Comparatively to the rest of the western world, western Europe dev salaries are garbage.
I live in the UK and have friends in Germany, France and Norway. Senior/mid salaries are fairly similar, so is the cost of living. But, I could get the same job in Poland by taking a 10-15% salary cut, living there my cost of living would go down by approx 40%. I would be noticeably wealthier there doing the same job I do in the UK.
Same story for many eastern european countries, they pay better for skilled labour but way worse for unskilled labour.
The only thing keeping me here is family and friends.
Not sure if this has been mentioned but don’t salaries in Europe get discussed post tax and American salaries are pre tax? On paper you can see 150k for American and 80k for Europe but that disparity is much smaller when thinking about everything post tax
I know the numbers by heart. And getting 100k usd before taxes is hard in Europe. No one usually talks after taxes that doesnt make sense as taxation changes among countries and your situation (some people get more tax exemptions than others for example if you have loans)
I’m a software dev in Germany and have always discussed salaries pre tax. And when I was looking for jobs in other european countries, the salaries were also discussed pre tax
There’s probably a bit of a disparity, but it’s not nearly as much as you’re making it out to be.
In the US it depends greatly on the industry and company - I don’t know anybody making 200k-400k in software development (CTO? sure. Devs writing code? Nah), but I also don’t know or work with anybody that’s in FAANG world. Those are the companies paying $100k+ for a junior.
I live and work in a lower cost of living area, for a company that’s not ‘software first’ and our juniors come in between $50k-75K. And that’s not the lowest I’ve seen for junior engineers starting out.
That said - it’s also not unusual for mid-career folks to be in the $100-150k range, and seniors/leads moving up from there.
So with all that in mind - some of it is market forces (are there more devs and/or fewer dev jobs in Europe than in the US? Potentially less mobility?) but one of the bigger causes (I’d guess, anyway) is the lack of FANG type “Master of the Universe” companies. Part of the reason juniors and seniors command that kind of pay in the US is because the rates that the FANGs pay tend to ‘trickle down’. The average senior/mid career dev may not be interested (or capable!) of working at a FANG - but if the other people in their hiring pool are, they’re still going to command that kind of salary.
As a point of comparison - my understanding is that financial services is sort of the same thing. Most Euro bankers/stockbrokers/finance bro types are pretty heavily underpaid compared to their US counterparts. Some of that is regulatory, but a lot of it is that there are more higher paying jobs in the US, mostly at the big multinantional conglomerates you can think of off the top of your head (Goldman Sachs, Bank of America, Citibank, JP Morgan), and that tends to drag the scale up throughout the whole system. A rising tide raises all boats.
Anyway - I don’t have any research or statistics to back any of these suggestions up - hopefully Cunningham’s Law gets us a ‘real’ answer. :)
Cost of living in the USA is higher. We have very good stuff in Europe that if you want to get equivalent in the USA you need a lot of $ (uni degree, ex)
Everything else is fine. If you pay 100k usd for your degree but make 2x youll pay it well over in the next 30 years of your work life.
Cars are much cheaper. Fuel is cheaper. Housing is mixed. WFH is easier in USA so you can livr somewhere cheap. Food is cheaper usually.
Ive been hearing we get a lot of things in Europe but other than healthcare I fail to see what we get. I still have my private pension as the public one I cant live on for example even though I pay close to 50% in taxes. Healthcare is free and great thsts true but thsts it.
I think you have a misconception of what is like here in America. Everything else is not fine here. You aren’t realizing the huge lack of safety nets and the inability to get basic funding for anyone that has no money.
That 100k loan has interest. You don’t get that 200k job right out of college. You only get that if you are extremely talented, lucky, or know rich people. The vast majority of programmers here make much less and when you take out health insurance are making about the same as what you make in Europe.
Meanwhile, you have to find a way to buy a car here because you will literally die here with out one. You find a way to buy a junker for 5k (that’s what they go for here). Your car breaks down after a month on the job. You just missed a day at work that they fired you for it. Now you have to find whatever job you can quick because you all have to pay that school loan, rent, food, and car repair bill. The sheer amount of financial parasites here is staggering.
Tbf, 100k debt for a 4 year CS degree isn’t as common as people on the internet make it seem. Most people do instate tuitions in a state university. They rarely hit that high. At least that was true 5 years ago, perhaps things have changed since then.
You also probably won’t get that 200k job either because of it. You only get those super high paying jobs if you know someone and you get that by going to an elite college
That’s typically not what I’ve experienced, and I don’t think I’m outside the norm. In my company there are very little employees who have prestigious degrees who are making 150-200k+. And most of these people aren’t even located in silicon valley or any high cost of living areas. Many IT jobs are still fully remote thanks to COVID.
You are absolutely right that you won’t get those high paying jobs out the gate. It takes time, talent, drive, and being strategic in the skills you choose to develop. It’s not that uncommon.
Surely there are people who have shortcuts, but honestly those are not so common.
The US companies still pay quite more in Europe and not only the FAANG ones.
All these benefits come out of my taxes. The before taxes salary is still higher in USA for most people. Whether your government is inefficient is another question but your companies pay more even here.
You are correct, we do on average make more here. I just don’t think you realize the extent of financial parasites in talking about. I’m not just talking about government taxes. I’m talking about constant, consistent payments you have to do for being poor here for everything. There’s no accountability for proper business conduct here unless you have money.
Social security. Strong protection against lay-offs. University without paying upfront - just because you don’t care for it as someone who didn’t grow up here, doesn’t mean it’s not a benefit for the majority. Healthcare at affordable prices. Public transport.
The thing is, you only see your own benefit. And I feel that’s a very typical way of looking at life in the US. The state is not here to rob you, but to provide you with a structure to live in that you couldn’t have in the same way on your own. Public transport may not be something you need, but what about the elderly? What about the people who can’t drive for whatever reason?
What if you have an accident that renders you unable to work? It doesn’t even need to be your fault. Someone might loose control over their car and you might get hit. People like that need strong social nets, and people who can work finance them. Elderly people need those. They are often sick (high health care costs) and not longer able to drive (public transport) and if their pension is not enough, the social security kicks in and supports them.
You personally may not be profiting from it right now, but there’s a ton of security built into the system for everyone that gets financed by everyone according to their means.
You’re right that healthy, young working adults without children have very little to gain from socialized systems. I’m going to assume that OP, like me, is an early Gen Z who fits this description, and is about to enter the job market or has just entered it. For our generation, this statement
The state is not here to rob you, but to provide you with a structure to live in that you couldn’t have in the same way on your own.
does not check out mathematically. The taxes we pay today don’t get locked away in a box to be spent when we are sick or elderly and need them. They are spent on the sick and elderly we have right now. This means that at the age that we start needing benefits more than we contribute to them, it’s not going to be us, but our children’s and grandchildren’s generation who are footing the bill. But the birth rates across Europe are below replacement level and none of our countries have come up with a system that either raises birth rates above replacement level or successfully introduces foreigners who will be net tax contributors for all their lives. That means that despite paying high taxes and receiving miserable salaries (compared to American salaries) today, we won’t even be able to enjoy benefits from the state in the future because there won’t be enough tax contributors by the time we need these benefits.
I am older than you think but I still need to pay out of pocket for most things and get an insurance for unemployment and invest my pension. At that point even when Im older other than healthcare and kids getting a free education theres not much more Id get out of the welfare. If I get sick its the insursnce that pays for me again. At some point paying 50% taxes and when Im old I basically have no pension feels so wrong. I feel taken advantage of. When Im old if I cant drive id sell the house and move to a smaller apartment in a city like most old people do. Again the country is not giving me anything or helping me its only my investments and decisions that would give me a bright future.
