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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?)

#31

Post by justsomehnguy »

> Cost of Living Comparison Between Seoul and San Francisco, CA

> You would need around 12,056,794.18₩ (8,727.42$) in San Francisco, CA to maintain the same standard of life that you can have with 6,600,000.00₩ in Seoul (assuming you rent in both cities). This calculation uses our Cost of Living Plus Rent Index to compare cost of living. This assumes net earnings (after income tax). You can change the amount in this calculation.

                                                       Seoul                       San Francisco, CA
    Preschool Full Day, Private, Monthly  :   509,352.94 ₩ (  368.70 $)  3,160,145.20 ₩ (2,287.50 $) +520.42 %
    Apartment (1 bedroom) in City Centre  : 1,063,680.37 ₩ (  769.95 $)  4,542,563.97 ₩ (3,288.18 $) +327.06 %
    Apartment (3 bedrooms) in City Centre : 3,410,888.38 ₩ (2,469.00 $)  8,160,113.43 ₩ (5,906.77 $) +139.24 %
https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

Basically - in some parts of US people would be homeless and starve to death on the pay of the most European citizens. And if you don't know - there are way too many homeless people in US for a developed nation.

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

#32

Post by dougmwne »

I’ll assume you are talking about the average, which is a bit above $100k. You have probably seen plenty of eye-popping FAANG salaries, but those are basically outliers from monopoly companies in a top talent Cold War.

There are some currency effects due to status of the USD as one of the most stable shelters of risk. But I don’t believe this is accounts for most of the difference.

Mainly, the US does not have a high enough supply of tech workers. Other professions are not particularly well paid in comparison to the cost of living. But for tech, the size of the US tech industry combined with a restrictive immigration policy means that companies will pay a lot for most technical talent. Companies try to hire abroad as much as they can, but there are enough disadvantages to outsourcing that there will always be reasons to hire within the US.

The tech industry fights against this high pay by encouraging more people to study IT degrees, lobbying for immigration reform, and even in the past by anti-poaching agreements that amounted to price fixing.

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

#33

Post by [deleted] »

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…

[deleted]

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

#34

Post by creamyhorror »

Many reasons, but the most basic factor is topline revenue: American tech companies earn revenue from both their local market as well as a huge swathe of the world. Without large enough topline revenue, the companies wouldn't have the ability to offer high wages to engineers.

If you work for companies with smaller or less wealthy target markets, they simply won't be able to pay you as much (even if they wanted to).

There's also the culture of compensating talent well, the dynamic startup scene that drives demand for tech workers, and high costs of living in key tech hubs driving up baseline pay. Those help justify paying out a greater chunk of overall revenue to tech workers.

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

#35

Post by buf »

I know this isn't an answer to the question, but an observation I'm seeing and experiencing personally.

I spent my 20s and 30s gathering wealth in the US, helped built 2.5 unicorns, and saved enough for an early retirement.

In my 40s, I'm living in Europe and enjoying more family-focused cultures.

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

#36

Post by edmcnulty101 »

Because it's expensive as hell to live in the US.. Health insurance and rent alone is the typical salary in another country. And don't even think about having a major illness, it will bankrupt you. We have shitty public transportation so one needs a car. And we have shitty safety net so a huge chunk of your money goes to retirement or savings to avoid homelessness at all stages of life. We also have numerous levels of taxation, Fed, State, City, Municipal, Local, Sales, Property. We also have massive insurance requirements on everything from health to cars to housing which is almost like another tax. Then we have to pay for our college which is the most expensive in the world, or get massive loans to repay.

After taxes rent utilities insurance car payment gas groceries savings retirement student loan you're looking at take home of like 20% of advertised salary.

Then the average person spends 8 to 10 hours working and another 30 minutes to an hour commuting with like 2 weeks of vacation a year average.

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

#37

Post by Barrin92 »

One factor for a minority of jobs is extreme profitability of large American companies, (FAANG mostly), but the bigger portion is that they need to pay that much.

Friends I know in the US who make about 40k more than I do actually don't come out ahead because they pay thousands for private schooling (for a school on par with public education over here), daycare, two cars, high rent and so on.

When I stayed in the US I paid 3.5k in rent for a one bedroom apartment, in a trendy part of Berlin you pay half that. Cost of living in the US where the popular jobs are is high. People seem to be unable to save a lot even if they earn 100k+ salaries. In many other countries social security, education, loans, healthcare etc is simply priced in publicly.

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

#39

Post by blackhaz »

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…

I live in London. Developed a persistent headache which goes on for a few months already. Just got appointment to a neurologist for August 2023. Today is September 2022. Although, is UK in Europe?...

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

#40

Post by chrisseaton »

ivolimmen wrote: post #25

I would really advise you to look into how stuff is organised in the US compared to your country. I once did and came to the conclusion that it looks like they earn more. I pay a really low healthcare insurance fee compared to the US. Their system for pension is also completely different from other countries. They have a 401K. In my case my company pays for my pension. I am Dutch from my stance it would be unwise to…

> They have a 401K.

What would you prefer? Defined-benefits, dependent on your company managing your pension? Most people would rather it was independent and invested.

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