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Comment by joefourier | Hacker News Reader

American salaries are difficult to make sense of from a European perspective. The referenced average salary of $36,000/year for millennials with only a high-school diploma would be a normal entry-level salary for a software engineer in most of Western Europe, and a very good salary for experienced engineers in Eastern Europe.

Tax burden is higher here as well, and while the cost of housing is exorbitant many parts of the US, so it is in cities like Dublin, London and Paris, but without the salary adjustments you see in San Francisco, New York, etc.

This makes it difficult to understand why frugality is impossible for an American making triple the average salary of an average Czech or Croatian.

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We don't have adequate public transportation (so car + car insurance + car maintenance). And our cities were never really designed to be walk-able or bike-able.

While we have compulsory health insurance not dissimilar to the German system, most areas only have one or two providers (vs. 130 of Germany) whose prices have been going up like 30% every year. We still pay out of pocket for most medicine, dentistry, emergency (like ambulances), and psychological services.

Some utilities are ridiculously expensive. Like internet can be 80$ a month for basic 2 mbps.

A large number of people are employed as contractors these days (the gig economy), which adds a 15% tax (that the employer would pay for employees) for a social security service we will likely never see, so I'm not sure the tax burden is higher. Contractors also have to pay for all their own health insurance (and our cutoff for public assistance for health insurance is like 12k, not the 50k Euro like in Germany)

Which brings me to: we have to pay for our own retirement, even if not contractors most companies don't assist with that anymore, especially for entry level jobs.

You forgot the housing/rental situation too. In my area, renting is 33% - 50% of _take home pay_ (after withholding taxes), without utilities or property tax.

That is the same everywhere - worse in places like London.

I agree with much of this, but where is 2 mbps internet $80?

I pay $75/month for 10mbps upstream, 1mbps downstream DSL. That's the advertised speeds, I get lower speeds in practice.

I'm not complaining. I'm happy to have those speeds as I live in a very rural area (South/Midwest). I can stream netflix or youtube without hitches, almost all the time.

Your plan is the first I've seen with a higher upstream than downstream rate.

I mixed the numbers up. 10down/1up.

Are we talking megabits or megabytes here? I'm guessing bits, but I would be a little surprised that this can stream at 1 megabit per second.

And I second @sokoloff—I've never heard of a plan that had an order of magnitude greater for upstream!

I mixed the numbers up. 10down/1up.

All good points, but student loans are important too. Many people who went to college are paying between $200-$500/month for the foreseeable future, which is a large additional cost that seems less common for Europeans.

Eastern european living in San Francisco now. It's the lifestyle. Back home I would go out once per week, drink 2 beers max, walk-to-and-from (4-5 euro total cost of a whole week's entertainment. Bang for your buck!). If you wanted to drink more you 'd pre-game at home, drinking unlabeled homebrewed vodka! Food? You cook it yourself (or mom would since I lived with my parents), put it in the refrigerator and warm it up every day at the week.

Now in SF, I order sushi twice per week. Go out at least 3-4 times per week and lots of times pay for drinks for friends etc, never walk when going out always rideshare. And it's not only about alcohol and food of course.

I could be saving way way more if not for this lifestyle. That's how it goes. Everyone who tells you otherwise are lying to you and worse themselves. Basic human nature. The moment you make more money, you want to take your girlfriend/boyfriend to a fancier restaurant. You want to buy the nicer phone. Except for rent prices which are insanely high, the regular cost of living is not that much higher than living in eastern europe. Actually funny enough when I first moved here, I was shocked at how cheap everything seemed - of course taking into consideration the high salaries. In many cases actually eastern europeans pay more for certain things because for some unknown reason 1 dollar turns to 1 euro, instead of 0.75 of a euro or whatever the price at the moment is. Our petty $350 salaries can sure take it!

Mate, people here have a favorite whisky!I now have a favorite whisky. And as any self-respecting adult it needs to be fancy, not the cheap stuff. Ardbeg, tastes smoky, like swalloing in dim campfire and most bars here will charge you $16 for a glass. There you have it, how people aren't saving money.

It adds up. But I also have a friend here who on a 120k engineer salary and saved 100k in 2 years. Only eating at work, living on a shared room with 3 more people in treasure island. Reimbursing bus fares to work etc. The other side of the coin. Almost everyday I say to myself that soon I will do the same, and sure enough every day I don't. Just like not going to the gym and forgetting to call mom again.

