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

It definitely seems to be to be a supply and demand issue (I guess by definition of market prices this is obvious). On the demand side, there are less venture capital dollars and the sheer volume of companies is lower. On the supply side, there are plenty of local qualified engineers (just look at upwork and how much you can get developers for in other countries).

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It may sound obvious, but most foreign companies will typically hire foreigners, rather than Americans, at least most of the time.

If you're a foreigner, working for a company in your country of origin, compared to an American company, offers the following benefits:

1) The right to work in the first place - getting an American visa is rather hard 2) Not needing to pick up your life, your family's life, and move far away from extended family and friends 3) Work in the same time zone - have a job during normal work hours, without an expectation to show up to meetings late at night 4) A work environment where most communication happens in your native language

Most development salaries are pretty high compared to the median salaries in the surrounding region, they're just low compared to American developer salaries, but few people abroad make American salaries, so people tend to be happy with their "I'm upper-middle-class compared to the people around me" salaries. And since American jobs aren't really under consideration, for the reasons listed above, foreign employers don't feel the need to boost salaries even further, to a level comparable with the US, since the labor pool doesn't apply for jobs with those salaries.

The free capital is probably a large factor, just as you say because there is a culture of investing in software development. I don't think you see that as much in say Japan or Germany or anywhere in EU.

The northern European countries are more geared for industrial conglomerates, as is Japan, and I have no clue what they do in southern Europe, but it's not investing in software development.

Other factors in Europe is probably as simple as historically less divergent incomes, less incentives for higher salaries due to higher and more progressive taxes, and a lower demand for really skilled developers due to the industrialist mindset that is hard to shake.

I've had friends move to the Netherlands & definitely they have more disposable income than I do. I've also worked in the UK (Scotland) where I made a hell of a lot less but where health care and prescription drugs were 100% free - that bit right there saved me 25K / year.

It's the causation that you suggest that's wrong. Income inequality is not an _input_ into this equation. It's the measure of a system!

And what income inequality is really measuring is just the mix of jobs. If you have everyone working the same job for the same amount, you'd have 0 income inequality. It's when you have a different mix of jobs that are valued differently that you get income inequality. America has a different mix of jobs, which changes our income inequality in comparison to Europe.

I think that the best way to explain the differences in software compensation is in supply/demand factors. The limited immigration, weak STEM education, businesses understanding the value of software, and inefficiencies with outsourcing makes it so that software developers can command a higher salary in the US because there's both reduced supply and increased demand.

So yeah. That's my problem. I think that there are clear supply/demand factors that explain the difference in compensation, and income inequality is the measure of a system, it is not an input variable.