Ask HN: How to increase SWE salaries in Europe?
It is often mentioned that Software Engineer salaries in Europe are significantly lower compared to US salaries, even adjusting for lower Cost of Living.
The consensus on why that is seems to be: * Individual contributors in Europe are not as valued as much as managerial professions, due to cultural/historical reasons
* Salaries in the US are skewed due to the presence of FAANG companies and VC money, which inflate salaries through the large amount of capital they inject in the system
* Europe has less freedom of enterprise (debatable), is in general more risk averse, and has a less dynamic job market (more difficult to fire lower performers), which results in lower wages to compensate for these factors.
Reasons aside, how can the European tech job market become more competitive?
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[ 5.1 ms ] story [ 374 ms ] threadhttps://news.ycombinator.com/newsguidelines.html
Why would that increase gross salaries?
> Lower corporate tax
Why would that increase gross salaries? Corperations pay the minimum they can for the product they get
> Eliminate unnecessary regulation
Well the UK has just created a ton, so that's unlikely to happen, but what specific regulation, and how does it keep wages low?
> Improve English education
They should try that in the States first
> Raise public sector tech salaries
That doesn't really mesh with lowering taxes
> Stronger accounting and capital market regulations
Seems the opposite to elimintating regulations
> Stronger contract laws.
In what specific way?
As for regulation, [1] suggests EU employment regulations for performance can require documented performance improvement plans before firing an employee is permitted. This basically makes early stage startups untenable, as you can’t easily remove employees that are incompatible with the company’s goal. For example, if you suddenly pivot you can’t just let go of an entire product line’s employees in a week. A recent example of this happening that made it to the HN front page is Gumtree laying off most of their employees a few years back. The trade off is obviously employment stability for employees, but in a hot labor market like software engineering there is not much downside to decreased stability.
Ultimately startups provide competition for big tech and drive up salaries, since if big tech doesn’t pay high enough people will flock to startups that will eat the big tech company’s lunch. That ecosystem doesn’t exist in Europe at least partially because of high income taxes and burdensome labor regulations.
[1]: https://www.saplaw.co.uk/brexit-articles/669-dismissing-an-e...
Income taxes for a $500k/year person in Arkansas is $196k
Income taxes for a $500k/year person in the UK $220k - but that includes healthcare
Why isn't Arkansas the centre of the development world? Does skipping healthcare and increasing your takehome pay by 3% really make a difference?
sources:
https://goodcalculators.com/us-salary-tax-calculator/
https://listentotaxman.com/366000
Healthcare costs for FAANG and other big tech employees (such as those that would be making $500k) are on the order of $2000/year or less. The company I currently work for covers all health insurance costs for me and I can choose to enroll dependents at a small cost per month. Again, adding high healthcare costs here for an engineer making $500k is unrealistic.
[1]: https://www.crfb.org/blogs/us-highest-taxed-nation-world
An company in the UK spending $500k a year on an engineer will get the employee about $250k a year
An company in California spending $200k a year on an engineer will get the employee about $147k a year
An company in the UK spending $200k a year on an engineer (gross salary £130k plus £17k employer NI) will get the employee about $107k a year
Its not taxes that keep the salaries "down" in the UK
Your own numbers show taxes are absolutely one cause of lower salaries in the U.K., although certainly I don’t claim they’re the only cause.
This may quite likely have the opposite effect. Corporate tax is auf on earnings. If corporate tax is high, the push to generate higher earnings is decreased - a large chunk would end up in the tax authorities pockets. Paying your employees more this hurts less since part of the delta is paid from taxes.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
https://news.ycombinator.com/newsguidelines.html
* Substantially more actual vacation time
* Substantially cheaper and yet similar health, dental, and vision coverage
* Less risk/stress associated with job security
* A very similar job market
I don't imagine this is the same in every country in the EU, just as technical job markets are different in the US. But working in the US Tech Sector isn't the panacea of work related issues.
I recall the React creator's base salary is 100k/year in London, and he works at Facebook.
The average salary for a Software Engineer is $66K per year in Germany (~61% less).
Source: indeed and payscale.
I always find a bit funny when US devs in HN talk about getting salaries above $200K/year... when the average US dev gets half of that. (I find it funny because everybody here thinks we are above the average dev level and can get a job at Facebook/Google/Amazon/etc... which is statistically incorrect).
- number of software engineers in the US: X - number of software engineers in HN: Y - number of software engineers working for FAANG-like companies: N
Where X >>>> Y >> N. So, yes, I also think that everyone here can't get a job paying 300K or higher not because we are not skilled enough but by simple math.
Well, yeah, luck certainly can factor in. There was a year I made around 1.35 million in total comp due to luck like this. Nowadays I mostly make around 150k.
I'm sure you can join one of the FAANGs and get, at least, $300k/year easily.
If I have a few millions in my bank, I'd definitely join an interesting startup with no regard to compensation.
1.3m/year definitely has some luck involved. 500k/year is probably less luck. Just joined one of the hot tech companies and stay for 4 years. You have to be unlucky to not get to 500k/year.
It's much easier to achieve 500k/year in Bay Area than in Europe.
500k/year can be achieved by being a senior engineer at one of the successful companies for a few years. The stock growth should take care of that, easily. There are probably like 100 of successful companies in Bay Area between 2010 to 2020.
There are thousands of people achieving this in Bay Area.
In Europe, the base salary is lower. The stock comp is also lower. If you are a regular IC, these 2 always go together. You would need a much higher stock growth. This level of compensation is rarely heard of that it seems impossible.
thousands ? out of how many ? seems like a tiny fraction
Way more attainable.
https://twitter.com/dan_abramov/status/1228454264915271683
Proprietary trading shops in London at the top end or L6+ at Google Zurich can pay that in total comp.
> I recall the React creator's base salary is 100k/year in London, and he works at Facebook.
And what about stocks? There should be at least another 100k in them. Facebook is a publicly tradable company, its RSUs are as good as cash, unlike startup paper money.
That's like a new grad engineer at twitter if we simply compare base salary.
To be honest, given how Facebook works, all the work he does in React/Redux is probably hindering him in terms of getting promotions.
When I was a new grad 8 years ago, my base salary was $120k already.
Unless he got a special deal, for an IC, the stock is proportional to the base salary. If your base salary is low, your stock will also be low.
Care to elaborate? Especially the part about vacation. Do you mean that US developers will retire early than their European counterparts because they are earning more in average and by doing so will enjoy more free time? I'd rather prefer to enjoy my free time when I'm in my 20s and 30s than when I'm in my 40s, 50s, etc.
The part about the health coverage: well, that's the thing, you never know if you'll deal with expensive or rare illness... so the European way of health coverage is worth it.
I paid $8400 in insurance premiums for my insurance. I also added $5200 in pretax to my HSA account which I used.
I paid about 30% to taxes.
I'm not complaining. I'd just like to point out that my high salary (which is not > $200,000) comes with some costs.
I've seen mid-level tech jobs in London banks for £146k which come with 34 days off including state holidays like new years day, christmas, etc
£146k for a full time contractor on 226 days a year isn't that much at all - £650 a day, which is in the "Senior developer" range [0]
With 30% tax in the US and the cost of health insurance, that would be $68,400
For a staff employee on £146k (which is quite achievable in finance), taxes would be 39.5%, or $79k in tax [1] (there's also local property tax, but that's in the ballpark £1k-3k a year depending on the size of your house). Tax could be potentially lower as a contractor if you're clever about distributing your income, but I know they've been clamping down on some avoidance schemes.