However if I slack off and Im a parasite the welfare will help me no problem. Im not that kind of person but it feels thats what my taxes pay for for the rest of my life.
Oof, it sounds like your country is further along than mine on the “broken down social system” scale. My country is already dealing with reports about retirees who can’t survive off their pension despite working for an average income their entire lives, old people who are not able to find caretakers and people who have to wait in line for an unreasonably long time to get public healthcare and subsidized housing. All while politicians slash budgets and make privatized systems the only way to get timely and high-quality services. I can only see it getting worse from here and it makes no sense to pay so much for something whose quality only gets worse with every passing year.
I’m not Danish (I’m the resident foreign invader on the instance), but if you are, you should come over to feddit.dk to complain with us. Privatization and the social system destroying itself is a hot topic right now.
I must admit though, the way you described your country made me think you were from Greece or somewhere that is bleeding citizens because its social systems are beyond salvaging at this point. Is the public pension in Denmark really unliveable? I would assume that it’s much worse here in Sweden but old people are generally still able to get by.
I guess it’s a difference in values, which affects your perspective. You can see it as robbing, or as contributing to society.
I’m trying to word it as neutral as possible, but it’s really hard in the values area. I think both sets of values are valid. I may not agree with yours, but that’s the thing with moral values - if you don’t share the same values, you will never see eye to eye or agree. Hard to be objective in such a situation.
Tl,dr: you value different things, which is not evil or bad, but completely valid. It’s just that I personally with my values don’t agree and see it negatively.
I don’t think that you, me and OP have different values on this issue, actually? We all agree that the state is supposed to provide us with a structure to live in that we couldn’t have on our own, and as payment for this safety net, we contribute taxes. My and OP’s argument is that with the current projection of the economy and population growth, the state cannot provide the current generation of tax payers with the structures and support that we will eventually need, and therefore many of us would rather pay lower taxes and lose the benefits, because we won’t be getting them anyway. We know what’s coming and we don’t want to be the ones “holding the bag” when the system collapses.
I’m trying to explain OP’s point to the Americans in this thread who don’t understand that European social security systems are currently under severe strain and are on the road to collapse, and how OP feels to have to sacrifice so much of his potential income to support a failing system. The 80s stereotypes of reliable, high-quality social security no longer hold true in Europe in 2023.
I think its hard for some americans to understand that welfare in Europe is not an utopia. I personally believe the estate needs to provide help and support to citizens including healthcare and basic education at a minimum. Ideally some basic help for people that are unable to work and whatever is needed for people to not be on the street.
My biggest issue is as it is right now I can see how much money I have been putting over the years and how much extra money I still need to put on top privately to have a quality of life for things such as pension, salary insurance, etc. So while almost half my salary goes out as taxes I still need to contribute on my own to private companies. On top of that I can see people that can take advantage of the system and between the high taxes and all the help you can get (house help, unemployment, lids, etc.) theres people not working that get almost as much as an engineer working full time. I think something is off.
But this has nothing to do with the post of why american companies choose to pay more than european ones.
There is a very loud cohort of devs who will roll their 4 (or whatever) years of stock options/RSUs into what they present as their annual salary number, greatly inflating it.
Typically the higher paying jobs are in very high cost of living areas
Typically the higher paying jobs are in very high cost of living areas
This can’t be understated. Companies like Google, Microsoft, and Amazon can pay their entry level engineers in the US around $120k/year, but some sources state that the bare minimum salary to be happy in places like Seattle, where these engineers need to be located, is around $117k/year.
but some sources state that the bare minimum salary to be happy in places like Seattle, where these engineers need to be located, is around $117k/year.
Those sources also state that worldwide the number to be minimally happy is $95k. I’m going to assume Europe is at least at the global average and likely a bit above since the US on average is at $105k. So if you go by those studies then the new grad in Seattle making $120k is minimally happy while the seasoned engineer in Germany making $90k is not. Not that I agree but if we’re going by the study you mentioned then that’s the conclusion.
So if you go by those studies then the new grad in Seattle making $120k is minimally happy while the seasoned engineer in Germany making $90k is not.
Not really, that would be a silly comparison. Income influences happiness because it determines how/where you live, what you can afford in terms of basic needs, what’s your disposable income, etc. Some countries, due to the way their society is organized, offload more living expenses to their citizens and ultimately lead low earners to simply not afford some basic services. One example is of course access to healthcare. In Germany you have access to public health care and employers are required to pay social security contributions consisting of a percentage of what they pay you, and in turn you have far more affordable and accessible healthcare. Consequently, the $90k you’d get paid in Germany will ensure you have a better quality of life right from the start by the simple fact that a single trip to the doctor won’t bankrupt you.
Apple earns $2.4m per employee per year… and most of their employees are sales/support staff. They don’t have hundreds of thousands working in R&D. The other big tech companies earn less, but still well above the salary for any employee except for C-level executives.
The reality is they should probably pay even more than they are. Every small tech company I’ve worked for spends nearly 100% of their revenue on salaries (without paying well compared to the big tech companies).
Also FAANG salaries are also quite high in europe. Just look at levels.fyi. In local or non-tech companies in the US salaries are also much more in-line with europe and actual difference will be much much smaller
I can see statistics of US companies vs non US companies where I am and they consistently pay 30-80% above market value. I havent seen one go below 30% over. Its not only FAANGS. They just pay much more
Not all do but these salaries simply dont exist here. Even when an american company hires in Europe they pay easily 50% over market. Stock is salary and most can be cashed out eventually.
One factor, in Europe a company’s expenses and taxes for you are higher paying into the social welfare system - which you do benefit from, so it works out. That US worker doesn’t have as good of public transportation system, healthcare insurance, and so on and need to make up for it.
What do we get from the welfare system? Healthcare is great but its not much more than that I get. I wouldnt mind paying for education if that means Ill get more money for the next 30 years of my life. While I get unemployment its actually because I pay for an insursnce for it. I contribute to a private pension as I cant rely on the public one. Theres a lot of benefits of which I get nothing because I have a “high” paying job. So again I fail to see what this welfare system brings to me. It seems I am just paying for everyone else (other than again healthcare).
You get healthcare, always. Not just when you have a job. You get security around your job, so your employer can’t just go “lol, you’re fired, stfu”. You get “theoretically” enough money to live when you do get fired.
And you get that, regardless of your employment status. Everybody, from students, to fast food workers, to the nice rich software developers. Sure, you NEED it less if you’re a software developer, I almost certainly pay more in taxes than I get in tax-related value. But it also means that if my arms fall off one day, I’ll still be living in a country that will ensure I’m relatively healthy, homed, and fed.
Co-operation is why humans are so successful. If everybody was only ever out for themselves, we’d still all be scrabbling around in caves looking for food. Helping 100 people get educated so 50 of them can be useful members of society is still better than having 10 of them get supported through their parents, and letting the other 90 fail.
What you get for your taxes and employment benefits isn’t always easily measurable in terms of “what do I gain economically right now”. So let me list some of the benefits I think you enjoy, if in an indirect way or in the future:
Many weeks of paid vacation every year, job security, paid parental leave for months, free education for you and your children, free school lunches, free healthcare, subsidized unemployment insurance, subsidized medicine, subsidized public transport, subsidized access to swimming pools and training facilities, base of 401k savings, “unlimited” sick leave (you can not be fired for being sick and will usually get a good portion of your salary for a very long time on sick leave), free or heavily subsidized rehab and accessibility aids like wheelchairs and hearing aids and modifications to your home if you get ill or old, heavily subsidized personal assistance if you get disabled, etc etc.
