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Comment by 4gotunameagain | Hacker News Reader

German tech pay is fine. The EU does not strive for the wealth inequality of the US, and tech wages are more than enough.

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The damaging wealth inequality is the hundred millionaire + class and the rest.

If prosperity distribution had kept track during the last 50 years (wealth has increased dramatically due to tech), the average salary would be 6 figures, so it’s actually better for wealth distribution to have tech folks making higher 6 figures to put pressure on the 8+ figure class.

High tech-sector salaries are the result of extreme wealth inequality, not the cause of it. The 0.1% are not Meta engineers hammering a check and fretting about RSUs. They are the ones investing in every half-baked TechCo and startup because they already own a few small countries and a Blackwater detail the size of the 82nd Airborne, and they can't think of anything else to do with their money. It's this desperation for anything approaching positive real returns that has inflated US tech salaries.

At German car manufacturers? Absolutely not. The maximum compensation that an IC can commend at BMW is just above 100k€ -- and that would require more than ten years of experience.

Compare that to a new grad at Google Germany making 130k€. Somebody with ten years of experience there would be making closer to 300k€.

But that typically old-school setup where there is only one way to make more money is move up the career ladder into management or in German “Führugskarriere”. I have no pity for these types of companies who don’t understand that a senior engineer is worth more than a young group leader. A few companies have started to change but Germany has along way to go to adapt from this mindset, but in reality there would be enough money just another distribution is necessary.

Google Germany does not pay new grads 130k. Not even close.

The GINI coefficient for Germany is about 32 vs 41 in the US with the global average being 38. That's not so far apart, and the US is skewed by have a chunk of the world's wealthiest people.

It's hard to take two numbers in isolation that we don't really use day to day and make any kind of sense of them. It's only when you graph a few countries together[0] that you see:

1. the US is somewhat of an outlier, while Germany is grouped together with other wealthy countries

2. the US' Gini has been steadily growing last few decades - implying inequality is getting worse

3. Germany's Gini is very slightly declining in the last few decades - implying it's staying roughly stable

I don't think higher-than-average is particularly good at all - you're in the neighbourhood of places like Qatar, Iran, DRC and Argentina. In fact the only way you'd use Gini to suggest the US has a ok level of wealth inequality is if you presented two countries Gini coefficients side-by-side to someone who doesn't normally think about Gini, presented them without any other context and said "look, they're kinda close"

[0] - https://en.wikipedia.org/wiki/Gini_coefficient#/media/File:G...

A graph showing income inequality seems impractical when discussing wealth inequality.

Slip of the tongue (fingers?) when I was typing - the original figures ch4se gave were for income inequality so I stuck with that.

Sure, that makes sense. It's just worth noting that the U.S. are not an outlier amongst developed nations when looking at wealth inequality -- which, IMO, is the much more important metric.

Yes, that's part of my criticism for gini.

Well income is what gini measures and what the comment I was replying to[1] was referencing.

[1]https://news.ycombinator.com/item?id=33530819

What I'm getting at is that Germany isn't some paragon of equality, it's average. The US as I pointed out is skewed by the high number of staggeringly wealthy people and a trend of people moving from the lower to upper levels of what you might call middle class. In the US wealth held by people form 50% of the distribution up to 99% represents about $91T vs $18.2T for the top 0.1% and $4.4T for the bottom 50%. The coefficient really hides the vast middle and upper middle distribution in the US.

Also this obscures the fact that it is far better to be poor or working class in the US than somewhere with a similar Gini coefficient.

> The US as I pointed out is skewed by the high number of staggeringly wealthy people

I think you might want to lookup what Gini tries to measure. You used Gini as a way to suggest the USA isn't so bad, and now you're having to backpedal and say that actually Gini kinda sucks but the USA isn't so bad.

> You used Gini as a way to suggest the USA isn't so bad

No, I'm pointing out that at lot was being made of a small difference in a ratio that's really sensitive to marginal differences. I'm noting a marginal difference that makes the US look more different than other OCED nations than it is in fact and more like autocratic developing nations than it is in fact.

I'm also pointing out that it isn't a good measure at all. It's as coarse as GDP and more misleading.

> the US is skewed by have a chunk of the world's wealthiest people

It's a little bit funny to say that a metric is skewed by measuring the thing it is designed to measure...

Not really. The US attracts wealthy people from around the world, has a gigantic internal market, and is friendly to financial business. If you don't consider the top 0.1% then the picture looks totally different. The VAST majority of wealth in the US is help by people in 50th to 99th percentile range. The Gini coefficient makes the US look superficially more like Qatar, which is obviously nonsense.