No idea what a HSA account is, I guess some form of pension plan? That tends to come off pre-tax.
[0] https://www.itjobswatch.co.uk/contracts/uk/senior%20ui%20dev...
[1] https://listentotaxman.com/146000
Also, finance generally pays better than other industries (although banking in Netherlands pays typically low-average); but trading and investment companies pay above average.
Median rent for a 2 bed in London is $1976 a month
Average rent for a 2 bed in San Francisco is $3772 a month
[0] https://www.london.gov.uk/what-we-do/housing-and-land/improv...
[1] https://www.rentjungle.com/average-rent-in-san-francisco-ren...
Also perm developer jobs in London are at around £100k at the 90th percentile, nowhere near £160k
See https://www.itjobswatch.co.uk/jobs/london/developer.do
I was looking at the following job last month which was advertised at £200k
Software Engineer needed for award winning tech focused hedge fund run by passionate computer scientists. Sells Flexible hours/work options Technologists only report to technologists Programmers treated as top commodity so ‘spoiled’ Very friendly/collaborative people Cutting-edge tech Multiple greenfield projects No red tape Beautiful offices Small team size in a growing company so able to make a significant impact Role Build and optimise new cutting-edge platforms to back-test, research & trade quantitative strategies Predict models to automatically invest, design and develop trading platforms Performance optimisation & building robust intelligent solutions to problems
And this one at £150k
My client is a specialist quantitative asset management company that takes pride in having a distinct culture and approach to working with technology. With a tech driven and relaxed feel in the heart of London. They are looking for an outstanding Low-latency Network Engineer. The successful candidate will be a key engineer in the company and will be designing, building and managing critical network infrastructure and automating all work.
Now sure, not everyone is paid those, but not everyone is paid $500k in america either. trcollinson was a on a gross of less than $200k as a contractor. Based on his hours that's $800 a day, or £586 a day, or £660 a day if you include Employer NI.
I think the OP meant Health Savings Account, which lets you put money in pre-tax for certain medical expenditures. There is a limit and IIRC you lose what you don't spend. It's good if you have predictable costs, or you're saving to do an expensive procedure (friends have done this for lasik), etc. You pay the bill then submit a receipt to get reimbursed out of the account.
In the US these are now termed Flexible Spending Accounts, with subcategories of Health, Dependent Care, etc.
https://en.wikipedia.org/wiki/Flexible_spending_account
It helps, but certainly a different attitude towards social safety nets, defense spending, etc would make a larger difference.
The downside is you must have high deductible plan to contribute to an HSA -- the idea is that you put aside enough money to cover the high deductible just in case, but are now motivated to price comparison shop for MRIs and whatnot, since any unspent money is now yours to keep.
Did working those extra weeks mean more value to you?
I'd say it's a cultural thing why we don't use it. Working hard and making big money is the dream. I'm not saying my company forces me to not take the vacation time. Heck they try to tell us all to use it more! (PTO is a liability on the books, FYI). But culturally, it's just not a priority (as in our countries culture, not the company itself). I realize it makes no sense. I need to make it more of a priority. My original point is my friends who are ex-pats on the EU seem to have a culture of using that time being more important than working.
Edit: I'm not sure why I'm being down voted. I'm mostly sharing what I see and feel. Your milage definitely may vary and I hope it does!
Your company at the end of the day doesn't care about you, those 5 weeks you could've spend on a trip doing a hike or just chill on the beach. That is what you'll remember later in life. That deadline you crushed, your boss enjoyed but won't be remembered in a few years, and if your "team needed you" comes up, your company overworks you and needs to hire additional staff.
The interesting thing is I used to try to force people who worked for me to take more time off and they would complain. I think in many ways it was the example I set, which was bad, of always working. It's a regret I honestly have. I'm also happy now that I am just an individual contributor. I don't have to try to change that culture anymore. I only need to change me.
Getting 6 weeks of vacation instead of 3? I’d still rather take the extra $150k. Having to shell out $15k for healthcare each year? I’d still take the extra $150k.
Last time I checked the average salary for SWE in the US was roughly $110k.
This depends on the company, last startup I worked at gave me around 6 weeks of vacation per year not counting holidays. Of course I got paid less than FAANG but still better than Europe even without the equity.
>* Substantially cheaper and yet similar health, dental, and vision coverage
I have heard a lot of people in Europe (UK and Germany) complain about issues with getting health coverage for non life threatening issues unless they also had private insurance. No idea how many companies pay for that in Europe.
>* Less risk/stress associated with job security
My bank account is my job security. I don't think I ever was worried about job loss after a few years of building up savings.
The experience my friends have in the EU seems to be pretty good over all with healthcare. The US healthcare system give fantastic results at a phenomenal and often strange price. It's a trade-off I'm sure.
I agree that having savings helps. And I have quite a bit of savings. But I still wouldn't feel comfortable being laid off .
Over all I'm here in the US and I love it. But I'm pointing out that there is give and take to everywhere.
Also everyone keeps talking about working for FAANG but.... The vast majority of US engineers don't work for them.
True, but since FAANGs have offices all over the world, employ a ton of people and doing market research for salaries they should offer, it might be a pretty good idea to look at them and compare what they pay per country to see disproportions
In my experience, the US is a place where little is given to you but you can get a lot. But you cannot take anything for granted. If you value vacation then you need to grill potential employers on that point and be willing to take a job that pays less. Most people value money so if you value something different you need to be proactive about getting it.
Some of those costs aren’t even borne by the employer.
The calculation is probably more favorable to traditional middle class jobs in Europe.
European healthcare systems are not exactly dream come true either. Range of treatments available/covered and waiting times can be significantly behind the US. US healthcare is actually great for an SWE making bank at a FAANG & co. Just not that amazing for common folks
> The US has no guaranteed paternity/maternity leave
Top tech companies all have those, it's a fairly cheap perk to provide to attract the talent
> and the majority of workplaces have less than a month of vacation time
I have just 20 days here in UK (on top of public holidays) too
I made ~$300k last year at a FAANG (Sr. engineer), and my healthcare costs were:
$29/month in premiums $200/month in an HSA, which I'm saving for retirement (complicated US income tax reasons), so money I don't available for my use but it doesn't go into a black hole either. $1500 deducible $3000 total out of pocket
I had a sudden health condition last year, before covid fortunatly, so I maxed out my insurance. So my total costs ended up being $3348 + HSA contributions.
I'm in Washington State, so there's no state income tax, my effective federal tax rate will probably be about 27%.
I'd love to Europe, but it's hard looking at the numbers to justify it. Even if I were willing to take a 50% cut in take home pay, I doubt I could find a job that paid that much.
So my comment was intended to apply generally. I can certainly see that there could be some outliers that this wouldn't apply to. I feel like SV and FAANG sort of fall into that category. I think many of us never make close to that money (or maybe I'm just a loser). I think I'll top out at $120k (today's value) if I have some career advancement, which seems unlikely. The US average (median?) for a developer is about $95k.
Not all engineers are at FAANG, we can't compare the average to the top tier companies.
Across all workers in the U.S., the average after 5 years is 15 vacation days, with 8-10 additional holidays and a more variable amount of sick leave (https://www.bls.gov/opub/ted/2018/mobile/private-industry-wo...)
