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Ask HN: Why do companies outside the US pay so much less?

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Re: Ask HN: Why do companies outside the US pay so much less?

#31

Post by doctorpangloss »

CamMacFarlane wrote: post #25
civilian wrote: post #14

Earlier quoted context omitted.

Uhhhhhhhh income inequality does not have that kind of effect. Income inequality may effect the taxes paid by people, but it doesn't change salaries the way that you're suggesting. America just has more highly paid jobs, because we've got some of the biggest companies and highest GDP per capita in the world. And this has the effect of creating a greater spread of income. It's a bigger, richer, pond.

>[USA] has the highest GDP per capita in the world Not quite, it has the 18th highest. Below Hong Kong, Switzerland, and Ireland all who pay less for engineering. https://www.cia.gov/library/publications/the-world-factbook/...

A more appropriate comparison might be GDP per OECD region, where the United States absolutely dominates.

https://en.m.wikipedia.org/wiki/List_of_OECD_regions_by_GDP_...

Re: Ask HN: Why do companies outside the US pay so much less?

#32

Post by omouse »

kat wrote: post #22

As someone with Canadian and American work experience, I think US wages are higher because there is more capital in the States. Both Canada and the States struggle to find qualified software devs. The companies that can afford to pay more, get their pick of devs out of a very small pool, so the wages increase. However, in Canada, the companies won't/can't pay as much, so the devs end up making less, or moving south.…

There is more free floating capital. There are VCs in the US who are willing to invest in all sorts of things and willing to take chances. There are few VCs or banks in Canada that would take a chance on Facebook, Twitter, SnapChat or Uber. Brain-drain is a problem but the bigger problem is lack of capital.

Also, its in the employers best interest to keep salaries down and convince their employees that living in Canada (Vancouver instead of San Fran) is better (how ever you define better).

Yes, especially true. I've yet to see any Canadians who have actually received a raise in recent years. No one talks about it and no one knows whether their salary will be increased to at least meet inflation. It's a little messed up.

Re: Ask HN: Why do companies outside the US pay so much less?

#33

Post by schmichael »

I'm in the US and a friend just moved to The Netherlands to accept a much lower paying job. He swears he has more disposable income due to cheaper health care, Internet, transportation (no car required!), etc. The basic assertion being that the cost of living is higher in the US.

I would love to see salary vs cost-of-living comparisons globally. I suspect this might account for the disparity, but I'm afraid I don't have the data to confirm or disprove this assertion.

Update: Spent 5 minutes googling with no luck. Found some moving company (?!) sponsored data showing most of the EU having a very high cost of living. Makes me wonder if that takes into account free-or-cheaper-than-US health care, child care, transportation (owning a car is $$$), education (most US tech workers are paying a high student debt "tax"), and other lifestyle/political differences between the two regions.

Re: Ask HN: Why do companies outside the US pay so much less?

#35

Post by omouse »

GordonS wrote: post #11

Since salaries are so much lower everywhere but the US, doesn't it make more sense to flip this argument around and instead ask: "why are software engineers' salaries so much higher in the US than everywhere else?"

Because devs get to keep more of what they earn? That should also be true for other workers but it isn't. It's really difficult to hide how much wealth is created through software.

I always like to point out that even the most junior developer can automate a task and save a company hundreds of thousands of dollars.

Re: Ask HN: Why do companies outside the US pay so much less?

#36

Post by omouse »

droopyEyelids wrote: post #18

I haven't heard anyone suggest that overall demand for developers is higher in the USA. The US has more companies that can see how to make more money off tech talent.

That's also possible. They know how to herd the cats and get them to move in the right direction. In Canada for example, there are few companies that do this correctly and the best ones are influenced by the way US companies (especially Silicon Valley companies) work and manage their employees.

Re: Ask HN: Why do companies outside the US pay so much less?

#37

Post by ThePhysicist »

A part of the gap can be explained by the way that work is organized in the US compared to Europe. Let's compare e.g. Germany and the USA:

https://data.oecd.org/germany.htm https://data.oecd.org/united-states.htm

If you scroll down to the Economic indicators, you will see that on average people in the US work around 1.700 hours a year, whereas people in Germany (and many other European countries) work only 1.400 hours. This alone can already explain 20 % of the wage gap between the two countries, and in fact if you look at the average salary per hour worked, it is almost identical (32 USD), which would support this theory. In addition, many things like education, housing, social security and health insurance are much cheaper in Europe, which leads to lower salaries (as they tend to follow the cost of living). Furthermore, regulations in Europe are stronger than in the US, which makes it more difficult (or sometimes even impossible) to fire people once they have been employed for some time. Hence the risk of losing your job is smaller, which should lead to a lower salary as well as companies face a higher risk when hiring someone, and employees have less risk.

And in extreme tech hot spots like SV or NY there should course be an additional effect due to the high demand of skilled IT professionals and the fact that people can usually find a new job very easily, which also makes it easier to negotiate a higher salary and forces companies to pay above average rates to attract talent, which is a self-reinforcing effect.

Re: Ask HN: Why do companies outside the US pay so much less?

#38

Post by CalRobert »

thehardsphere wrote: post #23
LeoSolaris wrote: post #2

There are a few reasons I have seen. The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies. We have a culture that doesn't require a business degree to open a business that investors would take s…

>The US has a higher cost of living than most other countries. Those who are comparable pay somewhat more competitively with US jobs. This becomes really clear with remote work. Outside of the major tech hubs, the pay for IT drops off to comparable levels with European companies. This is partially true but I thought the cost of living in Europe was generally higher than in the US.

Eh, I don't have to own a car, I have cheaper health insurance, vacations cost less (but only because I used all of them to go to Europe before I moved here), and my rent is cheaper. Also, remember that you're getting at least a month off a year, by law, which even now relatively few US companies do.
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