A safety net not reliant on your employment.
Additionally I want to ideally have happy lawful people around me in my community and society and not homeless, hopeless, sick, uneducated, destitute and desperate people. So I want to build a sustainable society where these things are accessible to everyone and am willing to pay extra for it.
You mean the ones that benefit from my taxes get those? Other than healthcare I fail to see what I get where I live. I think Id pay less than 20% in taxes and health insurance in Switzerland vs 50% now and still get the same benefits.
Are the high taxes and equality in Europe pushing companies to not try harder to reward talent while USA rewards the high performers as they can see the benefits it brings?
No, taxes are basically the same, and we get much more in return as well. Also cost of living is much lower, the programming jobs in USA are usually in big citys where the cost of living is astronomical, in most EU countrys thats different.
You live better with 100k in Europe than with 400k in USA most likely.
Source? Everything I’ve read indicates Europe has 15-20% more taxes for the same income. The tax rate in California for $100k would be 27% (total) and a 7% sales tax. Europe seems to be in the 45-50% range depending on the country and a roughly 20% VAT. Even the tax rate in California on $400k would be lower than the tax rate in Europe on $100k.
45% is the absolute highest tax rate you can currently get you need a income of 277826€/year
Yes, we have higher social security Expenditures as well, but they pay back a lot more as well, they are paid 50/50 (Employer/Employee) and they are capped at some point (different for insurance and gets changed every year)
It has pros and cons, cost of living for example is a lot less.
45% is the absolute highest tax rate you can currently get
we have higher social security Expenditures as well,
So it’s higher than 45% in reality (for example I believe at $100k the social contributions would be twice as much as the tax). That 27% for California includes everything. If those taxes are worth it are a separate issue.
A person having that tax rate doesn’t pay social security anymore usually…
Thats the highest possible tax rate. Most are around 20% and i don’t think you know how taxes are calculated. You don’t pay 45% on your entire income either.
And no its not a separate issue. It all plays part here.
The guy making 400kusd a year can probably save and invest 100k a year and retire after 10 years. He can then come enjoy all the european benefits if he wants. Im sure he lives better off.
You’re right. But half this conversation is a bunch of people using random US stereotypes and downvoting anyone who says otherwise. Cost of living is fairly irrelevant when you’ve got an extra $200k/year post-tax to play with. And any company paying that much will give you really nice benefits including fully coverage health insurance and possibly a on-call concierge to help if you have any issues. Being poor in the US is really miserable but I also know people who can’t see a doctor in Europe due to waiting lists (or their GP blocking it) and lack of money for private insurance. Neither case matters if you’re an engineer. And France has the same rate of homelessness as California so neither has a happy community on average.
Each country has its own things that are better and worse. At the end of the day US companies pay more before taxes than european ones do for the same job. And when american companies come to Europe they also pay more.
I think the discussion of welfare, taxes, etc. is another talk which is independent of this post which id about before taxes salaries for the same type of jobs.
In the US I can quit a job with 0 days notice. I can also be fired from a job with 0 days notice and no severance.
That makes the job market significantly more fluid. If there is demand for a specific job compensation will go up quickly as there is no artificial buffer on people switching jobs for better pay. Supply and demand is very sensitive to small shifts in either. Companies are also not afraid of paying this compensation since worst case they’ll just do some layoffs.
If a US company has some employees in Europe then they still have a benefit from all this so they can pay more than a purely European company. If they need to cut costs they can fire the expensive US employees first and then adjust the Europe comp more slowly. If they need to grow quickly they can do so in the US and then slowly shift to Europe.
edit: The profit margins of US tech companies are also massive as they have relatively little regulation, taxes or bureaucracy. Goggle makes $2 MILLION/employee/year. So no risk of not making record profits by paying an extra $200k.
One reason (among many) is that employment in American companies is less stable than in Europe with strong employment laws. Twitter could not do the same type of layoffs in Europe, with stories like this one being pretty common. But this safety net has a cost, and the cost is a part of total employment cost for employers. Whether the safety net is worth it for employees in IT, that’s another matter—but it can’t not be taken into account because of the law.
BTW, in some European countries there is a strong culture of IT workers doing long-term contractor work exactly to trade off employment laws for (usually quite a lot) higher wage.
Im aware one of the few ways to get some decent salary here is do contract work. Same job as regular employee but 2x the salary. Ofc no sick leave, etc.
Still US companies pay according to my union statistics 30-80% more and they cant go around the law.
Most people take these statistics where I work and are very reliable. Theyre so reliable than when you go take a salary negotiation they pull them out and say you should get around that and its not much more you can get usually. Unless the company is american. Then again 30-80% more than average is expected according to these surveys which have been correct so far everytime Ive used them.
Its so ridiculous than a newly graduated engineer that is lucky to work for an american company can get more salary than a person with 20 years experience in an average company. And thats why I created the post why do americans pay more even outside of America.
The thing I was pointing out is that you have a union. Unions are actively and aggressively busted by US companies. Almost every US state has “at-will” employment laws that mean you can be laid off at any time for pretty much any reason at the drop of a hat.
All of a sudden that 400K or whatever you were expecting to make this year turned into $0. You no longer have health insurance. Those RSUs you had vesting this year are gone (and those RSUs made up a big chunk of your compensation - that’s how people get into the 300-400K+ a year numbers).
Everyone or almost everyone is in an union here. My point was these statistics that come from the union are very reliable so when I say american companies pay 30-80% more consistently here it is quite accurate. Its not some online poll or something I have heard.
My point still stands that while laws and welfare are different in the US when an american company comes to Europe it must follow its local laws. At that point its the same as a local one but chooses to pay way more.
There is a clear difference in pay between american and non american companies here and that I think can only be attributed to american companies choosing to pay more to attract talent and european ones being more relaxed and pay average attracting more average talent. I think this is a cultural thing where the US is a more competitive country and benefits us (developers).
American companies pay more because they have huge investors. They have huge investors because they know the company won’t have accountability to do things right because they are in America.
I’m not in Europe, but I am in a country with strong employee rights.
Even if I was a contractor, I would still have all the rights of a salaried employee. Employee rights generally cannot be taken away. For example I just straight up am not allowed to work more than five hours without a (paid) meal break. And my employer has to contribute to my retirement fund. They have to pay my federal income tax on my behalf (otherwise my boss goes to jail for tax evasion…). They can only terminate my contract with a valid reason - the government maintains a list of reasons, and they have to take reasonable steps to try to keep me employed (there’s a requirements list for that too), and they have to give me fair notice (or severance pay). None of that can be taken away just because I signed a contract. But a lot of it doesn’t apply if, for example, I only work there for two weeks or if I’m hired for 20 minutes to deliver a pizza (uber eats/etc).
(Strictly speaking… I can sign a contract taking away my rights, but the contract has to replace them with more favourable conditions for the worker… otherwise the contract is invalid and might as well not exist. For example I’ve signed a contract stating I have no sick pay or holiday pay… but in exchange they pay me for both, trusting me to set aside the money so I can afford holidays/unpaid sick leave (I put the money in a savings account that earns 6% interest))
I’m pretty sure it’s similar in the US? Contractors do have full employee rights if they have an employee-like relationship - it’s just US employees don’t have many rights to start with.