Now Americans are notoriously bad about actually taking all our vacation in a year, but the limited data I see suggests that we still on average take more than 2 weeks a year.
Edit- grammar
Things that are not good for the average american is not the reality for the average big-tech software engineer and you have to compare apples to apples.
That survey probably also includes such stars as tata, infosys, random IT firms and places you wouldn't call SV style software. Yes, you shouldn't move from europe to work at such places. What everyone is implying is working in SV or FANG tier places.
Theres an interesting sort of recursion where companies compete with others slightly earlier and slightly later than them, where the more mature company promises less risk (in the form of cash and equity $ value as of the last round raise) compared to the less mature company. This means that e.g. Stripe must offer comparable or higher salaries than a series B or C company, and slightly “less” equity compared to the less mature companies more risky but higher potential equity. So the salary floor is driven by very early upstarts, and companies are pressured as they mature to increase that floor or employees leave to other companies with the same salary but less equity risk.
So, 2 things: early companies must be able to grow (so their equity over the long term outpaces or matches larger companies) and early companies must be able to pay something close to reasonable salary (in SV this is usually ~70% salary of top of market, so 90k from a seed startup vs 130k from a FAANG). Basically, more companies need to be started and access to initial investment is a huge part of that.
Dramatically increasing the pay of these people would be doing them a disservice by making them less employable.
From my experience eastern developers seem to need a lot of hand holding their don't seem to be many technical leads / CTO who can take broad instructions and produce a good piece of work
"doing them a disservice by making them less employable."
Hmm that's interesting and there may be something to it (I'm Polish). I've seen some very competent Polish tech leads, but no one higher than that really. It may be because the local value of a developer or tech lead salary is so high in Poland (esp. if you contract for rich Western/US companies) that people don't really have the motivation to move up the ladder - they're living like kings already and build wealth that will stay in their families for generations.
Europe as a single entity is problematic, there's a north-south gradient, the cold war east-west divide, and EU/non EU.
* Switching jobs was less common, there used to be loyalty from both sides.
* It's easy to get competent workers from outside of "western" europe with a matching culture and timezone. I've seen a switch from outsourcing to poland(former east) to the ukraine(non EU+east). This is good for the polish guys, they're almost at our level now.
* Residence requirements for people outside of the European continent are low, and on base wage mostly lower than for any other sector.
This makes the wages more internationally competitive from a business perspective, and hooks into "Individual contributors in Europe are not as valued as much as managerial professions" Because you can get the work from somewhere else cheaper.
The average house price to earnings ratio in the UK is over 8x, so your 65% loan becomes 5.2x earnings, which is actually higher than the 4.5x that mortgage lenders are allowed to lend by regulation (only 15% of mortgages can be lent above this).
So let's be generous and say your 65% loan is 4.5x earnings. That means the other 35% is 2.4x earnings.
2.4x earnings is equivalent to saving something like at least 15% of your gross salary for 10 years, assuming a 7% annual investment return (which in itself is unobtainable, but lets be generous).
15% of gross salary is going to be 20-25% of take-home for most people...not exactly obtainable when you're already spending 40-50% of your take-home on rent.
When you finally get the mortgage the monthly payments might be affordable, but getting there is the problem for the vast majority.
So no, most people are still looking at 3-4% mortgages with the equity they have at hand.
More recently I found a bug costing >£500000 for a Major UK Job listings board.
At an engineering firm? Seriously?
I'm looking for a job change. Purely for money. Anywhere in Europe is fine actually. I mean, looking at the US, how hard can it be to earn 80k EUR with a CS degree and a few years of experience.
If anything, the impression I got at my last job where I was in the union was that the union negotiations mostly created an excuse for not increasing individual pay. "Sure, you perform really great and all, but if we give you more we'll have to reduce pay for someone else based on the agreed upon average increase."
For high-in-demand jobs such as SWE, the leverage of "if you don't maintain competitive pay I'll probably start look around for other work" is much more effective than union negotiations when no one is paid bad enough that they'd be willing to go on strike to get better terms.
Education is good and free enough that the supply of qualified labor would be hard to keep down without governmental intervention.
You do give up some agency by going through intermediaries.
Good thing you are not forced to stay
You get a lot of devs with 20+ years of experience with very respectable wages (in European terms) who are not able to implement fizz buzz by themselves within any reasonable timeframe.
The younger devs, although considerably more skilled due to more recent education, aren't encouraged and mostly lack ambition, all they have to do (and can do) to make a good income is to hang around until they have 20+ years of experience.
* Offer tax breaks for tech startups. The UK has a whole suite of these and London is number one in EU (out of now) for tech startups
* Similarly non-tax pro-entrepreneur reforms and help: bankruptcy protections (the US does this very well, the UK very badly); access to mortgages / leases and credit for the self employed; better management of taxes and benefits; reform of regulation for smaller businesses; and media campaigns to make starting (and failing at) a new company more acceptable socially. The UK does great at some of these (starting a business is easy), badly at others (bankruptcy is a nightmare here).
* Legal reforms around freedom: so you can break non-competes (the UK does ok at this and the EU too I think); so it's harder to enforce IP that isn't being actively used; to prevent large established companies from bullying smaller ones (less of a problem already because the rest of the world doesn't follow the "American Rule" for court cost...)
* there are a bunch of smaller initiatives that can assist too: government buy-local and buy-small policies; entrepreneur training and projects in schools and universities, requiring graduate programs to accept delayed/older entries (so you can take a year off between uni and SafeCorp without worrying you'll never get back on the ladder), encouraging contracting over employment.
All of that should drive entrepreneurship. That will hopefully build an eco system (suppliers, capital providers etc.) and it can grow organically from there.
I'm not sure it will ever be Silicon Valley in London or Amsterdam or Berlin. Partly there are established industries that soak up talent tech workers (finance in the UK) but also because software is a "winner take all" market most of the time. Even hardware can be that way too. And that's just not the European culture.
What do you do if you are a person who runs out of money and can't pay debt? Surely you have your assets repossessed and some form of debt charge hanging over you for some time so you can't get into that position again (or rather that others will know not to lend you money again)
Is it different in the US?
"In a Chapter 11 bankruptcy, the debtor corporation is typically recapitalized so that it emerges from bankruptcy with more equity and less debt, a process through which some of the debtor corporation's debts may be discharged."
https://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_S...
Why can't an average person do that?
There's also Chapter 13, which is more of an adjustment plan. You keep your assets, but you agree to pay some portion of your debts over 3 to 5 years. If you don't make your payments, the judge can dismiss the plan and creditors can pursue you under state law for the debt.
https://en.wikipedia.org/wiki/Bankruptcy#Chapter_7
This makes creditors more likely to be reasonable (as no one is getting paid) rather than all race to be the most demanding (because if anyone is getting paid you want it to be you!).
There is also Chapter 7 which governs liquidation. Even that allows room for the company to seek a buyer or similar opportunity rather than just give up and die. British law has moved a bit more on this direction in the last 10 years.
This is important because in modern companies are usually valued much higher than the sum of their parts. Actual assets you can repossess are much less important than the brand name, staff that know the job and each other, on going relationships with customer etc. Grabbing the assets gets you 10% of the value and burns the other 90%...
Edit:
Even British bankruptcy protects a workers tools. Because a few second hand hammers is worth a lot less than the bankrupt blacksmith could earn if he kept them (and hopefully pay you back). This is the same concept.
