. Remember you can be in one of those groups today and in the other tomorrow.

Agreed. Let's see how well your system copes with the refugee crisis. I'm eager to see if "those who can" can really feed the mouths of all the refugees. A number of important litmus tests for our modern society are taking place in Europe as we speak. A positive outcome might tip the scales here in America.

> I think you took a negative tone to my post when it was not meant that way. A number of the things you pointed out are just facts of living in America vs Europe. I have to drive a car because everything is spread out. European cities were built over many centuries before cars were a thing.

Well, I do think the potential salary difference is not worth it; and the reasons are what I've stated in my reply.

> I think it's safe to say tech workers are well compensated in both places, which was my point.

They are, agreed.

> The OP was acting very arrogant as if American tech workers didn't have healthcare, vacations, etc.

Well, they rarely have healthcare at the same level you can get in Canada, Spain, UK, etc - which is given to any worker in those countries. That is my point :)

They rarely have paid vacation, too.

> I think you're deluding yourself. No offense, but I don't need to justify my gun ownership through the guise of "hunting" like you do in Germany or other European countries. I don't shoot animals, only paper and steel. I like guns so I own them. Also you would be outmatched in gun competitions such as 3 gun races simply because you are not allowed to purchase modern firearms like AR15s. You will just tire out faster than the guy carrying a 5LB AR15.

You play gun sports, I told you can play gun sports in Europe too. It's a thing - not just "hunting" (seriously?:)). Good for you if you like to shoot AR15s.

> Agreed. Let's see how well your system copes with the refugee crisis.

Funnily enough, the US is not part of the refugee crisis yet your government is freaking out more than anyone. Food for thought.

> I'm eager to see if "those who can" can really feed the mouths of all the refugees.

It is possible. It has been proven in Germany of all places.

Funnily enough, the US used to be the receiver of refugees. Germans, Italians, Irish, Polish, Hungarians, Cubans, ... And it worked well.

> A number of important litmus tests for our modern society are taking place in Europe as we speak. A positive outcome might tip the scales here in America.

And we will prevail.

You start by saying:

> I think you took a negative tone to my post when it was not meant that way.

Then go onto say:

> I think you're deluding yourself. No offense, but

Sounds like the negative tone is continuing.

On another note:

> I'm sure your country is very nice as well, but there is not enough freedom.

What exactly are Americans free to do which we cannot in the UK?

The American dream seems to be more viable in Europe where the difference in pay between the top and the bottom is less severe and social mobility is higher.

You know my main point was, that it doesn't matter at all for me to go to usa to work there only because the figures are 'higher'.

You counter argued nearly every point but not about my 30 days holiday every year and the overhours. Why?

You're right. But why not make use of the best of both worlds? If you can work remotely and make $100-150k a year working from Germany or France, then you get the benefits of living in Europe but with an equivalent US salary.

I know several developers who have tripled or quadrupled their after tax income, without having to work any harder.

> There are no killings in cities

http://www.bbc.com/news/world-europe-36882445

http://edition.cnn.com/2017/01/01/us/chicago-murders-2016/

This is what they are talking about; not terrorist attacks which are sporadic.

This is such a weird reply. If you are talking about where you'd rather live, then it makes sense to talk about all things given you like your choice.

However, that's not the discussion. Wouldn't it be more productive to say "how were american engineers able to get so well paid, and how can we emulate that in Europe?"

If you're comparing to European jobs, one factor is that the U.S. has higher income inequality then many other countries, which means generally the highly paid jobs pay more, and the poorly paid jobs pay less. This will make U.S. salaries look good in some areas, and bad in others. (The median U.S. salary is also a bit higher than most other countries, but not by enough to explain the differences seen specifically in tech salaries.)

I think there is also not as much of a general tech talent shortage in Europe, so it's not one of the most in-demand jobs outside of specialized areas (if you're a top deep-learning expert right now, yes, but not for general programming / SE jobs). Many European countries traditionally have very strong STEM education, in a number of cases actually overproducing highly skilled graduates in the field relative to the local industry's needs (which is why you see a lot of Spanish, Romanian, Greek, Italian, etc. STEM graduates working in other countries). Not quite as badly oversupplied in the "T" part of STEM as in the "M" part, but still, not a shortage.

edit: Oh, another factor, for right now, that I should've mentioned is that the U.S. dollar is much stronger against the Euro and UK pound than it has been historically (even compared to a year or two ago), while salaries don't respond that quickly to currency movements. There are still significant differences if you use circa 2015 exchange rates, but smaller.

Uhhhhhhhh income inequality does not have that kind of effect. Income inequality may effect the taxes paid by people, but it doesn't change salaries the way that you're suggesting.

America just has more highly paid jobs, because we've got some of the biggest companies and highest GDP per capita in the world. And this has the effect of creating a greater spread of income. It's a bigger, richer, pond.

>[USA] has the highest GDP per capita in the world

Not quite, it has the 18th highest. Below Hong Kong, Switzerland, and Ireland all who pay less for engineering.

https://www.cia.gov/library/publications/the-world-factbook/...

A more appropriate comparison might be GDP per OECD region, where the United States absolutely dominates.

https://en.m.wikipedia.org/wiki/List_of_OECD_regions_by_GDP_...

That list was impressive until I read about what OECD is. It's a 35 country organization.

The US does have the highest GDP for any major country, though. The ones above it there are all quite small.

Switzerland, Singapore, Norway, Hong Kong and UAE don't match my definition of "quite small". Each of them has several million inhabitants.

The U.S has ~ 320 million people. So 2 magnitudes difference compared to some others. Additionally the U.S is quite large with many regions and sub-regions. Some regions have quite high GDP while others lower. So given that it's quite impressive versus much smaller and less populous countries.

In any case it's a stretch to make an apples to apples comparison when you have 2 magnitudes of population difference.

That way you could say the US is a small country because it only has ~1/4 of the population of China.

Just because a country has a smaller population it doesn't make it unsuitable to live or to compare economic data.

You're just being pedantic here.

There's a big difference between countries that above the US (top 18) on that list where there is a 10x to 100x difference. 1x (US) to 4x (China) does not a magnitude make.

Even given that I would concede that the U.S is a lot less populous country than China. Additionally, there's a lot of places where comparisons of stats are invalid because of that difference.