Isn’t the question rather “why do US companies do that” when they could get away with paying less?
I can only speak for myself but I’m not keen on constantly job-hunting like I see so many US engineer advise. I’m looking for a more stable situation where the company seeks to hire long-term, and often in those cases you get benefits that are not monetary. Free access to partnered places like fitness studios or swimming pools can’t really be rolled into your salary, but if you use those often you end up with a financial benefit too. Automatical raises when your child is born is another.
Maybe it’s just a different culture, but I’ll trade in some base salary for a work environment based on mutual trust and goodwill.
Yes, any day of the week. OP is either trolling (which I heavily lean toward at this point), has an incredibly narrow world view, or is an edgy 16-year-old who identifies as libertarian.
I’ll admit I got annoyed that OP seemed to almost deliberately misunderstand or discount other perspectives or answers. It makes their pretty open question seem disingenuous. I assume people ask questions because they’re interested in other people’s perspectives on a topic, rather than just wanting to hear that they are right?
Possibly OP just failed to communicate why they feel as they feel with regards to the relative value of welfare systems, taxes, and salary (they clarified somewhat later in another thread), but it’s frustrating to see other people’s well thought-out answers being discounted or strawmanned without actually being refuted. That rings my troll warning bell, or imo is a sign of someone who can only see the world through one particular lens.
I didnt expect so many replies and its hard to keep with comments so sometimes I may have skimmed some replies too fast (like your comment on taxes for companies ;)). Im also on phone.
People have also started talking about welfare and taxation which is irrelevant to the question which was why US companies pay more (pre-tax). I think this dereiled and I wanted to edit the post to l clarify but my mobile client doesnt have edit post functionality yet. I have to admit I got a bit annoyed because that had nothing to do with my question and turned into a us vs europe welfare/benefits which has nothing to do with pre-tax salaries. When broght that even in Europe with the same welfare and benefits US companies pay mroe people still kept talking about welfare. Its a bit annoying to be fair
I mean you don’t have to constantly job hunt but you have the option of doing so if you want to maximize money. And enough people doing so raises the compensation for everyone even if they don’t job hunt constantly.
Maybe there already lies another reason for the lower salaries - if you are from a country which traditionally had your company actually appreciate their employees and make them feel valued, and historically you just had to land your job and could expect to stay with the company the rest of your life, you will not be actively looking unless you get laid off. Loyalty on both sides is still quite common where I live.
Loyalty is all great until a depression comes or a bad decission causes layoffs. Then suddenly all the loyalty and being a family means nothing. I think back in the days when 5% raises were the norm and you could buy a house in 5 years on one income being loyal made sense. Now since companies do not keep up with inflation and the standards of living are so high I believe its in your best interest to do whatever its needed to get a better job. If staying in the same company gives you that its great but most often than not changing jobs often and testing the market will do you better imho.
You’re replying in an antagonistic tone to anyone trying to answer your questions in good faith. You don’t see the value in paying for a welfare system or income redistribution for the betterment of society as a whole, but many people do. Most of us want to not live in a dystopian nightmare where there are haves and have-nots depending on luck or misfortune. Not saying that the US is quite there, but there is a lot less of a societal buffer between you and total destitution after an adverse event there.
This is the reason why US employers have to pay more, they have to offer more due to the bigger inherent risk to every employee on a life basis (at-will employment, you’re responsible for your own 401k and health insurance and education and transportation and remaining healthy and capable enough to work your whole life). If you can’t be sure of your future source of income, you have to charge your employer more. This is also why consultants are paid better in Europe than direct employees, because consultants take a bigger risk.
But theres american companies here and as I wrote pay 30-80% more. They need to follow the law like everyone else yet still find possible to pay so much more without issue.
In the US the gap is even higher but we can focus on Europe then. American companies in Europe pay a lot more. Why can they afford it and why european counterparts consistently pay around their average? American companies like to come to Europe because they can get away paying less they pay in USA.
I couldn’t tell you why individual American companies in Europe pay more, but I’m guessing a big part of it is the difference in tax burden for companies based in Europe vs America. American companies have the majority of their employees in the US, and for these employees they pay much less into the system than Europe based countries so are able to pay more for a few European employees.
For example, payroll taxes/social fees (the fees and taxes your employer pays on your behalf) and corporate taxes are much higher in North Europe than in the US. Sales tax/VAT is higher in Europe and, while it’s technically paid by customers, companies have to take the sales tax surcharge into account when setting the prices for their goods and services to be competitive on a global market. That means they can’t afford astronomical salaries.
Yes, and I answered that I think there are more factors, but that tax burden is a big reason?
An American company which has 100 employees located in America and 2 employees located in Europe will have a smaller total tax burden as a company, than a European company with 102 employees located in Europe. Same number of employees, very different bottom line tax burden. The American-based company can thus afford to pay their few European employees more, to outcompete European companies on salary on the labor market.
I see your point better now - thanks for claryfing. Still shouldnt european companies that have massive profits choose to pay also way more? I cant see much difference between salaries in local companies (even with big well profitable ones). I would expect some to pay 2x for example then if they can afford it (they can in some cases I know).
But from what you suggest it may be possinle for some american companies in europe to benefit from some taxation stuff and by doing so they can pay more. What I hear is they can pay more and choose to do so to get talent in contrast with local companies that could do the same bur rather keep it to them instead. So again without trying to sound arrogant I think US rewards talent and europe mediocrity.
No problem. My impression (based on an extremely small sample size though) is that there are some trade-offs to working for American companies in Europe, like your American managers not understanding that there are strong labor laws here giving you the right to take cohesive vacation, sick leave and parental leave. Work hours (meetings booked in the late PM for us) and 24/7 availability expected and degraded work-life balance. Essentially that some of the American work culture bleeds over across the pond.
That probably varies a lot from company to company, manager to manager and job description as well though.
The US companies do seem reward talent and performance (or the appearance of talent and performance) with great pay. On the flip side they will also drop you in the blink of an eye of you have a period with mental or physical health problems, or aren’t getting good KPI metrics for a while due to circumstances outside of your control (poor management, bad KPIs, being inbetween projects etc).
I guess what I’m getting at is that American jobs are more “big risk, big reward” (but they will discard you the moment you aren’t as useful) and European companies don’t really work like that.
But I do personally agree with you in general, that European companies both can afford and morally should pay better. However, I feel that that conversation is a different one than the European-American work culture and pay divide.
I think sometimes its also the ilusion of safety. An european company can fire you basically at will in Denmark - its just not often people get fired unless the company is struggling a lot. But it can happen. I saw the case personally with someone getting fired because the manager didnt like him even though he worked well in a local company and no one beats and eye.
The american companies here still have at least some local managers. So perhaps theres some meetings a bit late sometimes but other than that its the same as a local company. Except you get paid way more for the same job.
And since they follow the same laws and regulations as any orher local company I think its better off to work for these. In the event you get fired you got some extra money by working in one and can get another job in another one after.
This right here. I’ll gladly take less pay in Europe than constantly having to worry about my health and whether or not that bit of pain you sometimes have in a weird area means a hospital bill you can’t afford. And even if I loose my job, I know I will not starve, because of our social security system. It will not be fun, but I won’t loose my house or worry about what to eat tomorrow just because I got unlucky and my company went under.
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USA paying high salaries = “Europe pays so bad”… You realize that there is more to the world than just USA and Europe right?