City-based salary adjustments are really something only educated professionals get, low-wage earners are screwed in big cities. I think also it will shock you how much every day items are compared to Europe. For one, public transportation is not available to most of America. So you have to have a car and car insurance, thats hundreds of dollars more per month right there. Cellphone service costs 3x as much as anywhere in Europe. And yes, the housing is absurd as a percentage of wages compare the the EU. Health insurance is really expensive as well; the employee's contribution to a company sponsored health plan is often as much as 20% of a minimum wage workers wage.

> City-based salary adjustments are really something only educated professionals get,

That's not entirely true. In many cities, minimum wage is substantially higher ($12-$15/hr) than the Federal minimum ($7.25/hr)

> in big cities > So you have to have a car and car insurance

Not in big cities.

Very few of the big cities in the US have public transit that's even sufficient for most people to get to work, let alone to sustain the rest of a reasonable lifestyle.

I'm saying this as someone who previously had a 1 hr 20 min commute via public transit just to go 16 miles, and that was with the relatively good public transit in the Portland metro area and me literally living a block away from main downtown transit hub.

Phoenix is pretty big. You could very easily spend 2 hours getting halfway across it on a bus.

> Not in big cities.

Name five big cities where a average-wage worker can get by without a car and car insurance.

5 can probably be done. (assuming "average" is average for that city, not national average). NYC, DC, Seattle, SF, Boston, Chicago... Naming 10 is probably way harder.

Seattle can be tough at least. Really depends on a lot on where you live and where you work. Almost any commute can be done but it easily gets to 2h+ which is just ridiculous.

Seattle is the only one I have personal experience with and I've found it to be pretty good. Usually walking < 1 mile total is reasonable. If you live out in King county things are a little different of course. Are the other cities better than that?

Hence why I mentioned "average-wage" in GP; usually you can avoid owning a car only by living in housing that is out of reach for anyone making <$6k/month.

I don't understand the comment. Is Seattle not doable for <6k $/mo?

Most places in the US, housing near transit options is pretty expensive. Further out, where you get to housing being affordable, is nowhere near transit.

Yeah, that's fair but, from experience, the threshold in Seattle is much less than 6k

It's probably any of the five big cities with a public transit program.

No demand, no program. Ride a bus in a large city, and you'll see a majority of bus pass users.

Can you name one that doesn't?

LA. San Diego. Salt Lake City. Atlanta. Houston. Dallas. Miami.

If you are making $36,000 per year, you are not making minimum wage. People that make around this much, their salary doesn't vary drastically like a software engineer's does city to city.

I can think of maybe 2 or 3 cities where minimum wage is anywhere near that high. And at least one of them that's coming close, Los Angeles, you absolutely need a car. New York, maybe San Francisco or Portland, you could reliably get around without a car.

Cell phone service in the US can be cheaper than Europe. I have had Project Fi for over a year now, and it's $24/month including taxes. This includes voice, text, international texting, data, and international data. You pay per MB so I don't watch videos on my phone, but use it for everything else.

Compared to the UK this doesn't really sound that cheap.

That doesn't sound right to me. Both UK and Netherlands' most expensive plans are cheaper than most plans in the US I've seen. Looking at Three, now it costs £15 for 12GB (reduced speed afterwards), but 4 years back I had an £8 unlimited (or maybe I just never hit the limit) plan.

Now I spend ~$80 with Google Fi, but I could rely exclusively on wifi and reduce that to ~$20/30. Every other american company seems to want to extract >$80 per month from you.

Agreed. For context, in the Netherlands you pay about $100 in monthly healthcare insurance. You pay about $160 a month for college tuition. You don't need a car, and transport to work (by public transport, car or indeed bicycle) is generally paid for by your company. Student loans are available at 0% at the moment. There's housing and healthcare subsidies for lower-incomes. (<$34k)

I'm not sure about housing though. There's a few crazy cities in the US, NY, SF, LA etc. But by and large, the median American pays a substantially lower square footage price than citizens of somewhat similarly rich European countries like the UK, Netherlands, France, Germany, as far as I'm aware. And we also have our outliers in London, Paris etc where the price-income ratio is off the charts. The US has far more land and is far less dense than Western-Europe, with land prices as a function of density (demand for land) I'd say Europeans have less real purchasing power on housing.