IIRC none of them even breaks 10 million people, the US has 320 million. Small areas can specialize in ways that are impractical for large areas. E.g. the SF Bay area has a very high GDP per capita, but you couldn't have the whole USA specialize in tech the way that metro does with ~7 million.

I wouldn't dismiss Switzerland. As we're discussing US vs Europe here, working in Switzerland is certainly an option.

This is not true... Google Switzerland pays more than in US (actually more, than anywhere else), especially if you take taxation and the pension system into account.

In what sense does it not work that way? And what do taxes have to do with it? I'm not talking about progressive tax rates, but about wider dispersion in incomes (which is what income inequality measures). If you have wider dispersion of incomes, generally you have more people making quite high salaries as well as more people making quite low salaries. I.e.: The 95th percentile American worker makes considerably more than the 95th percentile German worker, while the 5th percentile American worker makes considerably less than the 5th percentile German worker. And yes, the U.S. median is also higher, which is an additional effect, but not enough alone to explain the (larger) difference in tech salaries (they aren't identical income distribution curves just shifted by a +$X constant in the U.S.'s favor).

It's the causation that you suggest that's wrong. Income inequality is not an _input_ into this equation. It's the measure of a system!

And what income inequality is really measuring is just the mix of jobs. If you have everyone working the same job for the same amount, you'd have 0 income inequality. It's when you have a different mix of jobs that are valued differently that you get income inequality. America has a different mix of jobs, which changes our income inequality in comparison to Europe.

I think that the best way to explain the differences in software compensation is in supply/demand factors. The limited immigration, weak STEM education, businesses understanding the value of software, and inefficiencies with outsourcing makes it so that software developers can command a higher salary in the US because there's both reduced supply and increased demand.

So yeah. That's my problem. I think that there are clear supply/demand factors that explain the difference in compensation, and income inequality is the measure of a system, it is not an input variable.

GDP per capita is one of the worst metric you could cite

This actually. It's not that the other countries are paying less, the US companies pay more. In Europe other kind of engineers (mechanical, electrical etc) are pretty much earning salaries at par with software engineers. And then further on the typically lower wage salary bracket... Where the salaries in the US would require keeping 2 jobs, in Europe is good enough to get by.

Can confirm.

As a comparison: I am a programmer with above average pay in Germany, my mom works upper management in a big company.

I make about twice as much as a steel worker and she makes twice as much as me.

The same jobs in the us would pay about 3-4 times a steelworker for me and triple to quadruple my pay for her.

I can confirm that. Live in the US, work for a giant company. I make very good money, but someone in management just 2 levels above me (e.g. my boss's boss) makes over 2x what I make. There's no way most of those people contribute that much more to the company - some might, but most don't.

> higher income inequality

This.

I'll gladly pay more (as in earn less) to live (and to raise my kids) in a more equal society. I grew up in a very unequal one (even though it had universal healthcare) and I was really tired of that.

As someone with Canadian and American work experience, I think US wages are higher because there is more capital in the States. Both Canada and the States struggle to find qualified software devs. The companies that can afford to pay more, get their pick of devs out of a very small pool, so the wages increase. However, in Canada, the companies won't/can't pay as much, so the devs end up making less, or moving south. Brain-drain is a problem in Canada for a lot of different industries (healthcare is hugely impacted).

The cost of housing in Vancouver, Canada is right behind New York and San Fran. I don't think wages has anything to do with cost of living. In general I think Canadian investments are less risk tolerant, the market doesn't shift as fast as it does in the States, and therefore less cash flow. Also, its in the employers best interest to keep salaries down and convince their employees that living in Canada (Vancouver instead of San Fran) is better (how ever you define better).

There is more free floating capital. There are VCs in the US who are willing to invest in all sorts of things and willing to take chances. There are few VCs or banks in Canada that would take a chance on Facebook, Twitter, SnapChat or Uber. Brain-drain is a problem but the bigger problem is lack of capital.

Also, its in the employers best interest to keep salaries down and convince their employees that living in Canada (Vancouver instead of San Fran) is better (how ever you define better).

Yes, especially true. I've yet to see any Canadians who have actually received a raise in recent years. No one talks about it and no one knows whether their salary will be increased to at least meet inflation. It's a little messed up.

The free capital is probably a large factor, just as you say because there is a culture of investing in software development. I don't think you see that as much in say Japan or Germany or anywhere in EU.

The northern European countries are more geared for industrial conglomerates, as is Japan, and I have no clue what they do in southern Europe, but it's not investing in software development.

Other factors in Europe is probably as simple as historically less divergent incomes, less incentives for higher salaries due to higher and more progressive taxes, and a lower demand for really skilled developers due to the industrialist mindset that is hard to shake.

Raising money for an internet startup in Canada is effectively impossible. You might get some minor Series A angel investors (dentists and vets are your best bet), but once you start getting into the Series B rounds where you need real money, you won't find anyone willing to risk it. All they're interested in is gas/oil/mining.

Very risk adverse. We've had to resort to roadshows down in California and New York to try and get US capital.

It's not about risk aversion. There's just not enough money going around. US is a big country so obviously if 1% of your capital will be allocated to high risk VC it's going to be a much more substantial amount.

We've had Canadian VCs tell us it was too risky to invest in internet startups. Full stop.

They're not really wrong though. Unless you really know what you're doing you will lose money, as evidenced by the fact that most VCs do in fact lose money and venture as an asset class sucks.

They aren't wrong but salaries are too low; you can't really bootstrap unless you're doing a side business and then you're effectively working two jobs. There's no YC in Canada or at least it's harder to get some funding.

That is true, but I think lots of capital is partially an effect rather than a cause. IE global investors would rather invest in a US startup or listed company than a European or Canadian one.

I think USA provides a good environment for companies where most other countries look after people first. One result is that people with skills that make money for companies will have above average salaries. The downsides of the American way are well documented.

The Canadian dollar went from ~parity to <70c over the course of less than 4 years. So that slashed a significant part of your cost of living, in US$ terms, by 30%.

It's a lot of the same companies, e.g. Google, Microsoft, Amazon, so I don't think we can say the can't pay as much. Other than that it's market forces.

If you're living in Canada on a savings account that is in USD, then yes, you're ahead by 30%. Otherwise you're making cdn dollars and spending cdn dollars, so you don't see the 30% difference in cost of living.