It's not even just the pure bankruptcy itself. If you've ever been bankrupt you can't be a company director. You can't access all sorts of financial products (car insurance!?) until long after the bankruptcy is discharged. It's a mess.
The one thing that probably has a real impact is the enormous size and and profitability and competition of large American software firms for talent. There's not many of them in Europe with the exception of SAP or something? So that's a real difference but it's not easy to recreate because the European market is not homogeneous and policy environment is much more weary of big tech.
I don't actually think Europe should or can compete on wages. Europe has other things to offer. Smaller, healthier ecosystems with focus on working on tech that solves social problems, better balance of life and work, free education and high degrees of safety and equality, walkable cities, and so on. There's no need to be more market-driven.
Spotify is also mentioned in that same post; it has the (profit) scaling problem that the more usage it gets, the more they have to pay their artists. Income and expenses scale alongside each other.
And the point based system is also... interesting, as one can score very high and yet be unemployable.
It’s generally true that the US is more comfortable with variance in outcomes than the EU. This is a cultural thing which also presents legislatively.
for instance, after world war 2, most European counties had to do heavy intervention in their economy to rebuild their country from scratch. (the dutch and French had wage freezes until the late 50's, Britain had rationing until the 50's, not to mention the insane human sacrifice during the war. Belarus lost a majority of its population during the war for instance). not to mention everything behind the iron curtain being completely mismanaged for 50 years after being the area which took the brunt of world war 2.
having two oceans between your country and the rest of the world helps a ton in keeping your economy stable and growing, while Europe at that time was turning itself into literal dust twice in 30 years.
Alternatively: What's the incentive for firms in the US to pay high wages?
Most large employers of engineers in Europe are rather old industrial companies. Management generally do not have software engineering backgrounds.
The only jobs filled by locals were those which had artificial cap on employee numbers and local regulations(accountants/legal)
Whilst some of these engineers were A+ level brilliant, most were mediocre and doing jobs that could easily be done by local talent.
The benefits for companies doing this? - immigration visa tied to job and ability to lowball salary (as residence in host country was itself a major plus) thus ensuring salaries rose way slower than demand would otherwise have made them.
The one off cost of Visa is nothing compared to the money those companies saved.
I think most people are mediocore, and doing mediocore jovs -thats ok
Keep in mind that this allowed some compabies to afford half-decent engineers whereas they would nornally only be able to afford junior talent. Whether that works out to a net benefit is ofcourse debatable.
I personally find that a lot on management of engineers in UK is shockingly inefficient. I dont kniw what its like elsewhere, but i recon average 'efficiency' is under 50%
"Efficient management" is a meme in Russian IT industry.
I'm surprised "British scientists" meme has a good Wikipedia article in English[0].
P.S. Runet's memepedia Lurkmore redirects from "Efficient manager" to Stalin page.
[0] https://en.wikipedia.org/wiki/British_scientists_(meme)
Not an easy feat. Most would be reliant on the H1B program.
Yes, but that has little effect on H1B visas. European applicants are in the same pool as everyone else.
> getting a green card is exponentially harder
Nobody mentioned getting a greencard, which is a problem in itself. Just a work visa. Which, if you're a European citizen, is dependent on a lottery.
Yeah, it's easier for an AU citizen to get a visa (because there's a special program for them), but you haven't said why it's easier for an EU citizen to get one. Please back up your claim.
American company also means a sales or support office (if registered correctly) of a European company.
The thing is, I just can’t find an argument why I should be able to get very rich doing my job. It’s a comfortable job. It pays a good salary. I got here by taking no risk at all. I wouldn’t want to switch jobs just to drive up my pay even if I could. I have other things to think about. I have worked 20 years in the same job and so have my colleagues. This is a cultural difference I feel.
That said, I don't think it's just a matter of culture.
Also just because capitalism likely makes the world better on average, doesn't mean we all have to go ferengi and dedicate our lives to pursuit of maximum profit :D (Perhaps there is a balance)
My dad didn't use internet forums before.. now he's on facebook groups about wood working -- I doubt the projects and reviews people in those groups share are fake news :)
Fact is: without facebook my dad probably wouldn't participate in any online community.
Also note: I did advice against going all Ferengi :)
For reference I make around $70k as a senior type eng. Not huge but the “ceiling” (for cash comp) if I switched jobs 10 times and ended up at a very well paying job in the end would be 20-40% more - which is 10-20% net!
There's no shame in wanting to work for a company and focus on a work-life balance. Americans (again, traditionally) celebrate(d) those with higher ambitions and achievement. In Silicon Valley and the startup world (many of whom are on HN), the entrepreneur/founder vs. employee issue can be very sensitive.
You can't have low inequality by definition if you decide to start paying one group a ton of money.
Well, this is a lot like the housing conversation in the US. "I want my house to go up in value, and be a great investment!" Also: "Why can't I afford a house?"
You can't have your cake and eat it too.
It's not necessarily a failure, it's just a different place to draw the line on social contract. While individual contributors earn less the social safety net also makes it much easier to found and grow a business without the threat of death and guarantees a peaceable minimum standard of living. It's also worth pointing out that salary, especially at high seniority levels, becomes a smaller and smaller part of total compensation.
- Gini for SE is 0.25
- Gini for FR is 0.31
- Gini for CA is 0.33
- Gini for US is 0.48
- Gini for ZA is 0.65
I've also included South Africa for comparison, one of the least equal societies on earth. A photo of what a 0.65 Gini country looks like is here (https://blog.prif.org/wp-content/uploads/2019/10/SA_Drone_Pi...)
[1] https://en.wikipedia.org/wiki/Gini_coefficient
If nobody has any money at all, would you not say inequality is low? If everyone in Tajikistan has $5 except the president, Emomali Rahmon, is inequality not low?
I suspect you are looking for a pairing of HDI and Gini, which factors in both the development (and hence the standard of living) and the inequality.
Sweden: (Gini: 0.25, HDI: 0.933), France: (Gini: 0.31, HDI: 0.901), Canada: (Gini: 0.33, HDI: 0.926), USA: (Gini: 0.48, HDI: 0.924), South Africa: (Gini: 0.65, HDI: 0.709).
Now, Tajikistan has an HDI of 0.66 ("medium"), and Azerbaijan 0.756 ("high").
Kazakhstan might surprise you, the HDI is 0.817 ("very high"). The standard of living there is actually good, in spite of what you may have seen on Borat - incidentally filmed in Romania. Almaty's been on my list of places to visit for a long time :) [1]
[1] https://en.wikipedia.org/wiki/Almaty
That distribution will yield a very high gini coefficient of very close to 1.
The Gini coefficient is defined as 1/2 the mean absolute difference considering all pairs of households:
https://en.wikipedia.org/wiki/Gini_coefficient
A group of people where everyone has the same income as a Gini coefficient of exactly zero. Adding a single outlier will increase it a little. A group of 1001 with 1000 people earning $1 and one person earning $100 has a Gini coefficient of 0.09.
> That distribution will yield a very high gini coefficient of very close to 1.
It yields (n-1)|5-p|/(2n(5(n-1)+p)) which is about p/(5n+p).
So it depends on whether the president (p) has $10 or $n^2.
Romania: Gini: 0.36, HDI: 0.828
HDI is close to Kazakhstan, actually
Obviously you have to compare apples to apples
Well, I mean, except property rights and the people that will defend them in most of the places in the planet suitable for human habitation.
