Ask HN: Why are IT salaries so much lower in Europe than in the US? | Hacker News Reader

Ask HN: Why are IT salaries so much lower in Europe than in the US?

16 pointsmoezhart21 comments

I noticed that there is a huge gap between IT (specifically, programmer) salaries in the US and European countries like Germany.

While I don't have hard data to back this claim up, there are some examples: Average salary for IBM Senior Consultant in USA: $97,865 [1] Average salary for IBM Senior Consultant in Germany: $83,820 [2]

If one believes in the market adjusting the prices the only explanation is that there are more programmers or less jobs in Europe than in the US. Certainly there is no lack of complaining about shortage of IT workers in Europe. Any other insights?

[1] http://www.glassdoor.com/Salary/IBM-Senior-Consultant-Salaries-E354_D_KO4,21.htm [2] http://www.glassdoor.com/Salary/IBM-Senior-Consultant-Germany-Salaries-EJI_IE354.0,3_KO4,21_IL.22,29_IN96.htm

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Yup. Moving from the US back to the UK, my salary took a hit from $110k down to $70k.

My guess (and this is no more than a guess) is that the difference is primarily cultural.

There is an acceptance in the US that technical skills are a core part of value creation, and as a result developers tend to be more tightly integrated into the "business". In a mild feedback loop, this in turn causes US developer culture to orient more towards the business, to the extent that developer and management roles and responsibilities start to overlap. (I am, of course, generalising. My experience is with the NYC startup scene, and so is not likely to be generally applicable).

By contrast, the boundary between the front and back ends of the business is more distinct in the UK. In part, this is due to the slightly more introverted/passive/geeky technical culture in the UK, which tends to reduce the involvement of technical staff in the management process. In part, it is also due to the attitude of the "business" - which tends to value the sales process as the key part of value creation - with technical staff tending to be seen more as an overhead than as the engine of the business. In extreme cases, this can manifest itself as an extremely derogatory attitude towards developers. "Glorified typists" was a phrase that I came across once - although fortunately this is a rare extreme.

So, my guess is that IT salaries are lower in Europe than in the US because developers in Europe have less autonomy and are less integrated into business decision making, partly as a result of an introverted and passive developer culture, whereas in the US, greater interaction between developers and management drives an increased perception of the value of technical skills, and a greater role in business decision making.

You've described my experience as a developer quite accurately, though all of my development experience (8+ years) has been in Canada. I'd say that here, the separation between developers and managers is very clear, and the derogatory jabs at developers was prevalent in 3 out of 4 of the development gigs that I've had over the years.

Unfortunately, there doesn't seem to be a strong tech/development culture here, or at least I haven't been exposed to it if it does exist. Most developers are content to see themselves as peons and want no part of the decision making process, which isn't doing much for those that do.

I've resigned to the fact that if I want to attain some autonomy in my career, at least in Canada, my only option is entrepreneurship.

"developers in Europe have less autonomy and are less integrated into business decision making, partly as a result of an introverted and passive developer culture, whereas in the US, greater interaction between developers and management drives an increased perception of the value of technical skills, and a greater role in business decision making."

To an extent, this has been my experience as well since I work with many globally distributed teams across US, Europe and Asia as well. It is probably not fair to generalize this but I have always noticed that developers in the UK/Europe tend to focus only on the actual code "what" is required and when it comes to any decision making, they usually do not have much say (whether voluntary or because of management structure). In the US however, developers are a lot more involved in management discussions and decision making. Again, I would be careful not to generalize this.

The average paid time off in Germany is about 30 days, whereas it is about 12 days in the US. That's something to factor in as a difference. I would happily take the extra time off over the $.

Is 3 paid weeks of vacation really worth $14,000 to you?

18 days is more than 3.5 weeks of paid vacation. You also have to consider that the additional 14k will be taxed at a high marginal rate. You won't see 14k of that money. Less than 10k more likely (perhaps far less).

So the question should be "Would you trade less than 10k of after-tax income for 3.5 weeks of paid vacation?"

If my alternative is a paltry total of 12 paid vacation days per year? Definitely. I have a family that I want to enjoy life with. An 80k salary is more than enough to live comfortably in my neck of the woods.