And as far as I know the big companies like Google, Microsoft, Amazon, do pay more than market salary in Canada. Their Canadian offices are not nearly as large though, they don't influence the wages/benefits culture as much as they do in the States.

My point is the cost of living didn't go up 30% with the currency. I.e. there wasn't 30% inflation over those 4 years. While your salary is down 30% vs. the US$ due to currency exchange rates your cost of living is mostly unchanged. You have to keep that in mind when you compare salaries between the US and Canada. If you work for a US company and have equity as part of your compensation you just got a 30% raise in CDN$ out of that as well. ;)

So in "real" terms, e.g. purchase power of your salary, Canadians are paid reasonably well compared to their US peers while at the same time it seems there's a lot less inequality. Throw in free health, free education, vacation, severance, etc. and it's not such a bad deal for Canadians employees. At the same time their employers get all sorts of benefits for operating here. SRED and other programs. A more reasonable immigration system. Win-win.

Nearly every single development-based office in Eastern Canada (particularly Toronto, Ottawa, and Montreal), is based here solely to benefit from saving millions on their bottom line. I have worked for multiple American companies (usually based out of New York) who have all of their developers located in Eastern Canada, and it all comes down to this one reason.

They all make their income in the U.S.; all revenue is made in USD. They discover that the most senior positions in Eastern Canada pay $80-90k CAD per year, with $45-60k CAD being made by juniors. These companies take advantage of our economy to pay on average well below $50k USD per developer.

It has nothing to do with cost of living. It's entirely based on the currency exchange. They also gain back a huge percentage of their employees' salaries by lying through their teeth to government-backed programs, meaning they actually pay < $30-40k/year USD per developer. It's actually disgusting. The executives at these companies are laughing all the way to the bank.

I'm in the US and a friend just moved to The Netherlands to accept a much lower paying job. He swears he has more disposable income due to cheaper health care, Internet, transportation (no car required!), etc. The basic assertion being that the cost of living is higher in the US.

I would love to see salary vs cost-of-living comparisons globally. I suspect this might account for the disparity, but I'm afraid I don't have the data to confirm or disprove this assertion.

Update: Spent 5 minutes googling with no luck. Found some moving company (?!) sponsored data showing most of the EU having a very high cost of living. Makes me wonder if that takes into account free-or-cheaper-than-US health care, child care, transportation (owning a car is $$$), education (most US tech workers are paying a high student debt "tax"), and other lifestyle/political differences between the two regions.

You could ask him where he was able to save more money by the end of the year. Maybe don't count the expenses for relocating to the Netherlands.

We talk about this sort of thing regularly, but it's still just anecdotal. HN demands/deserves hard data. :)

I've had friends move to the Netherlands & definitely they have more disposable income than I do. I've also worked in the UK (Scotland) where I made a hell of a lot less but where health care and prescription drugs were 100% free - that bit right there saved me 25K / year.

Is/was your friend an American citizen? I've been fascinated by emigrating to Europe for a long time and am always looking for stories about how people pull it off.

Originally English/Dutch, so that simplified moving.

This is rather easy for the typical HN crowd. For example, to get a working visa for Germany (Blue card) you "only" need to find a job that pays more than 50000 Euro/year. In a nutshell, that is all.

http://www.bamf.de/EN/Infothek/FragenAntworten/BlaueKarteEU/...

Had no idea about this, thank you for passing it along. This part is particularly interesting:

> Holders of an EU Blue Card can enter another Member State without a visa after 18 months and apply for the EU Blue Card of that Member State within a period of one month.

And it looks like Americans (at least for now...) can go to Germany before they're even approved:

> Exceptions apply to nationals of Australia, Canada, Israel, Japan, the Republic of Korea, New Zealand and the United States of America. They can enter Germany on a visa-free basis and can apply to the competent immigration authority in Germany for their future place of residence for an EU Blue Card within three months of entering Germany.

Same here. This might be one route to consider: https://en.wikipedia.org/wiki/DAFT

Thanks for this. I'm sure it's not quite as scary as it sounds, but the only thing I can think of that's more challenging than "start a business" is "start a business in a new country where you don't know the language." The "friendship treaty" seems like a great idea, but right now I'm not a very good friend.

I have friends who've moved to the NL via DAFT. You'd probably do well to hire an accountant who can deal with the tax authorities (who are the only branch of gov't that will not speak English to you), but the business doesn't necessarily need to cater only to Dutch speakers.

And while it's nice to learn the language and all, the NL has among the highest English competency in Europe. It's rather difficult to learn Dutch because English is so useful and prevalent.

I'll link you to a comment I made a few days ago about moving to the NL:

https://news.ycombinator.com/reply?id=13522661

Thank you; missed this the first time around. Suddenly really interested in learning Dutch...

TBH, when making $250k+ as many engineers in top bay area companies are, "standard of living" costs don't really affect you that much anymore... They don't take into account the luxuries of the exorbitant lifestyle you can afford. And there aren't really any other cities in the world you could move to where you can still just be a programmer and afford the same lifestyle (and still have a lot of money saved up every month)

Realistically it's not a terribly relevant point for most engineers, even on the Bay Area.

As a $250k Bay Area household, you are not even starting to scratch the position of a $90k (i.e. $50k accountant + $40k teacher) household in a Midwestern metro, i.e. comfortably afford to own a 3-bedroom in a pleasant neighborhood with good public schools and a sub-30-minute commute to the central business district.

The rest of the standard-of-living costs (food, toiletries, etc.) would be vanishingly small, but housing would still be a big deal.

Stop trying to own. Just rent.

Look at the volatility (and especially the upward trend) in the last ~20 years of rents here. Renting is a fine strategy if you accept:

- That your stay here is temporary, you will be priced out within a few years, and any lease renewal could be the one that necessitates a cross-country move.

- That until you reach that breaking point, your "anything but housing" budget will decrease rapidly as rents rise much faster than wages.

It's a fun thing to do in your early twenties when your only worldly attachments are a backpack and a laptop, but people are not AWS spot instances. I do not intend for my eventual children to be scheduled onto communities preemptibly.

Owning is desirable because even if the payment is a stretch, it can get no worse, so barring catastrophe, your life is indefinitely sustainable. Renting in any volatile market is a bad idea if you're looking for a stable, long-term home rather than a short-lived adventure. Of course, there's nothing wrong with doing some adventuring while young and single.