Yeah pay can be worse than in europe, obviously, but it could also be better (to avoid brain drain, which is certainly happening…)
Comparatively to the rest of the western world, western Europe dev salaries are garbage.
I live in the UK and have friends in Germany, France and Norway. Senior/mid salaries are fairly similar, so is the cost of living. But, I could get the same job in Poland by taking a 10-15% salary cut, living there my cost of living would go down by approx 40%. I would be noticeably wealthier there doing the same job I do in the UK.
Same story for many eastern european countries, they pay better for skilled labour but way worse for unskilled labour.
The only thing keeping me here is family and friends.
Not sure if this has been mentioned but don’t salaries in Europe get discussed post tax and American salaries are pre tax? On paper you can see 150k for American and 80k for Europe but that disparity is much smaller when thinking about everything post tax
I know the numbers by heart. And getting 100k usd before taxes is hard in Europe. No one usually talks after taxes that doesnt make sense as taxation changes among countries and your situation (some people get more tax exemptions than others for example if you have loans)
I’m a software dev in Germany and have always discussed salaries pre tax. And when I was looking for jobs in other european countries, the salaries were also discussed pre tax
German salary is discussed pre-tax but post-employer-required-contributions-to-social-security though (4 types).
I assume the US has no such thing?
There’s probably a bit of a disparity, but it’s not nearly as much as you’re making it out to be.
In the US it depends greatly on the industry and company - I don’t know anybody making 200k-400k in software development (CTO? sure. Devs writing code? Nah), but I also don’t know or work with anybody that’s in FAANG world. Those are the companies paying $100k+ for a junior.
I live and work in a lower cost of living area, for a company that’s not ‘software first’ and our juniors come in between $50k-75K. And that’s not the lowest I’ve seen for junior engineers starting out.
That said - it’s also not unusual for mid-career folks to be in the $100-150k range, and seniors/leads moving up from there.
So with all that in mind - some of it is market forces (are there more devs and/or fewer dev jobs in Europe than in the US? Potentially less mobility?) but one of the bigger causes (I’d guess, anyway) is the lack of FANG type “Master of the Universe” companies. Part of the reason juniors and seniors command that kind of pay in the US is because the rates that the FANGs pay tend to ‘trickle down’. The average senior/mid career dev may not be interested (or capable!) of working at a FANG - but if the other people in their hiring pool are, they’re still going to command that kind of salary.
As a point of comparison - my understanding is that financial services is sort of the same thing. Most Euro bankers/stockbrokers/finance bro types are pretty heavily underpaid compared to their US counterparts. Some of that is regulatory, but a lot of it is that there are more higher paying jobs in the US, mostly at the big multinantional conglomerates you can think of off the top of your head (Goldman Sachs, Bank of America, Citibank, JP Morgan), and that tends to drag the scale up throughout the whole system. A rising tide raises all boats.
Anyway - I don’t have any research or statistics to back any of these suggestions up - hopefully Cunningham’s Law gets us a ‘real’ answer. :)
Cost of living in the USA is higher. We have very good stuff in Europe that if you want to get equivalent in the USA you need a lot of $ (uni degree, ex)
Healthcare sucks in USA.
Everything else is fine. If you pay 100k usd for your degree but make 2x youll pay it well over in the next 30 years of your work life.
Cars are much cheaper. Fuel is cheaper. Housing is mixed. WFH is easier in USA so you can livr somewhere cheap. Food is cheaper usually.
Ive been hearing we get a lot of things in Europe but other than healthcare I fail to see what we get. I still have my private pension as the public one I cant live on for example even though I pay close to 50% in taxes. Healthcare is free and great thsts true but thsts it.
I think you have a misconception of what is like here in America. Everything else is not fine here. You aren’t realizing the huge lack of safety nets and the inability to get basic funding for anyone that has no money.
That 100k loan has interest. You don’t get that 200k job right out of college. You only get that if you are extremely talented, lucky, or know rich people. The vast majority of programmers here make much less and when you take out health insurance are making about the same as what you make in Europe.
Meanwhile, you have to find a way to buy a car here because you will literally die here with out one. You find a way to buy a junker for 5k (that’s what they go for here). Your car breaks down after a month on the job. You just missed a day at work that they fired you for it. Now you have to find whatever job you can quick because you all have to pay that school loan, rent, food, and car repair bill. The sheer amount of financial parasites here is staggering.
Tbf, 100k debt for a 4 year CS degree isn’t as common as people on the internet make it seem. Most people do instate tuitions in a state university. They rarely hit that high. At least that was true 5 years ago, perhaps things have changed since then.
You also probably won’t get that 200k job either because of it. You only get those super high paying jobs if you know someone and you get that by going to an elite college
That’s typically not what I’ve experienced, and I don’t think I’m outside the norm. In my company there are very little employees who have prestigious degrees who are making 150-200k+. And most of these people aren’t even located in silicon valley or any high cost of living areas. Many IT jobs are still fully remote thanks to COVID.
You are absolutely right that you won’t get those high paying jobs out the gate. It takes time, talent, drive, and being strategic in the skills you choose to develop. It’s not that uncommon.
Surely there are people who have shortcuts, but honestly those are not so common.
The US companies still pay quite more in Europe and not only the FAANG ones.
All these benefits come out of my taxes. The before taxes salary is still higher in USA for most people. Whether your government is inefficient is another question but your companies pay more even here.
You are correct, we do on average make more here. I just don’t think you realize the extent of financial parasites in talking about. I’m not just talking about government taxes. I’m talking about constant, consistent payments you have to do for being poor here for everything. There’s no accountability for proper business conduct here unless you have money.
Social security. Strong protection against lay-offs. University without paying upfront - just because you don’t care for it as someone who didn’t grow up here, doesn’t mean it’s not a benefit for the majority. Healthcare at affordable prices. Public transport.
The thing is, you only see your own benefit. And I feel that’s a very typical way of looking at life in the US. The state is not here to rob you, but to provide you with a structure to live in that you couldn’t have in the same way on your own. Public transport may not be something you need, but what about the elderly? What about the people who can’t drive for whatever reason?
What if you have an accident that renders you unable to work? It doesn’t even need to be your fault. Someone might loose control over their car and you might get hit. People like that need strong social nets, and people who can work finance them. Elderly people need those. They are often sick (high health care costs) and not longer able to drive (public transport) and if their pension is not enough, the social security kicks in and supports them.
You personally may not be profiting from it right now, but there’s a ton of security built into the system for everyone that gets financed by everyone according to their means.
You’re right that healthy, young working adults without children have very little to gain from socialized systems. I’m going to assume that OP, like me, is an early Gen Z who fits this description, and is about to enter the job market or has just entered it. For our generation, this statement
does not check out mathematically. The taxes we pay today don’t get locked away in a box to be spent when we are sick or elderly and need them. They are spent on the sick and elderly we have right now. This means that at the age that we start needing benefits more than we contribute to them, it’s not going to be us, but our children’s and grandchildren’s generation who are footing the bill. But the birth rates across Europe are below replacement level and none of our countries have come up with a system that either raises birth rates above replacement level or successfully introduces foreigners who will be net tax contributors for all their lives. That means that despite paying high taxes and receiving miserable salaries (compared to American salaries) today, we won’t even be able to enjoy benefits from the state in the future because there won’t be enough tax contributors by the time we need these benefits.
It absolutely feels like getting robbed.