I honestly don't understand how enjoyably living in Europe is possible. The class divide seems to be much greater over there.

My wife and I were in Barcelona a few weeks ago to celebrate our honeymoon. Prior to going, I did some research on what life was like there. The max salary for most people in tech in the area is about €75,000 (~$USD 93.5k). This is considered a great wage over there. The rents within the city are similar to NYC (studios >€1000k, etc). Barna has a pretty good transit system, but living farther out requires a car. Also, employees get taxed HARD all over Europe and the cost of goods (groceries, entertainment, etc) aren't cheaper than their US counterparts.

The story is similar in London.

It just doesn't compute for me.

AFAICT, based on my visits and the people I know there, it's a pretty different lifestyle, people seem much more frugal. People eat out less frequently. Owning a car is much less common, and those that people own are usually much less luxurious (many more very compact cars). Housing is generally much more modest (this is almost universally true), Europeans seem a bit flabbergasted at the gigantic houses we live in when they visit. A lot of things like transit and healthcare are heavily subsidized, so low earners can still get around and get medical attention. The top tax rates are fairly high, but I believe not that much higher than the cumulative tax rates for a high earner living in CA or NY, once you consider fed income+state income+sales tax+payroll tax.

Basically, Europeans on average have much lower incomes than Americans, and they seem much more frugal.

Cheap public transport, cheap medicine, cheap food, cheap housing (mostly) and people live without shit in the head like "I should own giant house, pick-up or other giant car and eat only in restaurants". That's how normal people live.

American salaries are listed as pre-tax figures. Lower end jobs often don’t include health insurance at all, and those that do will usually require the employee to pay for a substantial portion of it.

net income is pretty close to gross income in income-tax-free states. everyone everywhere pays some form of property taxes, so that's moot.

State income tax is not generally the important part. From a quick search, the highest rate in the nation is 13.3% in California. The Federal income tax rate tops out at 37%, and there's also 7.65% Federal payroll tax.

Yes it is because that 13.3% is on top of your federal taxes (which don't change). A Californian making $150k is making $20,000 less than a Texan making $150k. That's sizeable! And Californians pay more in property taxes!

The 13.3% bracket starts at around a million dollars a year. Where do you get $20,000 from? A single person with no dependents with that income would pay about $11,000 in state income tax and $37,000 in federal income tax.

150*0.133.

That's still $11k coming out of your pocket for the privilege of living in California.

And that’s still $37,000 making a huge difference between your net and gross income.

I don’t dispute that state taxation makes a difference. I dispute that it makes such a huge difference.

You can't really compare a $36k salary from one region to the next in the US, much less the US to Europe. You would need figures adjusted for ppp.

As for triple the salary in eastern Europe, well, housing and other big expenses are presumably lower. But so is the standard of living.

You have to compare people to those around them.

Plenty of people in Africa would think a $10k annual salary is exorbitant and unnecessary.

As a fellow non-American, it took me years the realise there is no America. It is the Unites STATES of America, where the states are all very, very different.

As an example, last I looked the GDP per capita in San Francisco is $48K, whereas in Miami it is $24K. That is a pretty massive difference, and leads to very different outcomes in a lot of areas.

The best way to think of the USA - and China BTW, which has an even worse demographic spread - is to compare it not to one country like England, or Croatia or the Czech Republic, but to the EU as a whole. Luxembourg is Washington DC, Switzerland is Connecticut, London is New York, Seattle is Berlin, Croatia is Alabama and New Orleans is Barcelona. Those are not exact comparisons, but just a framework for understanding how aggregate US results are so weird.

Because even healthcare, if you combine the population Conneticut and Massachusetts, it is the same as Sweden's with very similar outcomes. Alabama and Mississippi, on the other hand, aren't doing quite as well.

TL;DR, The average for the USA is really misleading, as the spread is much larger than it is in smaller (area and population) countries.

Don't forget the part where in any given state the entire area outside whatever beltway rings the major city resents everyone inside it.

That's a universal human truth.

So are many countries in Europe. Look at East vs West Germany or Catalonia vs Extremadura

> This makes it difficult to understand why frugality is impossible for an American making triple the average salary of an average Czech or Croatian.

No, it doesn't. It's rent and healthcare.

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