This is generally terrible advice in the US. The tax breaks for ownership (mortgage interest + property taxes) is huge, and it is likely - although far from guaranteed - that your real estate investment will become more valuable over time.

Rent - generally - never goes down, you have no tax breaks, and you have no asset.

There are many lifestyle reasons to rent but few financial (in the US).

This has been argued ad nauseam, but there absolutely are financial reasons to rent, especially in cheaper regions.

My yearly rent is twice what the property taxes alone would be on the condos across the street. I considered getting one of them, but after doing the numbers, it didn't make since. After interest, taxes, maintenance, and HOA fees, there's no way these people are coming out ahead until they've been there 10+ years.

It's all well-and-good that some of that is tax deductible, but the standard deduction on a couple is still more than taxes+interest on a 250k loan. So it really doesn't matter unless you have many more deductions.

Now go from the mid-west to a west coast boom city, and you'd be a fool not to buy.

A $250k household in SV with children will have very significant costs of living. It won't be that hard to get a comparable lifestyle in Europe while your children are living at home. Once they're at university, most jobs in a country like Germany will give you a comparable standard of living (if you support them financially).

It's not the cost of groceries that count here, it's healthcare, education, housing and pensions that can easily consume $100-150k more per year than in a German town of comparable size.

As an American living in Germany, I can vouch for this. My wife and I did a big calculation when we were thinking of moving back to the states. Basically we made three projections based on three different time frames/factors: (a) 1 year comparison (gross net income - tax only), (b) 1 year comparison (net income - all costs including taxes, fees, cost of living etc), and (c) 20 year estimate of point (b). For fun I tried to extend the tables out to a 'lifetime' value, but there are so many variables and assumptions that I don't think it's worth it for anything other than fun.

If you only look at salary - tax rate, the US is far and away better, but as soon as you start to factor in other things to get a real net income it goes to the German side pretty quickly. If you calculate out for 20 years (especially if you want to send kids to college) it's not even close. Moreover, we have a relatively high income and if you more in the middle or lower tax brackets, the values you get from services vs what you pay into the system would be even greater.

From what I see (commented here and elsewhere), many, many people do not have an accurate idea of what their actually paying and making over time. The easiest thing to compare is salary numbers, but it's also the most flawed because net income minus taxes is only the start of a real calculation not the end answer. You should also take into consideration the non-monetary things that come with living in each place as a more qualitative list (this will, of course, differ from person to person). As already mentioned vacation is lengthy and it's expected that it will be taken (and people really try not to bother you while you're away), lower anxiety due to less crime and a better social safety...

Slightly off topic, but I would highly encourage people to make projections like this for their households. It could be eye opening and I've found that is has a very positive benefit on long term goal planning and budgeting.

Supply and demand?

I think there's a large variance in the US as well between different geographical areas. I would expect you can find x2 differences even within one geography.

There are a lot of factors in play:

- In SV there's a lot of "easy" money and a shortage of people.

- There's a lot of friction preventing this from equalizing. Immigration policies being one example.

- There have been significant currency movements over the last couple of years and those take some time to reflect back to things like prices and salaries. The strength of the US dollar means that at least temporarily you make that much more if you work in the US.

- Cost of living. If you have to pay more to own a house, pay for your kids education, commute, health, etc. then you can expect upwards pressure on salaries to make up for that.

- Risk premiums.

I think it's important to realize that these things can take a while to play out. When I look at today's salaries compared to 10 or 20 years ago I don't actually think they're very high but that's against a backdrop of erosion in other middle class salaries. Time will tell.

I suspect a partial cause from right-to-work laws. It's much harder to fire an employee in Europe, so companies are less willing to bid on employees, and so compensation is lower. Plus the employees themselves value the job security, which substitutes for wages when evaluating offers.

For specific predictions from this model:

1. Public-sector programmers in general should get paid less than private-sector programmers, due to employees valuing the job security

2. The public/private gap should be larger in the US than in Europe, since there's a smaller job security gap

3. Public-sector programmers in the US should have higher wages than public-sector programmers in Europe, due to having to compete with more vigorous private-sector activity in the US

California, Massachusetts, New York, and Washington do not have right-to-work laws, yet software salaries in SF, Boston, New York, and Seattle are among the highest in the world. If that were the cause, Austin, TX should become the high-pay Mecca that every programmer would migrate to, because Texas is a right-to-work state.

You're supporting the GP's thesis - he's saying that right-to-work laws depress wages...

GP's thesis is that Europe has no right-to-work laws, but America does, so America has higher wages than Europe.

GP is confusing "at will" with "right to work". All states, except Montana I believe, are at will, meaning employees can be let go without cause. Right to workis much less common, and prohibits things like closed shops where an employee is required to join a specific union as a condition of employment.

That would make more sense.

Yeah, I meant the laws that say that your boss can just show up and fire you for any or no reason, which is at-will employment. Got the name wrong, embarrassingly.

Everyone throwing around "free" healthcare as a valid explanation for this wage gap needs to account for taxation levels too.

using estimates via Google:

"average programmer salary usa" -> $84,360

"average programmer salary in sweden" -> $54,264

According to http://www.economist.com/blogs/graphicdetail/2012/10/focus-4, average effective taxes in the USA (including social security) are 25%... but 35% in Sweden. Even if those particular numbers are off, the point is that higher taxes may further expand the gap with lower pre-tax foreign salaries.

So the Swede keeps $35k and gets state-sponsored healthcare. The American keeps $63k and probably has decent health coverage from his employer. I'm not sure about this but I suspect that the American can use a fraction of that $28,000 difference to upgrade the health insurance to Swedish levels or better.

(There are also smaller but still significant expenses like housing, affected by property taxes, and consumption taxes like New York City's 8.875% relatively-high-for-the-USA sales tax vs Sweden's 25% VAT.)

The averages don't work well when you divide. You need to look to medians for the income and then compute average tax rate forthat* income.

That's true. I didn't look into how exactly Swedish rates are computed. A 25% effective rate sounded about right to me for a single-filer US salary in that range in most states which have income taxes on top of the federal+FICA. A Nordic country having 10+% higher effective rates likewise seemed reasonable but I certainly don't know for sure.

Your number for Sweden is (sadly :)) incorrect. This site (http://www.lonestatistik.se/loner.asp/yrke/Systemutvecklare-...) puts the median at 396,000 kr -> $44,800. But unless the site adjusts for salary increases, the estimate is probably on the lower side.