I am older than you think but I still need to pay out of pocket for most things and get an insurance for unemployment and invest my pension. At that point even when Im older other than healthcare and kids getting a free education theres not much more Id get out of the welfare. If I get sick its the insursnce that pays for me again. At some point paying 50% taxes and when Im old I basically have no pension feels so wrong. I feel taken advantage of. When Im old if I cant drive id sell the house and move to a smaller apartment in a city like most old people do. Again the country is not giving me anything or helping me its only my investments and decisions that would give me a bright future.
However if I slack off and Im a parasite the welfare will help me no problem. Im not that kind of person but it feels thats what my taxes pay for for the rest of my life.
Oof, it sounds like your country is further along than mine on the “broken down social system” scale. My country is already dealing with reports about retirees who can’t survive off their pension despite working for an average income their entire lives, old people who are not able to find caretakers and people who have to wait in line for an unreasonably long time to get public healthcare and subsidized housing. All while politicians slash budgets and make privatized systems the only way to get timely and high-quality services. I can only see it getting worse from here and it makes no sense to pay so much for something whose quality only gets worse with every passing year.
I think your country is my country. 60% top skat… still no decent public pension. Where the money goes who knows.
I’m not Danish (I’m the resident foreign invader on the instance), but if you are, you should come over to feddit.dk to complain with us. Privatization and the social system destroying itself is a hot topic right now.
I must admit though, the way you described your country made me think you were from Greece or somewhere that is bleeding citizens because its social systems are beyond salvaging at this point. Is the public pension in Denmark really unliveable? I would assume that it’s much worse here in Sweden but old people are generally still able to get by.
I guess it’s a difference in values, which affects your perspective. You can see it as robbing, or as contributing to society.
I’m trying to word it as neutral as possible, but it’s really hard in the values area. I think both sets of values are valid. I may not agree with yours, but that’s the thing with moral values - if you don’t share the same values, you will never see eye to eye or agree. Hard to be objective in such a situation.
Tl,dr: you value different things, which is not evil or bad, but completely valid. It’s just that I personally with my values don’t agree and see it negatively.
I don’t think that you, me and OP have different values on this issue, actually? We all agree that the state is supposed to provide us with a structure to live in that we couldn’t have on our own, and as payment for this safety net, we contribute taxes. My and OP’s argument is that with the current projection of the economy and population growth, the state cannot provide the current generation of tax payers with the structures and support that we will eventually need, and therefore many of us would rather pay lower taxes and lose the benefits, because we won’t be getting them anyway. We know what’s coming and we don’t want to be the ones “holding the bag” when the system collapses.
I’m trying to explain OP’s point to the Americans in this thread who don’t understand that European social security systems are currently under severe strain and are on the road to collapse, and how OP feels to have to sacrifice so much of his potential income to support a failing system. The 80s stereotypes of reliable, high-quality social security no longer hold true in Europe in 2023.
I think its hard for some americans to understand that welfare in Europe is not an utopia. I personally believe the estate needs to provide help and support to citizens including healthcare and basic education at a minimum. Ideally some basic help for people that are unable to work and whatever is needed for people to not be on the street.
My biggest issue is as it is right now I can see how much money I have been putting over the years and how much extra money I still need to put on top privately to have a quality of life for things such as pension, salary insurance, etc. So while almost half my salary goes out as taxes I still need to contribute on my own to private companies. On top of that I can see people that can take advantage of the system and between the high taxes and all the help you can get (house help, unemployment, lids, etc.) theres people not working that get almost as much as an engineer working full time. I think something is off.
But this has nothing to do with the post of why american companies choose to pay more than european ones.
This can’t be understated. Companies like Google, Microsoft, and Amazon can pay their entry level engineers in the US around $120k/year, but some sources state that the bare minimum salary to be happy in places like Seattle, where these engineers need to be located, is around $117k/year.
Those sources also state that worldwide the number to be minimally happy is $95k. I’m going to assume Europe is at least at the global average and likely a bit above since the US on average is at $105k. So if you go by those studies then the new grad in Seattle making $120k is minimally happy while the seasoned engineer in Germany making $90k is not. Not that I agree but if we’re going by the study you mentioned then that’s the conclusion.
Not really, that would be a silly comparison. Income influences happiness because it determines how/where you live, what you can afford in terms of basic needs, what’s your disposable income, etc. Some countries, due to the way their society is organized, offload more living expenses to their citizens and ultimately lead low earners to simply not afford some basic services. One example is of course access to healthcare. In Germany you have access to public health care and employers are required to pay social security contributions consisting of a percentage of what they pay you, and in turn you have far more affordable and accessible healthcare. Consequently, the $90k you’d get paid in Germany will ensure you have a better quality of life right from the start by the simple fact that a single trip to the doctor won’t bankrupt you.
Apple earns $2.4m per employee per year… and most of their employees are sales/support staff. They don’t have hundreds of thousands working in R&D. The other big tech companies earn less, but still well above the salary for any employee except for C-level executives.
The reality is they should probably pay even more than they are. Every small tech company I’ve worked for spends nearly 100% of their revenue on salaries (without paying well compared to the big tech companies).
Also FAANG salaries are also quite high in europe. Just look at levels.fyi. In local or non-tech companies in the US salaries are also much more in-line with europe and actual difference will be much much smaller
I can see statistics of US companies vs non US companies where I am and they consistently pay 30-80% above market value. I havent seen one go below 30% over. Its not only FAANGS. They just pay much more
Not all do but these salaries simply dont exist here. Even when an american company hires in Europe they pay easily 50% over market. Stock is salary and most can be cashed out eventually.
One factor, in Europe a company’s expenses and taxes for you are higher paying into the social welfare system - which you do benefit from, so it works out. That US worker doesn’t have as good of public transportation system, healthcare insurance, and so on and need to make up for it.
What do we get from the welfare system? Healthcare is great but its not much more than that I get. I wouldnt mind paying for education if that means Ill get more money for the next 30 years of my life. While I get unemployment its actually because I pay for an insursnce for it. I contribute to a private pension as I cant rely on the public one. Theres a lot of benefits of which I get nothing because I have a “high” paying job. So again I fail to see what this welfare system brings to me. It seems I am just paying for everyone else (other than again healthcare).
You get healthcare, always. Not just when you have a job. You get security around your job, so your employer can’t just go “lol, you’re fired, stfu”. You get “theoretically” enough money to live when you do get fired.
And you get that, regardless of your employment status. Everybody, from students, to fast food workers, to the nice rich software developers. Sure, you NEED it less if you’re a software developer, I almost certainly pay more in taxes than I get in tax-related value. But it also means that if my arms fall off one day, I’ll still be living in a country that will ensure I’m relatively healthy, homed, and fed.
Co-operation is why humans are so successful. If everybody was only ever out for themselves, we’d still all be scrabbling around in caves looking for food. Helping 100 people get educated so 50 of them can be useful members of society is still better than having 10 of them get supported through their parents, and letting the other 90 fail.
What you get for your taxes and employment benefits isn’t always easily measurable in terms of “what do I gain economically right now”. So let me list some of the benefits I think you enjoy, if in an indirect way or in the future:
Many weeks of paid vacation every year, job security, paid parental leave for months, free education for you and your children, free school lunches, free healthcare, subsidized unemployment insurance, subsidized medicine, subsidized public transport, subsidized access to swimming pools and training facilities, base of 401k savings, “unlimited” sick leave (you can not be fired for being sick and will usually get a good portion of your salary for a very long time on sick leave), free or heavily subsidized rehab and accessibility aids like wheelchairs and hearing aids and modifications to your home if you get ill or old, heavily subsidized personal assistance if you get disabled, etc etc.
