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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?)

#161

Post by krakatau1 »

skywal_l wrote: post #104
krakatau1 wrote: post #102

Earlier quoted context omitted.

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 are using a moral vocabulary to describe a social program. You already lost the point. I encourage you to read about the Capitol Hill Babysitting Co-op [0] which I find enlightening. It's not about pensions but about liquidity yet it is an interesting insight into why assigning moral values to what is basically an "mechanical" system made to improve the life of people is not just wrong but useless. [0] https://sl…

I have read it. I know what liquidity trap is. That's not the problem. It's incentives. Incentives matter and people in western countries are not incentivized to have children and money isn't all that matters.

People care about reputation, social standing, glory and their conscience. All of these can act as incentives. When we say that incentives matter non economists only hears that people respond to price signals but what economist really mean that, holding everything else constant and giving a price signal people will do it more or less of it.

Economists often focus on monetary incentives because they are observable and usually easier to change in a model. For example if we say that doctor salaries go up more people will want to be doctors. This is misunderstood that doctors are motivated by money rather than the non-monetary motives to be doctors but this really means that holding the non-monetary satisfaction of medicine constant, increasing the monetary satisfaction will make medicine more attractive relative to other professions. The clear example for this are doctors in USA and Cuba. The difference in monetary compensations is huge relative to other professions but non-monetary motives are still high enough for people in Cuba to want to endure ardous learning to be a doctor.

I fully realize it's a lost battle. The genie is out of the bottle. I'm just annoyed that it's happening. I live close to a city that 2000 years old and all that time population either managed to grew or stagnate but never this.

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

#163

Post by giantg2 »

skywal_l wrote: post #89
DoingIsLearning wrote: post #85

Earlier quoted context omitted.

You make a lot of good points. I agree it is a cultural problem but the other half of the problem is _Taxation_. Culturally most workers in EU markets (I am generalizing but lets exclude Executive, Finance, and Consulting positions) see an offer letter as the end of the recruitment process. People are not confident in negotiating an offer up because they are afraid employers will withdraw or walk-way (Which I have ha…

> 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…

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 currently working people when they retire."

The only reason ponzi schemes fail is when they don't have enough fresh blood to pay out the prior investors. Your mention of population shrinkage after a baby boom is fairly similar.

"You can disagree with the idea but calling it a Ponzi scheme is incorrect."

Yes, it may operate similar to a ponzi scheme but cannot technically be called one. Usually the owner of the ponzi fund siphons off money for themselves, which is pretty similar to congress siphoning off social security for other pet programs. So I do agree with the sentiment, at least here in the US where the programs are expected to be insolvent in the coming decades.

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

#164

Post by wreath »

olabyne wrote: post #88
kf7njh wrote: post #67

As an American living in Germany for a few years now, this is something I really struggle with. In short, it's because Europeans are content with lower wages. I am in a "high-demand" job as an electrical engineer at a publicly traded medical company, and getting less than €65k. This is absolutely absurd in my opinion, but in discussions with friends/colleagues they feel it's overall typical. One colleague was in shoc…

Hey french here. You are speaking of raw income, right? I don't think we are content with lower wages. It's just that you cannot really compare EU-US just like that. You need to compare cost of living, entirely. Paid leave. Public holiday. College fees. Working time. But also what I call 'peace of mind'. In Europe, you have retirement from the state. You will never have crazy, 6 figures hospital bills. My employer fi…

> I don't think we are content with lower wages. It's just that you cannot really compare EU-US just like that. You need to compare cost of living, entirely. Paid leave. Public holiday. College fees. Working time.

None of this justifies the lower pay compared to US tech where it's very common to have a good medical coverage and much higher standards of living. It's not like France or Germany are cheap for the average french or german. All things considered, french and germans end up taking home less than their american counterparts. Maybe this worked well in the last 50 years in Europe, but it most certainly won't in the next 30 when you see fewer younger people entering the workforce and the pension and medical system won't be sustained in Europe.

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

#165

Post by 0xBDB »

thephyber wrote: post #121
whiddershins wrote: post #55

Earlier quoted context omitted.

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 m…

If 92% of American households have health insurance, which they do, and by law there is an annual out-of-pocket maximum on health insurance, which there is, I find it somewhat unlikely that 10% of the country will be medically bankrupt in a generation.

I'm not saying it's impossible to go bankrupt on a capped 10k of medical bills, given that so many Americans live paycheck to paycheck. But if it happens there may be confounding factors. Or, you know, it's possible people facing bankruptcy have some incentive to exaggerate to a federal judge the reason they're standing there.

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

#166

Post by 0xBDB »

legacynl wrote: post #160
badpun wrote: post #153

Earlier quoted context omitted.

Not hugely so. Properties in top cities in Europe are probably as expensive as in top areas of US (NYC, SV). Rent is higher in US (that's because, if landlords charged SV/NYC rents in Europe, then the flats would just be empty, as the rent would be more than 100% of salaries of most people), but mortgage is comparable. Other typical cost of living expenses are somewhat higher in US (according to https://www.numbeo.co…

I don't agree. You get higher wages in the US, but you also have to pay more in the US. Healthcare (or saving money for when you need healthcare), schools, having to drive everywhere, etc. In most of western Europe you don't actually need that high salary. There are no crazy medical bills, your children can go to school for free, you don't have to spend a couple of bucks for gas for every errand. Also i think your co…

I live in the Dallas area. A typical salary in my corner of tech is 150k. That's about 30 percent in income taxes. Sales tax, etc. is (more or less) deductible from that. Like all of the 92 percent of Americans with health insurance, my annual out-of-pocket expenditure on healthcare is capped, in my case at 10k. 2 years of community college and 2 years of state school for my kid will probably run about 60k, one-time. Love your rail networks, but a "couple of bucks for gas" here isn't a liter; that will get me 2/3 of a gallon which is 30 miles in a Honda Civic, which is 10 errands.