They tend not to be very wealthy by modern standards. Maybe you could ingratiate yourself to them with them gifts of things that require modern manufacturing infrastructure.
You were born into the tribe, and stayed there your entire life. Also there were no laws on hunting, setting traps, etc.
You've also broken the site guidelines frequently with snark and attacks on other users. Not cool.
https://news.ycombinator.com/newsguidelines.html
And the above presumes the existing population would accept you, and it's quite likely they won't.
Deciding to live off the land without special privileges enjoyed by native populations is simply not possible; regular financial transactions between you and society is a requirement, and it's pretty much impossible to raise children without access to modernities and without having the authorities go after you for child abuse.
I love eating wild weeds and berries, but it takes _a lot_ of time to get enough to fill yourself, and it's not a case that people have only eaten stuff like acorns only in times of famine.
This fact by itself made me question a lot of what's in "Sapiens".
Also from what i gather most meat was aquired from trapping, rather than hunting
1. HGs are very skilled, and they build their skills throughout their lives - crucially, starting with childhood and adolescence. I, an adult brought up in a Western civilization, would be totally clueless in a rain forest the same way that those HGs would be totally clueless in our world.
2. HGs live in groups. I would need to find a group of HGs that would accept me, which is highly unlikely because of the language and culture barrier, plus my lack of skills - why would they want to have anything to do with an useless guy in the first place? My CV full of accomplishments does not impress them at all.
Unfortunately, just like transplanting an adult HG into our society most likely ends in them becoming a homeless addict, most likely result for me heading for the jungle is fairly quick death.
If you are a hunter gatherer you just need a good hunt every now and then. There is no pressure to perform work all day if you get enough food.
This is different if you are a farmer. Farming is highly labor intensive. There is so much work to do that you are never done. You will have to repeat the same motions every single day. Swing the same tools the exact same way. People are tied to their land and it is possible to conquer the land violently. You are dependent on a military force which implies that a local ruler must collect taxes to pay the soldiers. That ruler also has power over you which can easily be abused.
Democracy is definitively fairer than having an authoritarian ruler but it can be subject to tyranny of the majority or the minority and still cause failure in leadership.
Break a leg, if you’re lucky, you’ll a burden for s month.
On the other hand, your teeth may be healthier than that of people who gulp sugary drinks.
Not quite. In totalitarian states, typically everyone's income is fairly equal.
Wealth, however, is often another matter.
In the soviet Union, party apparatchiks often had very nice dachas to live in, fancy cars, exclusive shopping venues with imported goods, vacations abroad, etc. But these things weren't necessarily purchased with disposable income, per-se. At least not officially.
My impression has been that wealth inequality in many places in Europe is much higher than income inequality, as a factor of it being an older society.
The places in Europe I'd want to move to are really no cheaper to buy a house than the places I'd want to live in the US.
[1] https://fred.stlouisfed.org/series/SIPOVGINICAN
I pulled some city-level numbers and it seems like at least in some areas, European SWE are missing out compared to coastal US ones:
London 2018: 0.7 https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
SF 2012: 0.523 https://www.sfgate.com/bayarea/article/Income-inequality-on-... (probably this has gone up!)
Paris 2015: ~0.492 https://www.institutmontaigne.org/en/blog/data-inequalities-... (they just say "similar to brazil", which is 0.492
Its unfortunately harder to find a bunch of city-level data, I wasn't able to find any German cities on quick googling, so I'm definitely fulfilling stereotypes of "Americans who think of Europe as just a couple famous cities", but those capture at least a couple of major population centers that aren't so appealing if you're a dev compared to the US hotspots: they're still unequal, but suddenly you're not nearly as high on the totem pole.
SE is 0.867 FR is 0.687 CA is 0.726 US is 0.852 ZA is 0.806
So you have very high wealth inequality, average German net financial wealth is equal to Greece and Germany has a significant number of billionaires, but you also have a system that fundamentally cannot be compared with the US. It just optimises for different things.
That being said, whilst recognising those differences, lower wealth inequality is not the result of most of these systems. Income inequality is generally lower but the cost of this is usually: low competition, high structural unemployment, weak unions, low levels of business creation...it isn't free. It is readly apparent from the EU that whilst the US has high inequality, it also has a far more dynamic economy that results in more people actually becoming wealthy (to take Germany as an example, most billionaires come from families that got rich in the 30s and inherited...the level of downward mobility is very high in the US) and higher levels of innovation.
This is exactly the other side of inequality: if there is a big gap, someone must be taking advantage of this gap. The problem is that most people are losers in this competition.
https://en.m.wikipedia.org/wiki/Global_Social_Mobility_Index
Rent control sounds like a good idea in theory but in practice it seems the opposite, creating two tiers of renters.
The reason why it works is because the government is forced to change laws that prevent the construction it just promised. It's about accountability rather than the promise itself.
The reason why rent control doesn't work is because the government can enact or keep laws that restrict the supply of housing. There is no accountability. It's actually equivalent to censorship. If you want the housing market to look good, just ban bad news (high prices).
(Of course this all depends on the alternative too: renting regulations vary widely over the world in how strong the position of the occupants is wrt rent increases and landlord initiated termination)
A house can easily lose its value or at least cause large expenses, e.g. if the cellar floods or develops mold problems. Or if the surrounding neighborhood becomes worse.
Selling houses has a large transaction cost.
I really don't see much benefits to owning over renting. I'd rather have 200k in a diversified portfolio that earns me 5k a year after taxes and has a much lower probability of losing 30% of its value while living in an apartment in a central location than own a house in a suburb that costs me a few thousand a year in upkeep and taxes. I'd likely need to buy a car too in that case, which is another few thousand a year.
From a financial point of you a difference is that to do this you need to have 200k cash, while you can borrow most of the money to buy a 200k house.
There is a leveraging effect when investing in property.
If you want to do it without reducing your expected returns you diversify to products with similar expected returns and, to the extent practical, mutually independent risks.
How could it not?
> If you’re splitting your investment, your downsides are smaller but your upsides are also smaller, and presumably by the same amount.
Yes, and your expected return remains the same. Reducing variability isn’t “reducing returns”, because, as you note, what you lose from reducing the 50+nth percentile returns is made up for by increasing the 50-nth percentile returns.
Also, extreme risks is not what most people aim for in investing when most of their net worth is involved; the utility of money is not linear.
[1] https://fred.stlouisfed.org/series/CSUSHPINSA
Risks of buying your home include: - Not being able to move if you can't sell (because the market isn't right) - Being stuck in a house where you pay a high mortgage while you could rent for much less after a crash (what happened in Spain after 2008). Note than in US you can give up your house and your mortgage goes away, but that doesn't work this way in Europe. The bank sells your house and if it doesn't cover the mortgage you still owe the rest
Also if you sell too early after buying, you're losing money because you pay more in transaction fees that you would have in rent (unless there is a big spike in prices).
Anyway, for a long time real estate have been steadily appreciating and people (especially boomers) got used to it, to the point that all their reasoning about real estate is that it's appreciating faster than inflation. It was true for a long period but that's no longer the case.
The German population is shrinking.
Real estate as a safe and stable investment in the long term relies on steady population growth to insure that demand will always be there for you to be able to sell at a good price.
Of course, if you buy in the most desirable locations you may be shielded from this because demand outstrips supply by a huge margin to begin with.
