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Comment by balabaster | Hacker News Reader

It's not just Germany that has lower tech wages. I've looked at moving back home to the UK many times so that I can spend more time with my family, but can't reconcile the fact that I'd have to take a 75-80% pay cut to stay in this industry. Compared to North America, software engineers are paid pittance in the UK... now that you've brought my attention to the fact it's the same in Germany, it begs me to ask the question - is this the same in all of Europe?

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I was approached by a German blockchain company last year and the salary range discussed wasn't great. Less than half. And it didn't seem cheaper to live there.

My theory of why tech salaries are higher in the US: the US, public and private, borrows trillions of dollars. It consumes more than it produces. Wages are higher. And so are imports and immigration. It's all a consequence of the borrowing.

If the US stopped borrowing so much and stopped inflating bubbles and re-inflating them after they collapse, consumption, wages, imports and immigration would fall.

If the US started paying down its debt, we'd be producing more than we consume. We'd be exporting more than we import and there'd be more emigrants than immigrants.

The growth industries are the most prone to bubbles. It's easier to believe something that is rising will get big than something that is the same or shrinking. So most of the VC capital goes to growth industries. Well, it would in any case, but even more so when there is an unnatural amount of capital. So that is where salaries get bid up the most.

>> It consumes more than it produces

One of the things the US produces with it's huge military spending is stability. The way the rest of the world pays for that stability is through buying T bills that pay <2% Every empire throughout history has demanded taxes from client countries, the way the US collects those taxes might be unique. All that is a long way of saying: don't worry about all that debt, it will never be paid back.

THere's a big difference being paying a tax and lending somebody money. And an even bigger difference between having cash in the bank and being unable to borrow.

> My theory of why tech salaries are higher in the US: the US, public and private, borrows trillions of dollars. It consumes more than it produces. Wages are higher. And so are imports and immigration. It's all a consequence of the borrowing. If the US stopped borrowing so much and stopped inflating bubbles and re-inflating them after they collapse, consumption, wages, imports and immigration would fall.

Just so everyone is clear, this is a heterodox (fringe) theory that is not accepted by economists, mostly because it flies in the face of both macroeconomic theory and empirical research.

> Just so everyone is clear, this is a heterodox (fringe) theory that is not accepted by economists, mostly because it flies in the face of both macroeconomic theory and empirical research.

It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money is extremely cheap in the US compared to Europe.

> It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money is extremely cheap in the US compared to Europe.

This is itself reductive and doesn't really represent the full story (venture capital in particular is itself already largely sourced from foreign money).

In any case, the statement "low interest rates encourage investment" isn't fridge (in fact, it is literally tautological). The fringe part is the idea that the US is fueling cycles this way, and the implication that the US economy would somehow be better off by paying off debt instead of printing money.

> The fringe part is the idea that the US is fueling cycles this way

I thought that the entire point of lowering interest rates is to fuel the economy? Problem is when the markets have become addicted to cheap money, and politicians don't have the guts to force them to give up the cheap money, so eventually the bubble bursts...

It exaggerates the cycles for sure. If the Fed let interest rates be set by the market after the next bubble collapse, the recovery would be slower, less bubbly and growth would be based on the value of things, rather than how easily a sector is stoked by interest rates. And it would be more likely to be sustainable and stable.

The fringe theory is that those four consequences are good things, not that they would happen. Perhaps I’m misunderstanding and you are saying borrowing has no effect on consumption, wages, imports and immigration, or even suppresses it?

The reason US tech salaries are high is because the 5 most valuable public companies in the world are Apple, Amazon, Alphabet, Microsoft and Facebook [0] which are all tech based American companies headquartered in 2 areas (bay area and seattle). They all compete for talent and bring up salaries for American software engineers (and they can still easily pay a lot more).

[0]: https://en.wikipedia.org/wiki/List_of_public_corporations_by...

I am aware of the competition between these companies. I live in Silicon Valley and spent a couple of years at Apple.

But I hardly think the investment environment in the Valley is irrelevant. Companies do use capital to get big.

Living in Berlin is absurdly cheaper than leaving in San Francisco. Think small appartments for 500 euros a month.

Good to know.

But....

https://www.thelocal.de/20170411/germany-has-second-biggest-...

For most California engineers, moving to Germany with the same salary would effectively reduce their taxes. California taxes for high earners are very high, even by European standards.

That could be true. A lower rate on double the salary could still mean a higher tax bill.

And in California, the state income tax is an additional burden.

Of course, it's the final take home pay that matters.

Unfortunately for most United States citizens, there's a double taxation system. Which means that even if you're living and working in another country, you're still required to report your income and pay taxes in the United States which means that even if the tax bill is lower in the country you live in, you've still gotta pay the difference in taxes to the U.S... unless you're willing to give up your U.S. citizenship in favour of your country of residence, which is a long and arduous process in a lot of cases.

