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Comment by stewx | Hacker News Reader

I looked at the salaries people are posting, and what I am seeing is people (at least the ones comfortable with posting this kind of info on the Internet) rapidly climbing from $30-50k/yr USD to $75-150k/yr USD.

These are excellent wages. They may be lower than outside the video game industry, but by any other standard they are phenomenally good wages, in the top 1% globally and at least the top 10-20% in developed countries. In terms of income, these people are unambiguously part of the upper class.

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It isn't about how the salary compares globally. It's about how does this compare to their peers.

The asymmetrical nature of information available to employees vs. information available to the company generally leads to employees undervaluing themselves. By sharing what others in the company or in the region make for the same job, we help people ask for more.

And furthermore, it's how it compares to the profits of the company. If an engineer is returning $500,000k annually in profit to a company from their work, and getting paid $75k of that, they are being exploited. (Or at the very least are undervaluing their labor.)

That's an unnatural/weird way to look at it.

If the engineer provides $500k value per year, and they get paid $500k per year, the company makes $0 profit. By that logic, the only way to not be underpaid is for the company to be in the red; but if that happens, there won't be a company to pay you!

Plus, it's likely any other engineer could provide the same value. So (as always) it's about supply and demand. In this case, there are a lot of qualified engineers that want to work in games, and relatively few positions.

Unions could affect that, but I think it'd do more harm than good at the high end (it would definitely help lower paid positions like QA though).

Maybe if Epic wins their case against Apple, it'll unleash a tidal wave of anti-trust lawsuits against the likes of Sony, Nintendo, Microsoft, Google, etc. and the game industry will explode with new business opportunities, new investments, and new jobs to balance out the supply/demand curve for game developers at all levels!

(...or not)

It's not unnatural at all, or at least it's not any more unnatural than someone getting to keep a portion of your labor's profit just because they put the most money down when they started the company.

A workers co-op, for instance, splits all the profits between all the employees in an arrangement that is basically "we collectively produced profit X we all get an equal share of that profit."

While "unnatural" is the wrong word, imo, I think it's fair to say that it's "unfamiliar" to most folks and "uncommon" out in the world.

There are no laws against worker co-ops. They are just a pretty inefficient way of running a business in that it's difficult if not impossible in most cases to raise sufficient capital. This is particularly true of software companies, where firms with 20 or 30 employees raise tens of millions of dollars. There is no conceivable way the employees would be able to put up that kind of money by themselves.

It's why many existing co-ops such as Bob's Red Mill were founded, funded, and built by capitalists but later gifted to the employees once mature.

Of course. I just bristle at the suggestion that they are "unnatural".

it's unnatural because that's not how a business builds. Even with profit sharing, you need to put a portion back into the business (not the CEO, not the worker, but into a metaphorical savings account). if you're giving 100% of labor back to the workers, there's no room for the company to grow and eventually everyone gets $0 when the company shutters.

Even a mom and pop shop of 1 needs to operate on these parameters. Heck, even a personal checking account. You keep some money in reserve for a rainy day, and some in the deep reserves for retirement (401k). You very rarely get 100% of your money in liquid (regardless of if you feel underpaid or not), nor do many desire to.

$75k is considerably higher than the top 10% for almost the entire world. Even in most of Western Europe, $75k would be in the top 5%. It of course depends on what that salary actually contains: a Western European salary is taxed for around 40%, but health care is cheap.

$75k a year will put you in the top 25-20% in “Western Europe”. In Denmark where education and healthcare is paid for collectively and our tax is 38%, you would need to earn $125k to be in the top 5%, and we’re pretty similar to countries like France and Germany.

So you can say that 75k a year would be a decent pay in Europe, though maybe not for someone with a candidate degree in software engineering.

https://www.detdanskearbejdsmarked.dk/den-danske-model/portr...