This explains the high wealth inequality we observe[3], despite the low income inequality[4].
This could be caused by the low levels of home ownership given that home ownership (and the associated leverage) is a huge tool for wealth accumulation for the average person.
I know that people say you can make more from ETF's etc. than real estate, but I'm not sure if that applies so much to your primary residence given you will always need somewhere to live and a bank isn't going to lend you hundreds of thousands of euros to invest in ETF's, but they will for your primary residence.
The extra mobility you have while renting is an advantage but one that comes with a hefty price.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
[2] https://en.wikipedia.org/wiki/Median_income#Median_equivalen...
[3] https://en.wikipedia.org/wiki/List_of_countries_by_wealth_eq...
[4] https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
Now what happens if you include expats in the calculation?
> makes it much easier to found and grow a business without the threat of death
And yet you see a lot of Europeans and Canadians founders going to the valley for funding. Yet the opposite almost never happens.
Pretty sure expats are included in Gini calculations.
> And yet you see a lot of Europeans and Canadians founders going to the valley for funding. Yet the opposite almost never happens.
Why wouldn't you raise money from where the money is? Inequality means there's a small handful of people with giant piles of money. That's a good bet to go knocking at if you want some.
Generally if you want to build a successful business you should raise on the best terms possible, and European investors are not known for offering particularly compelling terms.
I should also say, just because you raise money in the bay doesn't mean you have to run your business in the bay. Should you choose to do so remotely, you'll like take a bit of a discount, but it's worth mentioning this year's YC class was entirely remote.
I'm not sure this argument is connected.
I like this idea. Is this common? How many companies followed this strategy? It might have been remote but it is entirely possible that the companies will move to the bay area after receiving funding.
I meant European nationals living in the US. Pretty sure the salary distribution would be different between "Software Engineers in France" and "French Software Engineers" as the second includes all expats living in the Bay Area...
> I should also say, just because you raise money in the bay doesn't mean you have to run your business in the bay. Should you choose to do so remotely, you'll like take a bit of a discount, but it's worth mentioning this year's YC class was entirely remote.
Had there not been a global pandemic would that have been the case?
> And yet you see a lot of Europeans and Canadians founders going to the valley for funding. Yet the opposite almost never happens.
Just because it is easier to found and grow a business doesn't mean the environment is friendly to founding and funding a high-growth business.
In fact, an environment that is friendlier to SMEs, lifestyle, and bootstrapped companies probably reduces the pressure to jump into a VC-funded high-growth swing-for-the-fences model. Combine that with a less generous funding climate, and those who do want to go that route will go somewhere else for their funding.
But I don't think the reverse applies in terms of attracting entrepreneurs that don't wish to go the high-growth route from elsewhere.
At the end of the day Bezos makes headlines but his personal largesse has very little effect on most people in the country. It has very little impact on the lives of folks getting "pushed out" of SF. That's the folks he employs.
This is primarily attributable to two causes:
1. distorted views that result directly from inequality and the extreme poverty some communities have: to the (stereo)typical Tenderloin resident, as person who is able to afford a modest 3/2 townhome appears to be vastly wealthy
2. the mistaken view of techies, themselves, as being in the same class as those who actually are wealthy, and presenting as such (including the disaffected/indifferent attitude towards those in even lower socioeconomic brackets), which reinforces (1)
> At the end of the day Bezos makes headlines but his personal largesse has very little effect on most people in the country. It has very little impact on the lives of folks getting "pushed out" of SF. That's the folks he employs.
That's so out of line with actual reality it's best classified as "not even wrong." I don't even know where to begin with it. The people pushing others out in SF are not Bezos' employees; they're a tiny, tiny fraction of tech workers, most of whom won a VC/IPO lottery.
Bezos and his social class benefit immensely from the lower socioeconomic classes in-fighting. For example, by some thinking paying a laborer more will lead to more inequality.
Unless you believe--quite wrongly--that SWEs aren't in the bottom....
See: https://www.investopedia.com/personal-finance/how-much-incom...
Look at the wage growth for the 90th - 95th (top 10% to top 5%): it's in the bottom.
The distribution of salary for Senior SWE is found, e.g., at https://www.salary.com/research/salary/alternate/senior-soft.... The median is $115k, the 90% is $130k--still not the top 10%. Even when you bonuses the salary curve shifts right by less than 10% (e.g. median goes to about $116k, 90% outlier to $138k).
Some 4 million people in the US work as software engineers (https://en.wikipedia.org/wiki/Software_engineering_demograph...). FAANG accounts for, what, 1% - 2% of that? Maybe a bit more, but not much. The vast majority don't have high TC, most of them are paid a flat salary with a modest bonus and either have ESPPs or no equity at all.
Software engineers are laborers, in effectively the same social class as manual laborers. Our economic circumstances are better, but not that much better.
Your comment is a great example of how the huge inequality gaps and the infotainment media have distorted perceptions among workers.
They became rich the moment they entered the bay area. So hating on the "rich techies" is really misguided and will only further increase inequality.
Pushed out is a misnomer, really. If you have a booming housing market you should invest into more housing. These "rich" people will take the luxury apartments in 3 story buildings and the existing residents can keep their housing.
These things are not mutually incompatible. You just need to give one side what they need and they will leave you alone.
If you think through it, the billionaires don't have all that much real resource to be used - eg, J. Bezos owns an island in Hawaii. So say the government takes his island off him and redistributes it to low-wage earners in New York - they can't actually use the island for anything. They'd sell their stake in it and go for real resources locally. The actual real resources they consume are going to be made up for by the upper-middle class having less.
If anything is done about income inequality, it is probably going to involve bringing the above-median types more into line with the below-median earners. There aren't many ways around that - low earners need real resources, not paper money. Billionaires tend not to have the amount of real resources that are needed.
That is not necessarily true if you can produce more of the resource. The extra money would drive up prices and thus make it more profitable to run a company that offers the resource. Housing is artificially restricted but the technology to build denser housing exists. Taking the island is not really a sound strategy though, because it is much more efficient to just borrow money and give it to people through government stimulus. CPI inflation will eat at the value of unproductive capital like the island away on its own.
>If anything is done about income inequality, it is probably going to involve bringing the above-median types more into line with the below-median earners.
There is no meaningful difference between lowering the top and raising the bottom. Wealth tends to flee easily so increasing the bottom is a more reliable strategy. CPI inflation is generally a force that does both at the same time.
Mind you, there are exceptions. The CEO of a certain hotel bookings company makes €17M/year. Technically an american company though.
From world market leader to out of business in 7 years.
The few that appear on the list pay FAANG-level salaries for the most part.
What do you mean by average CEO? That's about the same as a CEO of a mid-sized American company. Shell's CEO makes a lot more than that, even considering the terrible year for oil.
Microsoft's CEO made ~44 million last year, and Microsoft is a trillion dollar company (https://www.bizjournals.com/seattle/news/2020/10/20/microsof....)
[1] https://www.hollywoodreporter.com/news/discovery-ceo-david-z...
It has nothing to do with “labels”. There is a fundamental different between what a company pays its CEO and what the value of its shares provide through appreciation.
From a social analysis point of view of incomes inequalities, they are just random labels.
FFS, one is not even income. So they aren’t the same if you care about even talking about income inequality.
An equity stake appreciating in a company is not actually income until you sell it and realize the gain. For example, if Amazon’s stock price doubles, none of the shareholders have made any income until they sell it on the market.
