Ask HN: A US programmer makes 3 times that of a EU programmer. Why?

* Making $1 in the US != making $1 in the EU: There are all sorts of things built into the society here that simply don't exist in the US (or Cali anyway). For example, in Cali I was absolutely required to own a car, which means paying registration and insurance and fuel costs. Here in Dublin the public transit is good enough (amazing from my standard, but don't talk to a German about it) that I can get around perfectly fine without a car. So that's something like $10k/year that I don't have to pay.

* School/University: This is a big one. When I graduated from a California State school (great education, fairly cheap), I had about $25k of student loans to pay off (way on the lower end of the spectrum). I was able to pay these all off in the first couple years of professionally writing code, but someone in the EU wouldn't even have to think about that. So there's around $10k/year for the average engineers salary that just literally doesn't exist (not taking into account the stress and economic inequality caused by having a system based on giant loans to teenagers).

* Childcare: Although I dont have kids, plenty of my Bay Area co-workers did, and were paying on the order of $3k/month for childcare. This is absolutely bonkers nutszo crazyness, but it's a fact of life for many in the US. Doing a quick google search tells me (I have no practical knowledge here) that childcare here in Dublin is something on the order of $250/week which although expensive is still waaaaay cheaper then what you would be paying in California. So here's another $20k/year price difference between the US and EU.

Adding it all up, cost of living here is something like $50k/year cheaper then in California (without even talking about house prices), so getting paid $50k here you're going to be seeing roughly the same value as someone making $100k in Cali and although it might shock some of the hackernews crowd, not all US programmers make $100k/year! I havent done an in depth analysis, but if you look longitudinally across all costs, I would bet that the average software engineer in the EU is being paid in more value (not $, but life value) then the average engineer in the US, especially since people here (on average) report having much higher levels of life satisfaction, and live longer.

Exercise for the reader: I have a friend that recently took a huge pay bump to move to the Washington are and work for Microsoft. He just paid $1M for a 3 bedroom house. What does $1M get you in the EU? Is he actually making more value by taking that job, or is he effectively paying microsoft for the pleasure of living in Seattle?

Now, you can get a lot more for your money outside of San Francisco while staying in the US, but that applies to European cities as well.

Don't get me wrong – US pay still outweighs these lower costs as a young engineer without children. If you're planning on starting a family, things get a little muddier. Having a child is free in Sweden, whereas it ranges from thousands to tens of thousands in San Francisco. Childcare in Sweden is progressively prized and never goes above ~$100/month, while it ranges from thousands of dollars a month in San Francisco, to hundreds in other parts of the US. School? Yup, that one's free too – college and the works. Got elderly parents? Elderly care is also subsidized to ~$300 a month (although private alternatives do exist).

However, there's no such thing as a free lunch, and these things do need to be paid for. This is done by many different taxes. Working as a contractor, you become painfully aware of a few of these – I've contracted for an American company while based in Sweden, at American rates, and I still end up with way less than I did working in the US.

First off you have your payroll tax at ~31%. Normally this cost is quietly absorbed by the employer, so from the get-go almost a third of your salary is gone without you knowing it. After that point, you have a progressive income tax that can go as high as 60% – which is what employees see on their pay stubs.

So they're just different models. The European model largely optimizes for a high common denominator, whereas the US model seems to optimize for extremes.

A few exceptions aside, Europe just doesn't have VC capital. VC capital translates in Dutch as "risk capital". We have neither the capital nor the risk taking.

A fitting example of this shortcoming is Blendle. Once called the "iTunes for news", this app would let you read articles across news publications and magazines. Imagine the convenience of that, and the massive total addressable market.

I would expect that a US entrepreneur would easily put a few hundred million (if not billions) into the idea, trying to aggressively seize this new market. To try and replicate what Jobs did for music, but this time for news publishers and magazines.

The Dutch/European way is starvation. A peak of 50 employees and a payout to publishers of a few million. Next, the founders barely hanging on by raising another 1 million at best, which is an amount a SC startup may burn in a day or week or so.

The big capital just isn't there. And you need big capital to pay for large amounts of 150K engineers.

A second factor, not sure if true across Europe but definitely in the Netherlands, is that people doing actual work are underappreciated. Trade-based as this countries' legacy is, the "real" business is the finance, sales and purchasing departments. The rest are just "hands", replaceable units. The idea of an ordinary worker earning 100-200K is quite alien to Dutch society.

They don't, period. At $45,284 the US has the highest household net disposable income per capita in the OECD (http://www.oecdbetterlifeindex.org/countries/united-states/>), where "disposable income" (http://stats.oecd.org/glossary/detail.asp?ID=46>) accounts for healthcare and government benefits.