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

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

#1
As a developer, I've found that it's just not worth it to respond to tech companies / recruiters seeking engineers, unless they're based in the USA. Companies based anywhere else, in my experience, expect to pay less than half the rate that US companies will pay.

Why is this? There are possible causes having to do with tax rates and culture, but has anyone really looked into it? How big a contributor is this (rather than, say, immigrants as percent of total population, or university quality) to the fact that the US has Google and Apple and Facebook and Twitter, and the rest of the world has… JustEat and Spotify?

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

#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 seriously. As a result, companies pay highly skilled IT employees more to keep them happy enough to not start up their own business.

There is more direct competition between deep pocketed firms for talent. High demand always skews the price, and it is faaaar easier for the US firms to hire US based workers.

Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established.

We also see that many of our outsourced maintenance IT jobs may be done cheaper, but they are often worth far less than what they charge. That negative impression reinforces the stereotype of US based IT professionals are more competent.

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

#5
If you're comparing to European jobs, one factor is that the U.S. has higher income inequality then many other countries, which means generally the highly paid jobs pay more, and the poorly paid jobs pay less. This will make U.S. salaries look good in some areas, and bad in others. (The median U.S. salary is also a bit higher than most other countries, but not by enough to explain the differences seen specifically in tech salaries.)

I think there is also not as much of a general tech talent shortage in Europe, so it's not one of the most in-demand jobs outside of specialized areas (if you're a top deep-learning expert right now, yes, but not for general programming / SE jobs). Many European countries traditionally have very strong STEM education, in a number of cases actually overproducing highly skilled graduates in the field relative to the local industry's needs (which is why you see a lot of Spanish, Romanian, Greek, Italian, etc. STEM graduates working in other countries). Not quite as badly oversupplied in the "T" part of STEM as in the "M" part, but still, not a shortage.

edit: Oh, another factor, for right now, that I should've mentioned is that the U.S. dollar is much stronger against the Euro and UK pound than it has been historically (even compared to a year or two ago), while salaries don't respond that quickly to currency movements. There are still significant differences if you use circa 2015 exchange rates, but smaller.

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

#6
post #4
post #3

The cost of life is lower. Healthcare is included in taxes.

Is it removed from your salary in the us? Or it assumed to be on top of your salary?

It's typically partly removed from your salary: you join a corporate health-insurance plan, whose premiums are partly but not fully subsidized by the company, with the remaining $x/month after subsidies coming from your paycheck. Some googling suggests that the average employee's share of the premium is $1100/yr for single people, and $5300/yr for those with dependent families. The actual numbers vary (quite a bit) by location and company.

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

#7
post #3

The cost of life is lower. Healthcare is included in taxes.

The cost of life argument makes no sense. By this logic we should be seeing janitors, or translators, or piano teachers in SV being paid much, much more then they are. If there was a coal mine near San Francisco I suppose the miners would be paid 100k/year as well?

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

#8
So i think it's partially values and markets. Enough US companies know the transformational effect tech can have on a business where that's not really understood elsewhere. Just having part of the market get it means it drives up all prices. In the US you are quoted a price before taxes, many countries quote offers post taxes (including after income tax is taken out). That can make US salaries look MUCH higher. Because the employer doesn't think about taxes, if you're outside the US as a contractor or freelancing, you can get a much better deal.

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

#9
post #3

The cost of life is lower. Healthcare is included in taxes.

The cost of life argument makes no sense. By this logic we should be seeing janitors, or translators, or piano teachers in SV being paid much, much more then they are. If there was a coal mine near San Francisco I suppose the miners would be paid 100k/year as well?

If being a dev is the new coal mining.

Yes.

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

#10

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…

> Traditionally, the US had been the only place to get any form of quality IT. The training programs and college degrees are more established.

Not sure that I agree with that! Compare to the UK, I don't think this is at all true. Compared to say, India, then that was definitely true.

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