This distinction matters because stock owner equity appreciation has literally nothing to do with the amount the board has agreed to pay the CEO. They give a salary and a fixed number of shares with maybe another fixed number of shares if performance numbers are hit.
All of the obscenely rich CEOs are also major owners and their net worth is a bunch of unsold equity in the company. Being mad about companies becoming valuable and making shareholders wealthy is a completely different argument from income inequality. Shareholder appreciation directly benefits 401k holders, etc. and you’ll find a lot less support for putting a cap on how much a company can be worth.
You have experience with some really terrible managers. Have a look at other places.
"You can't have low inequality by definition if you decide to start paying one group a ton of money."
Very few of even FAANG-level salaries are high enough to put them in the same bucket as the people who wield power through their wealth. Paying the entire field of SWE laborers even 50% more salary is not going to appreciably change the inequality gap.
- Federal: 24%
- State: 9.3%
- FICA: 7.65% (6.2% social security, 1.45% medicare)
- SDI: 1%
This gets you to 42%. Your employer matches the FICA payments too, so that's closer to 50% of your take-home pay.
Once you make enough to pay off the regressive FICA taxes ($142K) you get bumped back down to "just" the mid-high 30% range briefly, until you hit $163K, then its back up to 40% again.
I get your point that the US doesn’t provide as much social services as other developed nations. Almost all these nations depend on US hegemony to not have to spend as much on their military. This is a choice that the US made. There are good arguments for scaling back military spending and increasing social spending without compromising US hegemony though, however those choices may not be politically expedient so here we are.
But I would want to point out the curious phrasing and of your first paragraph and what that says about USA way of thinking. All these points are business targeted while all european points are individual targeted.
I don't think there is anything curious about this way of thinking. And US hegemony plays directly into this!
Pre-World Wars, European nations had their colonies and their militaries and the priority of thinking was along similar lines: access to expansive markets, large pools of labor, protection of business interests etc, chiefly through colonies.
WW2 changed all of that, reducing European nations to client states (no disrespect) of the US, that funded their reconstruction. Colonialism was no longer allowed, and European nations could not freely pursue foreign markets without competing with US companies, which would always get precedence. With no real way to compete with the US militarily, and with NATO aligning with their immediate geo-political needs anyways, European nations invested heavily on Social Services, rather than blow up their military budgets. This geopolitical equation hasn't changed post WW2 and you have generations of people that consider social services as the primary function of their Government.
However, its a fundamental mistake to assume that a Government can provide effective social services without having a strong economy. Strong economies require successful businesses.
Umm... I would say the social services in european countries are pretty successful.
And Washingtonians do not? What you wrote does not address the question that the parent poster asked.
I frankly have no idea why US govts on all levels, and from all parties, seem so much more incompetent than many European/Asian ones (I have a pet theory), but they are.
I'm actually curious, is there somewhere you can see the total revenue for a state from the union of all collected taxes and fees?
100k USD in GBP is 73347.60. In the UK you'd be taxed 30% on that, including national insurance. https://listentotaxman.com/73347.60
Student loans operate like a tax in the U.K., taking 9% of your pre-tax income above 15 or 25k directly from your payslip.
Student loan deductions reduce a balance that doesn’t impact your credit score, can’t chase you for repayment (unless you do something stupid like move country and fail to inform them) and doesn’t impact lender decisions. Most people have no hope of repaying their ‘loan’ in their lifetimes and instead expect the loan to be written off after 25 years. U.K. student loans being debt is a technicality, it’s a tax with a countdown timer that might be shorter if you’re baller.
Plan 2 students are screwed, with the high interest rates and slower repayment schedule I wouldn’t even be sure non-London devs would finish paying it off.
Between 100 and 120k there is also the loss of personal allowance, which results in a marginal tax rate of 62% in that bracket. If you have children between the ages of 3 and 4, you also lose out on 15 hours/week childcare, resulting in that marginal tax rate hitting 89%
Tax is (arguably, different argument) progressive.
In Austria the total is 75%. In Austria going through capital gains would still be 70%.
I'm very disappointed at how much money Europe sucks out of my work.
Are you owner of property like apartment or house there? Just wandering, if that makes a significant personal economic difference for owning it in EU.
What I also dislike is the tax prepayments for business owners, which is basically legal theft. The government takes tax in advance and then gives you back the money if you overpaid after about a year. I wouldn't mind this if taxes were low.
Imagine being a business owner and there's a period of irregular income yet the advance tax payment arrives and bankrupts you.
The taxes here are just insanely high and everything is insanely inefficient. Healthcare, education and municipal services.
After moving from Croatia to Austria, it's much worse in Austria, a wealthier country but still, I see all of the same patterns of inefficiency and they are even worse because Croatia can't afford being so inefficient.
"Capital gains" through GmbH is 25% KÖSt (Körperschaftssteuer) and then 27,25% KESt on Profit. The highest VAT rate is 20%, there are also lower ones. This results in 56.35% percent including VAT (1-((1-25%)(1-27.25%)(1-20%)).
If you go through income tax as a freelancer this is even lower when you claim the default deductibles (Pauschalierung), which is common in IT jobs, because you have very low expenses. The later is also cheaper if you factor in health insurance.
Austria is one of the worst countries in the world to do any kind of small business. Self-employment is also taxed aggressively.
A form of self-employment in Croatia allows a fixed tax payment of about 5k EUR a year with an income cap of 39k EUR per year, leaving you with 34k EUR after taxes. Similar thing in Serbia but even more money.
In Austria there's nothing like that.
It would be nice if it was possible to assign a significant amount of life expenses to business but that also is heavily bureaucratized and regulated that even buying a 5k EUR computing machine has weird tax consequences (not immediately deductible as expense in the full amount or now, because expenses are higher, you might not be able to take that 12% of profit untaxed).
I mean, I guess I'm just miserably following every word of law and my accountant's advice and maybe other people just ignore a bunch of these guidelines and hope that inspection never comes.
20% "forced savings" (Pension + Vorsorgekasse) 7% health insurance 6% income tax
But 39k a year is definitely not a freelance programmer in Austria.
80-120k is the average I see at my colleagues and enterprise customers for freelance programmers with regular working hours compared to regular employees (5 week vacation, sick absence, ...). I know people scratching at 200k, but they are senior consultants.
So a more realistic view would be 100k 40,5% tax+insurance+pension 15% "forced savings" (Pension + Vorsorgekasse) 6% health insurance 19,6% income tax
This calculation assumes that you do not really have significant expenses of business. Having those actually makes the picture look worse.
You can calculate here for yourself, no "cheating" required: https://abrechnen.wko.at (official chamber of commerce calculator)
A GmbH is always better at 220k+/year. But there may be reasons you would want one earlier (liability, employees, IP, investments, ...)
Employing people in Austria is expensive ("cost of labor"). Beeing self employed is not bad, if you factor in benefits and costs of life and quality of life.
The federal tax rate is much lower if you account for that.
1-(1-0,24)*(1-0,093)*(1-0,0765)*(1-0,01) = 0,37
A lot of those "taxes" are also not going into the government's budget. They are used to fund specific services exclusively.
False, this mechanism only prevents income inequality but not wealth inequality as existing wealth is not taxed much in Europe.
For example, inheritances, assets and properties are not taxed much in Europe (people scream double taxation if you propose that) but income is taxed substantially so you'll never be able to save enough to catch up to the upper classes who own assets.
