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Ask HN: Why is pay so much higher in the US? (or is it?)

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Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#121

Post by thephyber »

whiddershins wrote: post #55
sixhobbits wrote: post #14

Compared to Europe there is more upside and downside risk in the US. You can earn more but you are more likely to be financially wiped out if you get cancer or have an accident (high medical costs). Most countries in Europe have more social support built in at every level, not just healthcare, so its unusual to go from living comfortably to being on the street. Some argue the US way is good (more downward mobility is…

No, if you have health insurance this isn't true. None of this is how it actually is in the US. Outside of addicts and the severely mentally ill it is rare to "fall off" middle class status.

note this comment is likely very misleading.

> According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness. The study found that even the Obama administration’s landmark Affordable Care Act (known as Obamacare) has failed to change the proportion of bankruptcies caused by medical debts, with poor health insurance cited as one of the main culprits.[1]

530k households into medical bankruptcy annually from medical costs in a country with 123,600k households. In 30 years, that would be more than 10% of the country, on average.

[1] https://theguardian.com/us-news/2019/nov/14/health-insurance...

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#122

Post by ipaddr »

krakatau1 wrote: post #102
skywal_l wrote: post #89

Earlier quoted context omitted.

> Pension Systems that at this point are a Ponzi scheme where working taxpayers are paying for retiree income (Privatized Retirement is fairly limited in Europe and mostly optional on top of standard contributions) How is this a Ponzi Scheme ? Currently working people help sustain retired people the same way retired people help the retired people when they were working and the same way young people will sustain the c…

Of course it's a Ponzi scheme since it promotes freeloading. People without children also expect to receive pension while escaping the effort and time to raise the next generation. When you did this at family level the result was pretty evident, in your old age you were alone and vulnerable. Doing this on national level hides this effect.

You pay in over your career. Your kids are paying for themselves. The only group who are freeloading were your grandparents or great grand parents

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#123

Post by turkeysandwich »

skywal_l wrote: post #105
turkeysandwich wrote: post #100

Earlier quoted context omitted.

It's a Ponzi scheme when it's not sustainable. Social Security in the US, for example is not financially viable in its current form. Either the retirement age will need to be raised or its obligations will need to be abandoned, probably a bit of both. Some but not all European pension schemes are facing similar problems.

> It's a Ponzi scheme when it's not sustainable. That's such a general and undeveloped affirmation that you probably don't even believe it yourself. Here is the real definition from Wikipedia: > is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Pension systems are not a fraud. If you believe so, we do not live in the same reality. Taxpayers and pensio…

I wasn't claiming that they're literally ponzi schemes. Clearly they're sanctioned by law, obviously I wasn't arguing otherwise.

I was simply using "ponzi scheme" in the more casual, euphemistic sense of "skeevy unsustainable scheme that will screw people over".

And like I said, I don't believe all pension schemes to be dishonest/poorly executed. Some are just fine. But many are sloppy and poorly managed. A few are even so poorly managed to an extent that I'd say it borders on fraud, if not legally, at least morally. (I don't think that's common, necessarily; I think most mismanaged pension plans are entered into with the best of intentions.)

> Taxpayers and pensioners are not investors. They are people who want to live a descent life.

I'm not blaming them. They're victims of this poor management.

https://www.pewtrusts.org/en/research-and-analysis/issue-bri...

This article paints a rosy outlook. And indeed, it's good news overall. But 35 state pensions meeting their goals means that 15 aren't. That's worth criticism.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#124

Post by sys_64738 »

In Britain you typically work 37.5 hours per week and get five weeks vacation. Over 47 weeks, those extra 2.5 hours an American works is three extra weeks of work. If you only get 10 days vacation per year then an American works 3 more weeks, for a total of 6 more weeks than a Brit.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#125

Post by jacknews »

sys_64738 wrote: post #124

In Britain you typically work 37.5 hours per week and get five weeks vacation. Over 47 weeks, those extra 2.5 hours an American works is three extra weeks of work. If you only get 10 days vacation per year then an American works 3 more weeks, for a total of 6 more weeks than a Brit.

But US salaries are much more than 12% higher.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#126

Post by credit_guy »

wbsss4412 wrote: post #106
badpun wrote: post #46

Earlier quoted context omitted.

Yep, that's how the coveted socialized health care system looks like in practice in many European countries. Sometimes the queue is short and you can use it. Sometimes it's not and you go to a private doctor instead. Sometimes, the nececessary drug is refunded and you get it for nearly free. Other times it's not and you buy it out of pocket. If it happens to be expensive, it will bankrupt your family just the same (o…

Meanwhile my friend here I’m the US has to wait until may 2023 to see a dermatologist. Long wait times exist in the US as well, we just like to pretend that it’s a socialized medicine thing.

Yes, but it's most likely a top dermatologist. There are lots of dermatologists around. For the first visit, it's normal to have to wait one or two months. Almost one year is definitely not normal.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#127

Post by cm2012 »

Mandatum wrote: post #5

Because that’s where all the money is. Seriously look at global GDP, maybe American citizens aren’t the wealthiest but the country and the businesses that run it sure as shit is.

Even West Virginia has a higher GDP per Capita than France. The US is just a really rich country (that has a very inefficient medical system)

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#128

Post by cm2012 »

pavlov wrote: post #28

Mainly because USA developed multiple geographic clusters where software developers are in high demand (Bay Area for consumer tech, New York for finance etc.) and the funding ecosystem is both deep-pocketed and culturally supports paying for talent. Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those star…

Even West Virginia has a higher GDP per Capita than France. The US is just a really rich country (that has a very inefficient medical system)

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#129

Post by gnicholas »

abofh wrote: post #48
gigatexal wrote: post #12

Earlier quoted context omitted.

Haha pay is higher in the US because, sure, it's the world's largest economy. Though there are more millionares being minted in China than in the US every year. Nevertheless I'd sure as shit not want to build my business in China. I used to think this was because of relatively higher taxes in the EU than in the US but at the top end the highest wage earners are taxed rather heavily. A 500k salary is not 500k takehome…

So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to to…

> If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth

What would you do to go from 200k to 2M without increasing your tax rate, if you're being paid in cash salary? Can you contribute millions to retirement accounts?

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#130

Post by gnicholas »

gigatexal wrote: post #109
abofh wrote: post #48

Earlier quoted context omitted.

So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to to…

I’m an expat here too and I pay a CPA to do my taxes. (1 rental means a biz return and all the deductions… meh) if you can take home 400k from 500k in gross then you’re doing amazingly well.

This sounds too good to be true to me (as a former tax lawyer). If you're being paid 500k in salary I can't think of how you take home this much. Maybe you put a ton into tax-deferred accounts, but that's not the same as netting 80% as take-home. It's kicking the can down the road (to a time when tax rates may be even higher).
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