Salary also depends on your title. So web developers earn less than system developers who in turn earn less than system architects even though they may all do essentially the same work.

Healthcare is not just having an insurance. It's about keeping your job/pay when your sick for a longer time, maternity/paternity leave, pensions (also if you have to quit the work force early because you can't perform your job anymore), etc.

Five things:

1. We are taxed on income heavily in the US.

2. Insurance is expensive here.

3. In the hubs, rent is very expensive.

Take-home pay after considering these three things is a lot less than you might think. And also:

4. Generalizing the salary of positions across the whole US is misleading. An average engineering job in the midwest or outside of a hub can pay half the salary of SF or NYC.

5. It really depends (1) where the company you're considering is based and (2) if it's a remote gig, whether they adjust your comp based on your location. One example of this is Buffer's extremely transparent salary calculator [1].

The holy grail is to geoarbitrage by getting paid by a company in a location that pays highly while living remotely somewhere the cost of living is much lower.

[1]: https://buffer.com/salary

Income tax varies quite a bit, and you have lots of control over it.

You can completely avoid state income tax: Texas, Florida, New Hampshire, Alaska...

You can chop down the federal income tax quite a bit. For example, you could have a dozen kids. For most software developers, that eliminates the income tax.

So, there you go. Zero income tax.

> The holy grail is to geoarbitrage by getting paid by a company in a location that pays highly while living remotely somewhere the cost of living is much lower.

Yes. I work remotely for a US company, and live in Hungary. I'm British. It's a great arrangement. Hungary is a modern country but much less expensive than the U.K.

I also work remotely for a US company, but live in the Philippines right now. It's quite inexpensive to live here on the US dollar. Now, the big difference between your situation and mine is that I'm in a developing country that is struggling to become modern in the sense you're referring to and that developers are accustomed to. So I pay a premium for fiber internet fast enough to enable remote work, and I'm healthy and don't need maintenance-level health care.

I wouldn't want to do this if my children were college age, if I were retirement age, or someone in my family had persistent health issues. But for right now, it's great. Especially for those who enjoy island hopping and beach bumming.

I think the infrastructure is a major reason to choose Eastern Europe. Internet speeds are actually better than they are in the U.K. I spent six weeks in Morocco last spring and it was a constant struggle to find consistent connectivity.

Healthcare is another reason: as a U.K. Citizen, I get free healthcare anyway, and that extends for most treatments to EU counties too. When I do have to pay for medical treatment, it's fast and low cost. I had to have a wisdom tooth removed and I was dealt with in a couple of hours at midnight on a weekend. Cost less than $150 including painkillers and antibiotics.

Your comment about internet speed is interesting. Why do you think it's faster in Eastern Europe than in the UK?

> 1. We are taxed on income heavily in the US.

I was surprised at this so I looked it up. From the article [1] it looks as if income tax in the US is lower than in most of Europe. But yes, higher than Russia, Saudi Arabia or Mexico.

[1] http://www.bbc.co.uk/news/magazine-26327114

To be fair, though, that tax includes the health care. At least in Norway, anyway, and many countries on the list.

And to me, it makes a huge difference. Some folks in the midwest pay about as much per month on health insurance as they do on rent: It isn't a minor expense. Even with employer-subsidized insurance, it is easily a few hundred per month, plus they have to pay the deductible before it kicks in. $5,000 after the monthly fee when you make 50k per year is quite the expectation. (the deductible is 10% of your income at that point).

There are a couple issues with that article.

1. "For each country, they calculated how much a high earner on a salary of $400,000..."

That number is way higher than programmer salaries. Most programmers are high earners but not that high.

2. It assumes a constant salary amount in any country, but this isn't reality.

If someone makes $250k as a programmer in the US, it might equate to $100k–125k in another country. US tax rates are tiered (see "Marginal Tax Rate" at [1]), so someone that makes $250k pays more than double the taxes of $125k.

[1]: https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...

If you scroll down a bit further, you should find that both your points are addressed in the second set of figures. US tax rates looking even lower there.

These percentages are misleading because they don't paint the full picture. Especially considering insurance and rent.

It's a very apples to oranges comparison.

Hum, I don't know how the system works in the US, but in France a lot of money is taken from the salary to cover for health insurance, unemployment insurance and retirement plan. Plus we have 5 weeks paid vacation automatically included. And I think cost of life is lower than in the US, even in Paris which is the more expensive area. To go with numbers, I currently earn 50k€ per year (gross), which makes for 3k€ per month (net). I don't have a car (no need in Paris). This income is enough for me to live my life without any privation, going to bars, cinema, restaurant, weekend trips, etc whenever I want, and still save 10 to 40% of it each month. Last year I bought a new computer, a new phone, and 2 weeks vacation in Iceland without even touching my savings account. All that knowing that if I go unemployed, I stay at full pay several months, if I'm sick I'm covered, and when I reach 65 yo I'll get retirement rent until end of life. Oh, and I'm only in my early 30's, meaning I get to get paid more and more. After my next raise, which should occur this year considering I got a title upgrade, I'm even considering stopping asking for money and asking for additionnal time off instead. So, I don't know how your 100k+$ reflect on your life in the US, but sorry I don't feel any need for it :)

In NYC a decent 2 bed apartment in second tier areas (ie not in Manhattan) is 3k€ a month, I'm surprised Paris is cheaper.

Depends on what you call decent and how far from the center you go. I'm currently outside of Paris, having 15 minutes on foot plus 15 minutes on train plus 15 minutes in Subway to go to work. I share a large two bedrooms flat (73 square meters) with a friend, and my share is 700€. (this includes water, electricity, heating, garbage collection and unlimited internet connection) Sure if you insist on having a big flat right inside Paris it may go up to 3k, but if you tolerate commute time you can find better rates.

Definitely not, my rent is much less than that and I'm 10 minutes from the city in a nice part of Queens.

Hip areas are expensive, but say, Staten Island is cheap af.