A safety net not reliant on your employment.
Additionally I want to ideally have happy lawful people around me in my community and society and not homeless, hopeless, sick, uneducated, destitute and desperate people. So I want to build a sustainable society where these things are accessible to everyone and am willing to pay extra for it.
You get more peace and security.
You mean the ones that benefit from my taxes get those? Other than healthcare I fail to see what I get where I live. I think Id pay less than 20% in taxes and health insurance in Switzerland vs 50% now and still get the same benefits.
Aren’t all companies greedy?
No, just different.
No, taxes are basically the same, and we get much more in return as well. Also cost of living is much lower, the programming jobs in USA are usually in big citys where the cost of living is astronomical, in most EU countrys thats different.
You live better with 100k in Europe than with 400k in USA most likely.
Source? Everything I’ve read indicates Europe has 15-20% more taxes for the same income. The tax rate in California for $100k would be 27% (total) and a 7% sales tax. Europe seems to be in the 45-50% range depending on the country and a roughly 20% VAT. Even the tax rate in California on $400k would be lower than the tax rate in Europe on $100k.
45% is the absolute highest tax rate you can currently get you need a income of 277826€/year
Yes, we have higher social security Expenditures as well, but they pay back a lot more as well, they are paid 50/50 (Employer/Employee) and they are capped at some point (different for insurance and gets changed every year)
It has pros and cons, cost of living for example is a lot less.
So it’s higher than 45% in reality (for example I believe at $100k the social contributions would be twice as much as the tax). That 27% for California includes everything. If those taxes are worth it are a separate issue.
A person having that tax rate doesn’t pay social security anymore usually…
Thats the highest possible tax rate. Most are around 20% and i don’t think you know how taxes are calculated. You don’t pay 45% on your entire income either.
And no its not a separate issue. It all plays part here.
The guy making 400kusd a year can probably save and invest 100k a year and retire after 10 years. He can then come enjoy all the european benefits if he wants. Im sure he lives better off.
You’re right. But half this conversation is a bunch of people using random US stereotypes and downvoting anyone who says otherwise. Cost of living is fairly irrelevant when you’ve got an extra $200k/year post-tax to play with. And any company paying that much will give you really nice benefits including fully coverage health insurance and possibly a on-call concierge to help if you have any issues. Being poor in the US is really miserable but I also know people who can’t see a doctor in Europe due to waiting lists (or their GP blocking it) and lack of money for private insurance. Neither case matters if you’re an engineer. And France has the same rate of homelessness as California so neither has a happy community on average.
Each country has its own things that are better and worse. At the end of the day US companies pay more before taxes than european ones do for the same job. And when american companies come to Europe they also pay more.
I think the discussion of welfare, taxes, etc. is another talk which is independent of this post which id about before taxes salaries for the same type of jobs.
In the US I can quit a job with 0 days notice. I can also be fired from a job with 0 days notice and no severance.
That makes the job market significantly more fluid. If there is demand for a specific job compensation will go up quickly as there is no artificial buffer on people switching jobs for better pay. Supply and demand is very sensitive to small shifts in either. Companies are also not afraid of paying this compensation since worst case they’ll just do some layoffs.
If a US company has some employees in Europe then they still have a benefit from all this so they can pay more than a purely European company. If they need to cut costs they can fire the expensive US employees first and then adjust the Europe comp more slowly. If they need to grow quickly they can do so in the US and then slowly shift to Europe.
edit: The profit margins of US tech companies are also massive as they have relatively little regulation, taxes or bureaucracy. Goggle makes $2 MILLION/employee/year. So no risk of not making record profits by paying an extra $200k.
Nah man.
The way you word this makes it sound like it would be the opposite of “hard” to achieve 200k-400k in the United States.
What has convinced you that 200k-400k is some sort of average developer pay in the United States?
One reason (among many) is that employment in American companies is less stable than in Europe with strong employment laws. Twitter could not do the same type of layoffs in Europe, with stories like this one being pretty common. But this safety net has a cost, and the cost is a part of total employment cost for employers. Whether the safety net is worth it for employees in IT, that’s another matter—but it can’t not be taken into account because of the law.
BTW, in some European countries there is a strong culture of IT workers doing long-term contractor work exactly to trade off employment laws for (usually quite a lot) higher wage.
Im aware one of the few ways to get some decent salary here is do contract work. Same job as regular employee but 2x the salary. Ofc no sick leave, etc.
Still US companies pay according to my union statistics 30-80% more and they cant go around the law.
I mean… you’ve got to be trolling at this point. No one is this clueless.
Most people take these statistics where I work and are very reliable. Theyre so reliable than when you go take a salary negotiation they pull them out and say you should get around that and its not much more you can get usually. Unless the company is american. Then again 30-80% more than average is expected according to these surveys which have been correct so far everytime Ive used them.
Its so ridiculous than a newly graduated engineer that is lucky to work for an american company can get more salary than a person with 20 years experience in an average company. And thats why I created the post why do americans pay more even outside of America.
On the off chance you’re actually serious.
The thing I was pointing out is that you have a union. Unions are actively and aggressively busted by US companies. Almost every US state has “at-will” employment laws that mean you can be laid off at any time for pretty much any reason at the drop of a hat.
All of a sudden that 400K or whatever you were expecting to make this year turned into $0. You no longer have health insurance. Those RSUs you had vesting this year are gone (and those RSUs made up a big chunk of your compensation - that’s how people get into the 300-400K+ a year numbers).
The highs can be high, but the lows are very low.
Everyone or almost everyone is in an union here. My point was these statistics that come from the union are very reliable so when I say american companies pay 30-80% more consistently here it is quite accurate. Its not some online poll or something I have heard.
My point still stands that while laws and welfare are different in the US when an american company comes to Europe it must follow its local laws. At that point its the same as a local one but chooses to pay way more.
There is a clear difference in pay between american and non american companies here and that I think can only be attributed to american companies choosing to pay more to attract talent and european ones being more relaxed and pay average attracting more average talent. I think this is a cultural thing where the US is a more competitive country and benefits us (developers).
American companies pay more because they have huge investors. They have huge investors because they know the company won’t have accountability to do things right because they are in America.
I’m not in Europe, but I am in a country with strong employee rights.
Even if I was a contractor, I would still have all the rights of a salaried employee. Employee rights generally cannot be taken away. For example I just straight up am not allowed to work more than five hours without a (paid) meal break. And my employer has to contribute to my retirement fund. They have to pay my federal income tax on my behalf (otherwise my boss goes to jail for tax evasion…). They can only terminate my contract with a valid reason - the government maintains a list of reasons, and they have to take reasonable steps to try to keep me employed (there’s a requirements list for that too), and they have to give me fair notice (or severance pay). None of that can be taken away just because I signed a contract. But a lot of it doesn’t apply if, for example, I only work there for two weeks or if I’m hired for 20 minutes to deliver a pizza (uber eats/etc).
(Strictly speaking… I can sign a contract taking away my rights, but the contract has to replace them with more favourable conditions for the worker… otherwise the contract is invalid and might as well not exist. For example I’ve signed a contract stating I have no sick pay or holiday pay… but in exchange they pay me for both, trusting me to set aside the money so I can afford holidays/unpaid sick leave (I put the money in a savings account that earns 6% interest))
I’m pretty sure it’s similar in the US? Contractors do have full employee rights if they have an employee-like relationship - it’s just US employees don’t have many rights to start with.
Isn’t the question rather “why do US companies do that” when they could get away with paying less?