Some metrics aren't linear so w/o knowing more about Gini coefficient, my first thought is "I have no idea if the difference is significant or not". Can someone ELI5 this so that I can build an intuition for what "1 unit of Gini" means?

It's a curve reflecting income (not wealth) share of a population against a line of perfect equality, which is a 45 degree angle. A low disparity hugs the line and a high disparity hugs the X and Y axis. Gini = A/(A + B) where A is area over the curve and B is the area under the curve. So an increase of 0.1 in the gini number reflects a larger A.

It's not a very good way to measure what it is trying to measure[1].

[1] https://en.wikipedia.org/wiki/Gini_coefficient#Limitations

I think the main problem is the lack of intuition of what "1 Gini means", except the "lower is better". Is difference between coefficient of 10 & 11 the same as difference between 30 and 31? The poster to which I responded said that "32 vs 41 is not far apart" - is it? Is difference between 10 and 19 the same as difference between 32 and 41 (delta is the same)? How about between 0 and 9?

That was me, and they aren't that far apart. Is 41% of the area under a lot more than 32%? Not really, see this example[1] Norway here has a coefficient of 27.5 and the US was at 41.2 but the graphs are barely different except that you can see that the US has a sharp bend on the far right hand side. The gini formula is really sensitive to that in a way that doesn't tell us much.

[1] https://wol.iza.org/uploads/articles/495/images/IZAWOL.462.g...

Wealth/income inequality is addressed by wealth/income taxes, or marginal consumption taxes. Controlling prices (limiting wages) would be a terrible way to go about it.

Lol blaming workers for income inequality.

Use profit margins to determine what wages should be. I wouldn't be surprised if the wages are fine on that basis, actually. But let's draw the right conclusions for the right reasons.

Say how much do the executives make at German companies?

Do tech salaries really affect the overall wealth inequality? Programmers are both few and still salaried.

It's best for the wealth to remain on companies owners. That's what Germany thinks.

Strong disagree with that one and this is a fairly unambitious take. Most companies and employees themselves in the EU buy their own kool-aid of "yeah we are ok with getting paid $40k because we got health insurance" (which does not work as efficiently in practice as one would like).

EU - esp. Germany and some other European countries - have abysmal salary compared to rest of the developed world and a poor wage growth over the last 10 years or so.

Heck, even countries like India have experienced faster growth: netto, a senior tech professional in India can earn more than what what they'd get in Germany. And that's not even accounting for 3-5x difference in cost of living.

Absolutely not even if you consider it pre-tax. Post-tax it's just horrible

Yes, but you get a social security which is without par. Including one year Arbeitslosgeld (in most situations), health insurance, the works. I always find it funny that we compare these things. In the USA the salaries are superhigh, but lo and behold if something happens to your crystal perfect life. And in life shit happens. A disease, an accident, an unwanted pregnancy. There is so much that might go off, you can literally drown in debts before you even know it.

Agreed, this is actually pretty scary for me (living in the US for a decade now) - bankruptcy is potentially one accident away (especially if it takes away the ability to continue doing the high-paying job).

If you have a high-paying job that you're worried about losing due to some kind of health incident, you should get disability insurance.

In the USA in Meta like companies you have good healthcare insurance, one year paid maternity leave and a lot of other benefits. 4 months salary at layoff. And you make 2 to 3 times more than in Germany.

I thought about moving to Berlin and did some research. Median salary for a Senior Software Engineer is 86k EUR in Berlin according to Glassdoor. You will pay ~48% in taxes (depending on your Tax class), so it will be around 3700 net per month with an avg rent ~1500 EUR. So it's like 2200 EUR left, and you are supposed to have a life (and even make some savings) with that money. I don't know how this is fine to be honest. The only reasonable way to do it is to have this salary when you live in a more cheaper place with a better tax regime.

Nah. With 86K gross/year in Germany you get: around 4K for tax group 1 (single) and 4.7K for tax group 3 (married and your partner earns less than you). Also, average rent in Berlin is among the cheapest (compared to other big cities like Hamburg, Dusseldorf and Munich). So, more like 1K/month for a decent apartment.

This salary calculator is extremely accurate https://www.brutto-netto-rechner.info/gehalt/gross_net_calcu...

In any case, I agree with your overall statement: even if 86K/year puts you in the top 10% of earners in Germany, in reality it's hard to afford a decent house (not flat) with that salary (unless you wanna work until you're 67...)

For me it comes to an almost philosophical question: do you want to live like an average person in a developed country, or do you want to live better than average in a different place with a cheaper cost of living?

Thank you for the calc though, seems really helpful.

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