I envy your positive attitude. 3k€ of disposable salary per month in a huge European metropolis like Paris seems very low to me. That's roughly what a web developer with 3-5 years of experience can get in a mid-sized (400-600k) city here in Poland and the prices of virtually everything are way lower. 700eur can get you a nice 2-3 bedroom apartment in a very downtown of such city and transport, food, groceries, restaurants, cinema tickets are probably all 2-3 times cheaper than in Paris. I personally feel developers in big cities of Spain, France and Italy are getting screwed big time comparing with their counterparts in US or other places in Europe and even Asia.

Well, maybe, I don't know, my only data points are personal experience and testimonies, which are not really the best building blocks for fully informed opinions. However, I'd argue that this depends a lot on what you value in life. If I get paid less than someone for the same job, but that "less" is already way enough to live my life in full, am I really screwed? I don't know. I think that yes, I am screwed if that makes me jealous and pushes me to want stuff I don't need for the sake of it. As I said, I'd rather take more time over more money. Or I'd be satisfied if I knew that additionnal wealth was given where it's useful. In my opinion, race to more and more personal wealth is damaging. But that's just my opinion, on an absolute scale, I may be putting in the same amount of work as others for less pay (aren't we all?), and that can be considered unfair, true. And it would surely bug me if the difference was high enough for me to struggle, so my 'positive attitude' may as well be just me not caring because I lack nothing anyway :/

So i think it's partially values and markets. Enough US companies know the transformational effect tech can have on a business where that's not really understood elsewhere. Just having part of the market get it means it drives up all prices. In the US you are quoted a price before taxes, many countries quote offers post taxes (including after income tax is taken out). That can make US salaries look MUCH higher. Because the employer doesn't think about taxes, if you're outside the US as a contractor or freelancing, you can get a much better deal.

A possibly flawed analogy follows:

Hollywood is the biggest city in the world for acting, followed by New York, and maybe Vancouver is in third place. I'm pretty sure people working as actors in any of those three cities are going to be paid more than actors working elsewhere, because there's greater demand in Hollywood/NYC/Vancouver than there is Omaha, Nebraska.

The biggest cities for software are San Francisco, Boston, Seattle, New York, and Austin. Probably not in that order anymore, but that's where most of the action is. If you're not working in one of those places, you're probably not making as much because there's less demand in your area for software people. All of these cities are in the US and none of them are in Europe.

There's also video game industry, which produces software, and traditionally the only kind of software normal people enjoy using to the point of getting emulators for.

It's a little more distributed: http://www.gameindustrycareerguide.com/best-cities-for-video...

I'm surprised SF comes up so much still. Isn't the rent an existential threat to the industry?

The rent is a minor expense if it gets you access to a competitive labor market and venture capital you otherwise would not have.

Plus, I imagine that many of those studios may have gotten their start before things like Unity and Steam made it possible for anybody with enough time on their hands to make and publish their own games very inexpensively.

There are a few reasons I have seen.

The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies.

We have a culture that doesn't require a business degree to open a business that investors would take seriously. As a result, companies pay highly skilled IT employees more to keep them happy enough to not start up their own business.

There is more direct competition between deep pocketed firms for talent. High demand always skews the price, and it is faaaar easier for the US firms to hire US based workers.

Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established.

We also see that many of our outsourced maintenance IT jobs may be done cheaper, but they are often worth far less than what they charge. That negative impression reinforces the stereotype of US based IT professionals are more competent.

> Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established.

Not sure that I agree with that! Compare to the UK, I don't think this is at all true. Compared to say, India, then that was definitely true.

I don't see is as a reality, merely a common perception. Having worked with several French software devs... I can say that the US devs are far more innovative. The impression that I have formed is that there is a major cultural difference in how the term expert is used. In the US, we tend to be willing to buck authority and expert opinion when we have facts to the contrary. Many of my French counterparts are not willing to even contradict their non-technical bosses over blatantly stupid things. It has lead to such a huge technical debt that it is drastically cutting into production.

Now part of my experience is with a multinational manufacturing company not an IT company. That likely makes a major difference.

>The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies.

This is partially true but I thought the cost of living in Europe was generally higher than in the US.

Eh, I don't have to own a car, I have cheaper health insurance, vacations cost less (but only because I used all of them to go to Europe before I moved here), and my rent is cheaper. Also, remember that you're getting at least a month off a year, by law, which even now relatively few US companies do.

It's simply due to the competitive hiring environment for the best software engineers in USA. The difference in pay cannot merely be explained simply by the difference in cost of living. I have personally worked in Singapore as a software engineer before moving to USA (worked for companies in SF & Seattle). A very good senior software engineer in SG might make SGD100-120k/yr with 10 years of experience. Singapore is a world-class city but it's also a very expensive place to live. In USA, the same engineer could be making USD400-500k/yr with 10 years of experience provided they work for top-tier companies like Google/FB/Apple/Amazon. These numbers obviously include stock-based compensation. The key is to be in the 95th percentile - I think the difference in pay (between USA vs world) is less drastic if you are just in the 50th percentile.

Don't underestimate the impact of social norms. If I were looking for work in the USA, I'd expect a salary which I would feel very uncomfortable asking for in Canada.

So a lot of the comments have argued the relative merits of one economy over another, or simply invoked "supply and demand" or "availability of capital" to explain the difference.

What I very often see in Europe isn't a marketplace of employers saying "We will pay X" and then finding a developer who will work for that. Rather, it often is a company desperate to hire a talented engineer, but when quoted a totally-not-outrageous-by-US-standards salary, respond with "Oh, we'd never pay that".

I suppose in some cases the employer literally couldn't pay that, but to me it seems more like there's some kind of cultural block, like "engineers make this amount and that's all there is to it".

Managers/executives don't seem to have any such restriction, again based on what I've been privy to, so I don't think that it's (completely) a case of just "salaries are lower here"

Since salaries are so much lower everywhere but the US, doesn't it make more sense to flip this argument around and instead ask: "why are software engineers' salaries so much higher in the US than everywhere else?"

Because devs get to keep more of what they earn? That should also be true for other workers but it isn't. It's really difficult to hide how much wealth is created through software.

I always like to point out that even the most junior developer can automate a task and save a company hundreds of thousands of dollars.

True, but companies don't reward employees if they don't have to. If anybody can save them hundreds of thousands of dollars then they'll get a normal pay.

They get so much because they'll be somewhere else instead. A race to higher salaries started at some point in the past and it's still going on. It's a difficult bubble to deflate until there are more jobs than people that can do them.