I can only speak for myself but I’m not keen on constantly job-hunting like I see so many US engineer advise. I’m looking for a more stable situation where the company seeks to hire long-term, and often in those cases you get benefits that are not monetary. Free access to partnered places like fitness studios or swimming pools can’t really be rolled into your salary, but if you use those often you end up with a financial benefit too. Automatical raises when your child is born is another.
Maybe it’s just a different culture, but I’ll trade in some base salary for a work environment based on mutual trust and goodwill.
Yes, any day of the week. OP is either trolling (which I heavily lean toward at this point), has an incredibly narrow world view, or is an edgy 16-year-old who identifies as libertarian.
I mean as someone who has experienced both the US and Europe I would say this applies to most everyone posting here.
And if we’re going to sling insults then I’ll say it’s hilariously amusing how clearly fragile the egos of the people posting here are.
I’ll admit I got annoyed that OP seemed to almost deliberately misunderstand or discount other perspectives or answers. It makes their pretty open question seem disingenuous. I assume people ask questions because they’re interested in other people’s perspectives on a topic, rather than just wanting to hear that they are right?
Possibly OP just failed to communicate why they feel as they feel with regards to the relative value of welfare systems, taxes, and salary (they clarified somewhat later in another thread), but it’s frustrating to see other people’s well thought-out answers being discounted or strawmanned without actually being refuted. That rings my troll warning bell, or imo is a sign of someone who can only see the world through one particular lens.
I didnt expect so many replies and its hard to keep with comments so sometimes I may have skimmed some replies too fast (like your comment on taxes for companies ;)). Im also on phone.
People have also started talking about welfare and taxation which is irrelevant to the question which was why US companies pay more (pre-tax). I think this dereiled and I wanted to edit the post to l clarify but my mobile client doesnt have edit post functionality yet. I have to admit I got a bit annoyed because that had nothing to do with my question and turned into a us vs europe welfare/benefits which has nothing to do with pre-tax salaries. When broght that even in Europe with the same welfare and benefits US companies pay mroe people still kept talking about welfare. Its a bit annoying to be fair
I mean you don’t have to constantly job hunt but you have the option of doing so if you want to maximize money. And enough people doing so raises the compensation for everyone even if they don’t job hunt constantly.
Maybe there already lies another reason for the lower salaries - if you are from a country which traditionally had your company actually appreciate their employees and make them feel valued, and historically you just had to land your job and could expect to stay with the company the rest of your life, you will not be actively looking unless you get laid off. Loyalty on both sides is still quite common where I live.
Loyalty is all great until a depression comes or a bad decission causes layoffs. Then suddenly all the loyalty and being a family means nothing. I think back in the days when 5% raises were the norm and you could buy a house in 5 years on one income being loyal made sense. Now since companies do not keep up with inflation and the standards of living are so high I believe its in your best interest to do whatever its needed to get a better job. If staying in the same company gives you that its great but most often than not changing jobs often and testing the market will do you better imho.
You’re replying in an antagonistic tone to anyone trying to answer your questions in good faith. You don’t see the value in paying for a welfare system or income redistribution for the betterment of society as a whole, but many people do. Most of us want to not live in a dystopian nightmare where there are haves and have-nots depending on luck or misfortune. Not saying that the US is quite there, but there is a lot less of a societal buffer between you and total destitution after an adverse event there.
This is the reason why US employers have to pay more, they have to offer more due to the bigger inherent risk to every employee on a life basis (at-will employment, you’re responsible for your own 401k and health insurance and education and transportation and remaining healthy and capable enough to work your whole life). If you can’t be sure of your future source of income, you have to charge your employer more. This is also why consultants are paid better in Europe than direct employees, because consultants take a bigger risk.
But theres american companies here and as I wrote pay 30-80% more. They need to follow the law like everyone else yet still find possible to pay so much more without issue.
In the US the gap is even higher but we can focus on Europe then. American companies in Europe pay a lot more. Why can they afford it and why european counterparts consistently pay around their average? American companies like to come to Europe because they can get away paying less they pay in USA.
I couldn’t tell you why individual American companies in Europe pay more, but I’m guessing a big part of it is the difference in tax burden for companies based in Europe vs America. American companies have the majority of their employees in the US, and for these employees they pay much less into the system than Europe based countries so are able to pay more for a few European employees.
For example, payroll taxes/social fees (the fees and taxes your employer pays on your behalf) and corporate taxes are much higher in North Europe than in the US. Sales tax/VAT is higher in Europe and, while it’s technically paid by customers, companies have to take the sales tax surcharge into account when setting the prices for their goods and services to be competitive on a global market. That means they can’t afford astronomical salaries.
But they pay 30-80% than non americsn companies where I work. Same country same laws same taxes. They still pay way more.
Yes, and I answered that I think there are more factors, but that tax burden is a big reason?
An American company which has 100 employees located in America and 2 employees located in Europe will have a smaller total tax burden as a company, than a European company with 102 employees located in Europe. Same number of employees, very different bottom line tax burden. The American-based company can thus afford to pay their few European employees more, to outcompete European companies on salary on the labor market.
I see your point better now - thanks for claryfing. Still shouldnt european companies that have massive profits choose to pay also way more? I cant see much difference between salaries in local companies (even with big well profitable ones). I would expect some to pay 2x for example then if they can afford it (they can in some cases I know).
But from what you suggest it may be possinle for some american companies in europe to benefit from some taxation stuff and by doing so they can pay more. What I hear is they can pay more and choose to do so to get talent in contrast with local companies that could do the same bur rather keep it to them instead. So again without trying to sound arrogant I think US rewards talent and europe mediocrity.
No problem. My impression (based on an extremely small sample size though) is that there are some trade-offs to working for American companies in Europe, like your American managers not understanding that there are strong labor laws here giving you the right to take cohesive vacation, sick leave and parental leave. Work hours (meetings booked in the late PM for us) and 24/7 availability expected and degraded work-life balance. Essentially that some of the American work culture bleeds over across the pond.
That probably varies a lot from company to company, manager to manager and job description as well though.
The US companies do seem reward talent and performance (or the appearance of talent and performance) with great pay. On the flip side they will also drop you in the blink of an eye of you have a period with mental or physical health problems, or aren’t getting good KPI metrics for a while due to circumstances outside of your control (poor management, bad KPIs, being inbetween projects etc).
I guess what I’m getting at is that American jobs are more “big risk, big reward” (but they will discard you the moment you aren’t as useful) and European companies don’t really work like that.
But I do personally agree with you in general, that European companies both can afford and morally should pay better. However, I feel that that conversation is a different one than the European-American work culture and pay divide.
I think sometimes its also the ilusion of safety. An european company can fire you basically at will in Denmark - its just not often people get fired unless the company is struggling a lot. But it can happen. I saw the case personally with someone getting fired because the manager didnt like him even though he worked well in a local company and no one beats and eye.
The american companies here still have at least some local managers. So perhaps theres some meetings a bit late sometimes but other than that its the same as a local company. Except you get paid way more for the same job.
And since they follow the same laws and regulations as any orher local company I think its better off to work for these. In the event you get fired you got some extra money by working in one and can get another job in another one after.
This right here. I’ll gladly take less pay in Europe than constantly having to worry about my health and whether or not that bit of pain you sometimes have in a weird area means a hospital bill you can’t afford. And even if I loose my job, I know I will not starve, because of our social security system. It will not be fun, but I won’t loose my house or worry about what to eat tomorrow just because I got unlucky and my company went under.