Moving to Germany wouldn't be enough. You'd have to emigrate to Germany, become a German citizen and give up your U.S. passport in order to escape the U.S. tax system.

The sweetest deal, at least for capital gains, seems to be in Puerto Rico. They're exempt from US federal taxes and there's no tax on capital gains there.

Peter Schiff talked about it on Joe Rogan's podcast recently.

That's correct, but you'd still escape the state income tax, which is really what would make a difference. I specifically said "for California engineers", since for engineers in Washington or Texas, the move would be most likely be detrimental from the tax perspective.

No. The UK has some of the worst tech wages in Europe, esp. on a cost-of-living adjusted basis. Switzerland is on par or better than the US. Other countries fall on a spectrum in between.

FYI this isn't limited to Europe; Canada also pays much lower than the US. (The Seattle vs Vancouver comparison is especially striking). Elsewhere, Singapore is comparable to Switzerland and the US. I'm not sure about NZ and Australia.

For that matter, the parts of the US that aren't the bay area, Seattle, NYC ... pay a lot less than the parts that are. The tech scene in Canada is much smaller, but pay seems similar to "the rest of US", for the most part. Perhaps a little better if you adjust for health care,etc. but I suspect it's a wash.

So is this really a Canada [or wherever] vs. US comparison, or large US tech-hub vs. everywhere else comparison?

Norway: Senior software engineers make ~100k in the cities, or maybe a bit more if money is the priority. Starting salaries for software people ~60k. You can make maybe double the senior rate if you're an independent consultant, but then you'll have no job security and be the first out during downsizing. The job market is considered very hot at the moment. We are considered a high-cost market for software talent by European standards, to my understanding.

4-5 weeks holiday, mostly 7.5 hour workday. Free healthcare and social safety net, but total tax burden is 50%-75% of pre-tax income depending on personal consumption patterns. Cost of living is comparable to some medium-size US cities. Average 1-bedroom apartment costs ~300k, very generally speaking. All consumer products are as expensive or more expensive than in US cities, due to 25% VAT.

>> Compared to North America, software engineers are paid pittance

I'm not certain it's North America as a whole. I'm in Toronto, mostly considered the highest paid city in Canada, and I've long decided to not pay attention to Silicon Valley salaries, lest I get depressed :)

Whether you search for developer, software engineer, system administrator, SRE or the like, salaries in California seem positively extravagant to those in Toronto (which also has a very high baseline cost of living).

Further, I'm pretty sure Mexico salaries are even further depressed (which is the third country composing "North America" :)

I know a family that moved back to Germany recently. The father is a lawyer. He described their new situation as a 2-3x pay cut once you factor in higher taxes. He also said it was a similar situation for doctors.

Lawyers have higher average salaries in the US, though there are plenty of lawyers in the US who don't make all that much.

German billing requirements are often lower. My personal experience was 1150 in Germany and 1650 in the US, while my spouse's was 1300 in Germany and 1900 in the US.

If you factor a 1900 hour billing req at $120,000 (new lawyer at a bigger firm or experienced at a smaller firm) with a $20,000 bonus in the US going to maybe an in-house company position for $85,000 (US) and 1300 hours with little or no bonus and maybe 10-15% higher tax rate, then it can sure seem like a 2x or 3x pay cut.

But the quality of life is much different.

I know plenty of US lawyers who earn 6 figures but work the equivalent of more than 2 full time jobs' worth of hours to do it.

My spouse and I are planning to move back to Germany within about 6 months. We each have jobs as lawyers lined up (one definite, one tentative), and we will be taking nowhere near a 2x to 3x pay cut even factoring taxes. Based on changes in the US tax code, I am not even sure that my spouse's salary overall will be less there than here. Mine, I think, will be, but that's partly because of circumstances.

So, I'm not saying you're wrong, by any means, but to take a 2x to 3x pay cut moving from the US to Germany working as a lawyer seems to me like there's more involved than only taxes.

Clearly you’re more knowledgeable about this than me. I was actually surprised when he told me he was taking such a huge cut. I expected the pay to be significantly lower based on what I’ve seen for engineering salaries, but 2-3x is drastic. He is a staff lawyer for a large company, though, so maybe that’s a factor?

Anyway, good luck on your transition!

is this the same in all of Europe?

No, in some countries (e.g. southern) the pay cut is much higher.

It's probably the same everywhere there's not a myth of programmers as rarefied hacker geniuses homesteading the tech frontier, as well as enough VC funding sloshing around to pay those rockstar ninjas the SV-tier salaries they demand. Most programmers are maintenance tradesmen, and are paid accordingly.

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