Considering that engineering salaries are within the ballpark of their EU equivalents throughout much of the US, I think the better question might be:

Why are software engineers' salaries so much higher in major US tech hubs than everywhere else?

What an engineer is paid in Columbus, OH, is very different than what they are paid in San Jose, CA.

My guess is the existence of outlier companies in these places that force salaries up. You have a number of large companies that make serious revenue-per-employee that demand the best (see: Google, FB, Apple, etc). Their bottom lines support paying more to hire from the top of the pool, and so they do, and over time the averages move due to this effect at all levels.

One of the defining things about these other job markets that pay considerably less, is the lack of major employers that are able to, and willing to, participate in this kind of price war with other employers. Some do not require top talent, and therefore there's no particular need to get into a bidding war with anyone else. Others simply can't afford to - since their revenue wouldn't support Bay Area-styled salaries.

It may sound obvious, but most foreign companies will typically hire foreigners, rather than Americans, at least most of the time.

If you're a foreigner, working for a company in your country of origin, compared to an American company, offers the following benefits:

1) The right to work in the first place - getting an American visa is rather hard 2) Not needing to pick up your life, your family's life, and move far away from extended family and friends 3) Work in the same time zone - have a job during normal work hours, without an expectation to show up to meetings late at night 4) A work environment where most communication happens in your native language

Most development salaries are pretty high compared to the median salaries in the surrounding region, they're just low compared to American developer salaries, but few people abroad make American salaries, so people tend to be happy with their "I'm upper-middle-class compared to the people around me" salaries. And since American jobs aren't really under consideration, for the reasons listed above, foreign employers don't feel the need to boost salaries even further, to a level comparable with the US, since the labor pool doesn't apply for jobs with those salaries.

The main reason seems to be linked to the cost of living: salaries in EU are lower only numerically. 50K€ have the same purchasing power of 150k$ in SF (EU devs pay rent, a car, savings, have holidays, etc.)

However the really STRANGE thing is that only a few USA companies exploit that by hiring EU devs for remote working. (ie: paying only 30% of a USA salary for an almost as good developer)

> 50K€ have the same purchasing power of 150k$ in SF

You can't compare the entire EU to one of the most expensive cities in the world - in spite of what the media may have you believe, most people in the US don't live in San Francisco or New York.

Other than the cost of living, (compared to India) I think one of the reasons is that most US jobs are "at will" where an employer can fire any time or an employee can leave anytime, with no notice. But often, employer/employee gives adequate notice (2 weeks) in US as a courtesy.

In India, most jobs are tied up to a contract. If you have a 2 yr contract with an employer, and you want to leave after 18 months, you have to pay the 6 months salary to the employer. If you dont, you wont get the next job, because the next employer expects a "relieving letter" from the previous one, which is given on completion of the contract or on paying the fine. Sounds atrocious right? Such practices, bring down the salaries or at least keep them from going up, unlike in US.

I dont know how often such contracts are enforced in India, especially when companies were going on a poaching spree.

A lot of it is cost of living in a given area can vary a lot in the US. Also, if you're looking for an EU job, that may well be post-tax, include better medical benefits (US contract jobs often don't), not to mention potentially better retirement options and last, but definitely not least upwards of 8-weeks of pto/year.

A lot of US jobs, you're lucky to see even 2 weeks of PTO, and even then, if contracting, you don't see that. I wound up taking about a month and a half off due to a bad relocation/project cut experience last year, and that has a huge impact on your hourly/annual salary. The culture is just different and the tax models very different.

In the US variety in income taxes at the state level, or cost of housing can vary a lot and you'll see similar variance in IT/Developer pay as well.

I haven't heard anyone suggest that overall demand for developers is higher in the USA.

The US has more companies that can see how to make more money off tech talent.

That's also possible. They know how to herd the cats and get them to move in the right direction. In Canada for example, there are few companies that do this correctly and the best ones are influenced by the way US companies (especially Silicon Valley companies) work and manage their employees.

The latter implies the former. What do you think demand is?

The cost of life is lower. Healthcare is included in taxes.

Is it removed from your salary in the us?

Or it assumed to be on top of your salary?

It's typically partly removed from your salary: you join a corporate health-insurance plan, whose premiums are partly but not fully subsidized by the company, with the remaining $x/month after subsidies coming from your paycheck. Some googling suggests that the average employee's share of the premium is $1100/yr for single people, and $5300/yr for those with dependent families. The actual numbers vary (quite a bit) by location and company.

It's a little of both. If your employer doesn't cover 100% of the premium then your share is deducted from your pre-tax salary. Healthcare is often one of the factors up for negotiation in salary discussions. It's not a 1-to-1 ratio, but generally if you opt out of an employer's coverage you can try to use that to ask for a higher salary. I've found it's been far more successful the older I get! The reason is employers want young healthy people in their insurance census (young people are cheap to insure and lower the cost for everyone), not middle-aged people with kids.

The cost of life argument makes no sense. By this logic we should be seeing janitors, or translators, or piano teachers in SV being paid much, much more then they are. If there was a coal mine near San Francisco I suppose the miners would be paid 100k/year as well?

If being a dev is the new coal mining.

Yes.

Adtech and social media are basically coal mining for people's attention spans. It poisons the atmosphere and eventually it'll run out.

Glassdoor says that a janitorial salary has a national average of $21,060; compared with $31,200 in San Francisco & San Jose CA; and $24,000 in Wichita KS.

Sounds like Janitors are being paid more in SV.

Since the average starting salary of a coal miner is $60-70k in the rural geographies where coal is mined, I'd say that yes, a coal mine in San Francisco would likely pay $100k.

And for experienced pit deputies in the UK the going rate for a single 12 hour shift in a deep coal mine at the weekend was £2K and that does count towards your final salary pension

Probably closer to $75K? If coal miner had a choice (most don't) of whether to work in Ohio for $50k or SF for $75k, I'm assuming they'd pick Ohio.

Thats why someone wouldn't start a coal mine near SF.

People are only going to be paid up to the point where a company still makes money from them. This has a high ceiling for software devs, a low ceiling for janitors.

There is a chart in Piketty's book, Capital in the 21st century, a that shows GDP PER CAPITA for several countries, including the US.

I guess US companies pay well because their share of the global GDP is higher (although it is decreasing slowly from he peak in the 50s).

Before seeing that I just thought it was that way because the US makes stuff (now intellectual property not physical goods), thus making profit of whatever is produce outside its borders.