> Western European salary is taxed for around 40%

You'll only get that tax rate at very high salaries and it's also of course marginal. In the UK the first 12k (~$17k) is entirely tax free for example. After that it's 20% up until you have earned 50k (~$70k). Only after that does the 40% tax kick in. So on a $75k salary, only $5k will be taxed at 40%.

For a $75k salary you would be paying just over 16% tax and 9% national insurance (i.e. pension) in the UK.

When I first started working as a SWE in the UK I worked out that my average tax rate was actually slightly lower than if I earned the same in California. If I was earning 2-3x more then the higher European taxes start to kick in.

Careful with the "of course marginal" and lumping all of Europe into one bucket :)

E.g. Germany has a progressive tax rate system and the salary ranges this applies to are rather small. Quoting from: https://taxsummaries.pwc.com/germany/individual/taxes-on-per...

For a single taxpayer:

Free amount: 9744 EUR Progressive tax from 14-42%: 9744-57918 EUR 42% on your entire salary from: 57918-274612 EUR 45%: > 274612 EUR

Also see a nice explanation and graph here, though the numbers they use are different, because different tax years are assumed: https://en.wikipedia.org/wiki/Taxation_in_Germany#Income_tax

I think you're misunderstanding his post. "Marginal" doesn't mean "small", it means "at the margins/edge". He's saying the same thing you're saying, that's how a progressive tax rate works: there are multiple tax brackets, each of them is taxed at an ever increasing tax rate, but always lower than 100% (so the more you make, gross, the more you get, net, too).

In your example, even in Germany, the total tax rate for someone making more than €274 612 is not 45%. It's lower because the lower brackets get taxed less. Realistically, it seems like the actual tax rate for someone making over €274 612 would be somewhere around 36-38%.

And anyone making that much in Germany will live like a king, anyway.

I understand very well thank you. I have lived in both tax systems ;)

Germany does not in fact have tax brackets but instead has the aforementioned progressive tax. I think there's a problem of translation in the as well as the bracketing system used in many if not most countries are also technically progressive taxes. But progressive is the literal translation of how the taxation system is called in German ;)

As the OP mentioned the 40% marginal tax rate only applies to the income above the threshold for that bracket. He is absolutely right about that and that's how I'm taxed where I live now.

In contrast the German tax is applied to your entire income after the basic free amount and it is applied. To quote Wikipedia:

> The German income tax is a progressive tax, which means that the average tax rate (i.e., the ratio of tax and taxable income) increases monotonically with increasing taxable income.

The bracketing is only done above where it reaches 42%.

To quote https://www.icalculator.info/germany/income-tax-klasses/2020...

>... use geometrically progressive rates which start at 14% and rise to 42%. This means that those rates are calculated as a linear evoving ratio rather than a straight percentage as typical in most other countries around the globe.

There are artifacts. Your marginal tax rate in the UK is 62% between $140K and $170K.

    £100K ($142K) take home => £66,689.16 ($94K)
    £120K ($170K) take home => £74,289.16 ($105K)

    (£74,289.16 - £66,689.16) / £20,000 = 38% for keeps

If you hit that you normally salary sacrifice pension to drop you out of that.

Also the UK has very generous matching for pensions

Matching varies by employer and isn't a legal requirement. The legal minimum employer contribution is just 3% if you put in 5% and it's arguable whether 8% is enough for a comfortable retirement.

For most 40% tax bracket earners (earning less than £100K) once you get beyond your employers match, there's not much benefit to a workplace pension. A £100K earner sacrificing 10% in to a workplace pension scheme is only £200/year better off than someone taking home that 10% and paying it in to a self-managed scheme (provided they reclaim the tax).

Things change dramatically over £100K. Someone earning £120K and sacrificing £20K in to an employer scheme ends up £4400/yr better off than with a self-managed scheme.

You know I meant the HMRC match and the tax treatment - not the statutory employer one.

You get tax relief at your rate of income tax, which is much better for higher rate tax payers

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