If I moved to London for example the salary would be at most 100k (U.S. equivalent; I've looked), 50% would be tax, and while your site tells me that overall cost of living is only about 5% higher, I find that highly improbable. I am not disputing that the peace of mind factor in Europe is worth something. I don't think there's any reasonable price you could ascribe to it to make the math work out for even a single year, let alone a career, however.

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

#167

Post by thephyber »

0xBDB wrote: post #165
thephyber wrote: post #121

Earlier quoted context omitted.

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 m…

If 92% of American households have health insurance, which they do, and by law there is an annual out-of-pocket maximum on health insurance, which there is, I find it somewhat unlikely that 10% of the country will be medically bankrupt in a generation. I'm not saying it's impossible to go bankrupt on a capped 10k of medical bills, given that so many Americans live paycheck to paycheck. But if it happens there may be…

You aren’t being creative enough.

Health insurance companies know about the annual caps and have strong incentives to deny as many costs as uncovered as possible. The out-of-pocket maximums only apply to covered costs. There are lots of costs that health insurance companies deny coverage for: - Incidents that the covered think are emergencies, but the insurer thinks aren’t. - Any time the insured doesn’t follow the policy procedures, such as visiting a specialist without first getting a recommendation from their primary care physician - Out of network providers. - Claims received after the insurer says the policy is cancelled

And there are dozens of reasons related to ineptitude (bad coding, mistyping, lack of cost transparency).

a blog article listing the top 10 types: https://mbamedical.com/blog/8-reasons-why-your-insurance-cla...

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

#168

Post by thephyber »

TMWNN wrote: post #132
thephyber wrote: post #121

Earlier quoted context omitted.

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 m…

>> According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness. That's the same bogus study that Elizabeth Warren has been pushing for years, which attributes any bankruptcy in which medical bills are involved to mean that medical bills caused the bankruptcy. Only 4% of US bankruptcies are because of medical bills https://www.washingt…

You bring an interesting point. I completely admit that I didn’t research the source of the study or any refutations of it.

> The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect.

An obvious counter observation: Isn’t an extended medical issue likely to cause a person to lose their job and health insurance?

Remember that in the USA most health insurance is company sponsored. When you lose your job, you either pay premiums at COBRA rates or you lose coverage.

And although it is illegal, companies do fire people (or find creative substitutes) for employees who are very expensive to cover.

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

#169

Post by 0xBDB »

thephyber wrote: post #167
0xBDB wrote: post #165

Earlier quoted context omitted.

If 92% of American households have health insurance, which they do, and by law there is an annual out-of-pocket maximum on health insurance, which there is, I find it somewhat unlikely that 10% of the country will be medically bankrupt in a generation. I'm not saying it's impossible to go bankrupt on a capped 10k of medical bills, given that so many Americans live paycheck to paycheck. But if it happens there may be…

You aren’t being creative enough. Health insurance companies know about the annual caps and have strong incentives to deny as many costs as uncovered as possible. The out-of-pocket maximums only apply to covered costs. There are lots of costs that health insurance companies deny coverage for: - Incidents that the covered think are emergencies, but the insurer thinks aren’t. - Any time the insured doesn’t follow the p…

That's true, though as another comment in this thread points out I still don't think the math works. But also it doesn't seem to be what that study found:

"A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found."

So to compare the U.S. to Europe we'd need to know how many are due to bills, which only really happens in the U.S., and how many are due to being out of work due to medical issues, which happens everywhere and apparently causes 8.2% of bankruptcies in the U.K., for example.

https://balancingeverything.com/medical-bankruptcies-statist...

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

#170

Post by TMWNN »

thephyber wrote: post #168
TMWNN wrote: post #132

Earlier quoted context omitted.

>> According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness. That's the same bogus study that Elizabeth Warren has been pushing for years, which attributes any bankruptcy in which medical bills are involved to mean that medical bills caused the bankruptcy. Only 4% of US bankruptcies are because of medical bills https://www.washingt…

You bring an interesting point. I completely admit that I didn’t research the source of the study or any refutations of it. > The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect. An obvious counter observation: Isn’t an extended medical issue likely to cause a person to lose their job and health insurance? Remember that in the USA most health insurance is company sponsored. When…

>An obvious counter observation: Isn’t an extended medical issue likely to cause a person to lose their job and health insurance?

You are correct in that most US health insurance is tied to employment. But the discussion point was the claim that "[insert high percentage here] of US bankruptcies are because of medical bills".

Any illness, extended long enough, is going to cause people to lose their jobs, whether in the US or elsewhere. Certainly any illness long enough to exhaust COBRA coverage. That said, in the US that's where Medicaid will step in, assuming that the loss of income is sufficient to trigger Medicaid's income-based eligibility.

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