In Sweden as far as I know the percentage paid on top of your salary by companies is around 33%, and I'm not sure that includes all of the fees and taxes related to hiring someone. From what other people write here that's a quite high number even compared to European standards, but it sure does explain why the salary paid to an employee would be lower here than in the US.

Tech companies in the US are extremely profitable and there is a stronger demand vs lower supply than in Europe. A typical tech company in France usually manage to make $100k of revenue per employee, so it is understandable that they can't pay them more than $60k on average. Then it's "market rate". Foreign companies just have to pay what local companies do.

The non-US companies either don't see the ROI potential or may actually have a capital problem. Or, they may know that world-wide they can get someone to do the work at 1/2 of what their US counterpart would pay.

The US companies paying double what everyone else does could be caused by them having the capital and ROI to do so. But, I don't think so. Within the US, why do so many tech companies open shop in SV. They value the culture and team and integral parts that lead to success. They want top talent. Even when they hire out of the US, they don't want to subject the project to the risk of failure by being cheap and hiring cut rate developers.

There's also a culture of paying sticker price. And perhaps, price ignorance. We know what things cost locally, but we aren't the best judges of knowing what a top developer should cost if they're based in another country. Maybe we pay them 75% of local rates and that's still 2X what they would get paid from a non-US company, we don't really know.

I wouldn't mind seeing a chart of effective salaries around the world. In the US, San Francisco is one of the lower paying hubs, Austin the highest: http://posts.thinkloop.com/top_tech_salaries_by_city_adjuste...

Well, there's way more software out there than just the ones you mentioned - some companies you won't hear of unless they're hiring.

As for the pay, a lot of it goes indirectly to Quality of Life. You might not be paid as much, but benefits are generated in other ways.

Here in the US, if you have money, you can have a great QoL. Conversely, if you don't, well, you won't. Personally, I think I might like living in the EU (maybe The Netherlands), once I got over the culture shock.

One commenter brought up the killings in the US. It's not like there's killing all around you every day - it's spread out over a very large geographical area. The USA Death Panels work to ensure that the killings are distributed according to an arcane metric that no one understands.

It definitely seems to be to be a supply and demand issue (I guess by definition of market prices this is obvious). On the demand side, there are less venture capital dollars and the sheer volume of companies is lower. On the supply side, there are plenty of local qualified engineers (just look at upwork and how much you can get developers for in other countries).

If you want to get a better idea of specific compensation at tech companies, check out https://www.transparentcareer.com

We collect data in native currencies as well. Full disclosure, i'm the founder, but if you have any specific questions about data in other currencies i'd be happy to pull information for anyone who asks.

Your salary is irrelevant. What matters is your buying power in the country you live. Plus safety, health, vacation time, racism, culture etc. etc. It is a complex issue. In the same way that choosing a job based on salary only is a big mistake.

If I were to make USD 200K/year as a Software Engineer in Bangladesh, I'd probably be richer than the CEO of that company.

I believe you're referring to the ration salary/cost_of_living rather than comparing difference currencies, countries, politics, taxes, etc. In this case, I'd say that the ration is fairly even, minus stocks/bonuses. The base salary puts you in a similar spot in terms of buying power in your respective country if you're a software engineer. That's the beauty of this job... you can work anywhere in the world and maintain roughly the "same" buying power.

One reason right now is that the US Dollar is high right now. 10 years ago the Euro was 20% higher, GBP was 60% higher. AUD was 5% higher(but getting stronger).

Despite forecasts I think in 5 years the USD is likely to fall back again.

To me, it is just currency difference and does not matter on engineer or skill. For example, when I was offered to move to the US from India, I was offered 3 times my Indian Salary to suit US expenses. Basically, the pay you get should match your expenses. So, if you earn in Dollars, you spend in Dollars providing your net savings be same as someone who earns in GBP and spends in GBP.

If you choose to work remotely, the story is different. You may want to negotiate to suit your local expenses and then it is up to the hiring company to decide if it can match your local expenses.

The way to calculate pay is:

(monthly salary + equity) - (studio apartment rent + tax + health care + 30 cappuccinos + 8 steaks + 50 lbs of tomatoes)

edit: times 12

(4000 + 0) - (800 + 1000 + 0 + 150 + 150 + 150) = $1750 CAD = $1336 USD

Times 12 is $16,032 - sad face - need to triple the $4k.

It's impossible over here (Montreal).

It doesn't make any sense to compare salaries solely by numbers and without comparing the buying power related to the salary in the given country. This is the most basic economic understanding. It just does not work out, no matter what you take in account to "justify" the the higher or the lower one.

............................................................................ these countries still pay remote contractors like shit. They don't get "free healthcare" or whatever shitty free thing you get in there, and also get the lesser pay.

I'm an outsider to a lot of the tech world, and not a tax guru, but could it be because US corporations have such low taxes to pay?

In Montreal, with 70k (53k USD), you can have a nice house, free healthcare and send your kids to the university.

I somewhat doubt that. Care to break down the numbers?

By "have a nice house", do you mean mortgage one for decades?

Developers in Australia and New Zealand are really well paid.

Not only that, (in Australia) we have free public healthcare, required superannuation (401k isn't a "perk"), a minimum of 4 weeks annual leave a year and around 12 public holidays. More generally, we have a pretty great country that has a decent minimum wage and pretty low living costs (Sydney is starting to get... high, though).

Still not paid nearly as much as US devs.

Unless maybe I should start looking for my next job :|

Do you know that for a fact, or are you assuming that is the case? Developer salaries, especially in the non-cubicle-dweller sphere, are really VERY high. Of course, most of the jobs are in Sydney or Melbourne where the cost of living is also very high, even after taking into account the universal health care.

The majority of dev jobs here in AU probably are in the 'cubicle-dweller' sphere. I've looked around at various roles advertised in syd/melb and there are very few jobs in my are (.NET 5+ years experience) paying more than, say, AUD$120k, unless some specialised knowledge is required eg trading, machine learning, etc. That's the equivalent of US$92k which seems lower (like.. >50% lower) than in comparable cities in the US.

Of course you'd then have to live in the US, which is a downside.

Cost of living is very high in NZ though - 15% sales tax on everything, including food. Not to mention the housing is very low quality - not up to US or Western European standards.

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