In general, I've found that North American employers will give you a raise much faster than they'll allow you more paid time off.

$14k/3 weeks = about $4600/week. That is equivalent to a salary of $230k. Better to take the higher paying job and just take some time off unpaid.

That's a fairly hyperbolic calculation. The difference between $98k and $84k is not really life-style changing.

On the other hand, if you can find a North American employer that gives you 12 days of paid vacation days off and you somehow get them to agree to give you an additional 18 unpaid days off a year, you've done quite well. I don't think it's a realistic scenario for a non-contractor.

That's a good question. It might be.

When I started my first job (in the US) out of grad school, I worked for Sun Micro. We got 2 weeks (10 days) of paid vacation leave. Total time off was greater because of holidays.

Sun shut down over the summer to save money - that was 4 days (they used the 4th of july). So now you're down to 6 days. Go to a wedding, maybe take a couple of days off between christmas and new year's? That's it. No more time off.

This isn't a good way to live. As a young person, I was able to last for a while, but after a few years I was so burned out that I quit.

Now, 3 extra weeks of vacation for $14,000, take it or leave it, would have been tough. But I would happily have purchased an extra week of vacation for one third of that amount.

This is one of those utility curves. In my current job, I get a little over 4 weeks vacation leave (still in the US). Extra time off would be nice, but I'd pay far less for it.

But in the early days, with 2 weeks only that was largely accounted for, that extra week would have made the difference between a tiny bit of discretionary time off and nothing.

Honestly, this is probably a big part of why I left Sun, though I didn't realize it at the time. I didn't understand how brutally burned out I was. Looking back - difficult commute, long hours, and 2 weeks of "vacation" largely eaten up by mandatory closures and family obligations... well, it's pretty clear in retrospect.

It seems the better US employers are far wiser now, and realize that very stingy vacation policies are harmful not only to retention but to actual productivity, in the long run.

Yes. I live in the UK. If my 25 days holiday dropped to 12, I would consider that an absolutely massive drop in quality of life and I would take a large paycut to prevent it.

The difference between the two salaries is less than the currency variance between EUR and USD in the last 18 months.

You say "IT" but then programmer, which is typically a job in R&D, not IT.

Are your data sets comparing apples to oranges? If you're looking at IT salaries in one place (network admins, db admins, help desk) and R&D salaries in another (software engineers, QA, product managers) you could easily get different results.

I'm aware that the UK tends to use "IT" for all things computer related, so it seems very easy to get mixed data when crossing the atlantic.

(Most likely the differences are due to the many differences in taxes, holiday/vacation, ability to hire & fire, etc between countries).

I checked this out for the same type of role in Bay Area and London.

There was no difference when you take tax,rent and holidays into consideration (10 - 15 days vs 25 - 28)

This didn't include any bonus / equity / perks

As an IBM Managing Consultant I would say don't trust those numbers.

In which way do you think they are wrong?

US salary is high

Actually according to glassdoor I'm probably just underpaid.

Socialist systems keep wages average. Extreme case is Belgium. I'm a proficient software developer with a college degree. I make about 500 euro/month more than a cleaning lady.

I have a hard time believing you since minimal Belgium legal wage is around 1200 euros / month before taxes. And software developer is hardly a blue-collar job. Either you work part-time or your being exploited. You're trolling and you know it, HN is not Reddit so please stop.

Supply & Demand

There is a lot of friction in the employment market, and market participants are a long long way from rational actors, so labour arbitrage does not really work like it should, and supply & demand economics only really applies in extremis, over extended periods time.

As a result, price discovery in the employment market is extremely inefficient - and tends to be set using cultural and cognitive biases; perceived value; and so on, rather than with rational market considerations.

Many employers simply follow the herd when setting salaries - offering the median of what everybody else in the marketplace offers - or they will set a salary that is in alignment with their cultural preconceptions of "value".

On the other side of the fence, it is rare to find a developer who will negotiate for a higher salary, or reject a job offer choosing instead to wait for a better role to become available, a factor that tends to reduce the effective "liquidity" of the jobs market.

So, it is entirely plausible that salaries spend a long time stuck far far away from the equilibrium point that they would reach if supply/demand economics really did rule the jobs market.

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