So actually, in some European countries, while having low income inequality because of high income taxes, you end up with huge wealth inequality due to untaxed inheritances, assets and overvalued properties rolled over across multiple generations to the point where Germany's top 10% own two thirds of the country's wealth:
https://www.iamexpat.de/expat-info/german-expat-news/germany...
To level the playing field and reduce wealth inequality, a sound policy would be to tax income less and tax inheritances and assets more but fat chance of that ever happening as that would be a blow to the ruling class.
> For example, inheritances, assets and properties are not taxed much in Europe (people scream double taxation if you propose that) but income is taxed substantially so you'll never be able to save enough to catch up to the upper classes who own assets.
In Ireland, apart from relatively small tax-free thresholds (€335,000 lifetime from parent to child, for example), gifts and inheritances are taxed at 33%.
In the UK, above its (similar) threshold, the rate is 40%.
The US Federal Estate tax rate is 40%, but with an enormous $11,580,000 estate threshold, which is orders of magnitude higher than Ireland or the UK.
Even though Ireland and the UK have some of the highest inheritance taxes in the world, the EU effective average is still ~14% - double the global average of ~7% and on par with the US, where added State taxes vary the average between 12% and 19%. Source: https://www.uhy.com/uk-imposes-highest-taxes-on-inheritance-...
Of course it's not, never said it was but cherry picking countries with larger inheritance tax is also a mistake as you can't choose where you pay your taxes as an EU resident. You pay them where your main residence is.
So on the other side of the spectrum you have Austria which has high income tax (because socialism and income equality) but basically no inheritance taxes, and taxes on assets are levied on their original purchase price so you end up having countless residents who earn small incomes but are sitting on millions of euros of wealth due to exploding real estate values but only pay 5 Euros tax per year as that's levied against the purchase price from 60 years ago when their grandparents bought it for pennies.
So you end up with huge wealth inequality where even people with good incomes pay high taxes and are priced out of the real estate market if they don't come from families of means.
> False, this mechanism only prevents income inequality but not wealth inequality as existing wealth is not taxed much in Europe.
The E.U. is home to both the highest and lowest inheritance taxes in the world, and averages very close to the US. I think this adequately refutes your statement that "existing wealth is not taxed much in Europe."
There is also the big issue that you can just transfer most of the wealth well before death.
If I were to suggest an inheritance tax it would not be significantly higher than 30% but it should have a generous tax exemption for at least $10 million.
However, I personally do believe not that this is an effective solution against wealth inequality because it is a very slow mechanism. It would make more sense to just raise capital gains taxes and decrease dividends taxes so that there is no longer a heavy skew towards wealth building in the first place.
You can still get returns but they have to be paid through a dividend which generally correlates with useful economic activity. You can't just flood the market with cheap money and then use the cheap money to pay dividends if you didn't earn the income in the first place.
Borrowing money doesn't increase the value of a company. It is neutral. If the company is spending that borrowed money on dividends then the company is losing value by exactly the amount that is paid out.
Now that I live in the USA, I've never heard anyone talk like that about a successful CEO. Envy yes, aspiration too, admiration yes.
It's a real mystery to me why people aren't up in arms about wealth inequality instead but I guess as long as the working class is provided with a minimum of comfort (food, shelter, healthcare, education, sex) and are kept busy with the ratrace for the next big career move during the day and with an endless stream of available entertainment and consumerism in the evening, they're too busy to notice, care or bother to do anything about it.
You have quite a few Dutch political parties talking about this, PVDA, The green party, the socialist party etc. The socialist party (SP) actually suggests giving all employees shares in the companies they work for. But these left wing parties, while not unpopular, have the whole ultra capitalist system working agaisnt them. What can the SP do if their legislation simply causes business and the rich move to another company? It's an impossible battle. You need international cooperation for it to work, and there is no such cooperation.
Income inequality is driven by wealth inequality. The wealthiest people don't get compensated in dollars, they get compensated in equity and if that equity is going up, companies can afford to pay more to their executives.
Wealth inequality is driven by domestic economic demand shifting away. It is either concentrating in a few economic hot spots (urbanization), moving to other countries (globalization) and through central bank money that sits around in asset markets. There are probably lots of other factors but they are increasingly less impactful.
Urbanization is not necessarily a bad thing if there is enough housing and people can move to the new location, except not enough housing is built and existing residents hate the new arrivals.
Globalization is not necessarily a bad thing if it also drives foreign demand. Turns out, the Chinese really love buying foreign real estate but nobody is building the luxury apartments they want. So they have to buy less luxurious housing and drive up prices in the middle and affordable segment of the housing market.
Central bank money is not necessarily a bad thing if the money is used effectively. The government can help the economy by providing cheaper funding to companies during bad years when there is lots of work to be done. But what if the economy isn't in a bad year and merely refusing to grow? It means that there is already enough funding but not enough demand for services and workers. In that case you also have to apply the government stimulus on the demand side as well. But that's not what central banks do. They can't do it by definition because that's not their responsibility. The central banks are separated from the rest of government because the government can just abuse it's money printing powers to fund endless debt and cause hyperinflation. However, when it's the central bank that is doing the endless printing people don't seem to care, somehow most economists care even less and will assert that even moderate demand side stimulus will eventually lead to the slippery slope of hyperinflation.
Ultimately history will just repeat. A war is a quick and easy way to get rid of excess workers. It is also a quick and easy way to provide demand side stimulus in a political environment where more sensible options are considered impossible. It's like political capital is like money. Once you have run out you are going to be extremely desperate and are willing to do anything no matter how stupid. Running out of political capital is the reason why Keynesian gold digging is even a thing in the first place. All good options have been exhausted, anything that follows is batshit insane but it is also the only thing that can be done.
For example, BMW. It is simply ugh. At least with US companies you know they'll do right by shareholders for better or for worse. If you invest in a German company you might as well be pissing your money away because they'll always do what's right for the heirs.
The idea of talking about money is slightly awkward anyway, and I guess I'd say embarrassed rather than ashamed? Different culture and motivation, but a datapoint for you :)
Plus my job is safer and more comfortable than many others. I sit in my office, I think and I type. Unlike the emergency services, I don't risk my life or health, nor does anyone's life depend on my work. Unlike construction workers, assembly line operators and many others, my office environment is free of hazards.
Software as they say is eating the world. The software you write replaces tons of manual processes generally. Finally it come down to supply and demand. If lots of people know how to program (well) the salary goes down.
You should never feel embarrassed by making a good wage. If you wish, you can always use that wealth to give back to society and your community.
FAANG salaries would help close that gap.
Even compared to Sweden, personal taxation is comparable for high-earners, although Ireland's much more progressive and redistributive scheme results in lower taxes for low-earners, and thus a smaller tax base.
Ireland is bang on the EU average for taxation of high earners. It seems Austria has higher (although not massively so) taxation of high earners - source below.
Ireland has the most progressive taxation system in the EU, so low-earners do indeed pay less personal incomes taxes than any country other than Cyprus and Estonia.
Ireland is definitely not a tax haven for tech workers - you're the only person I've ever come across to hold that opinion. The UK may be closer to that, as self-employment is much more attractively taxed there than Ireland.
https://www.uhy.com/uk-imposes-highest-taxes-on-inheritance-...
And then the German finance ministry keeps trying to squeeze blood from the turnip even further every year by dreaming up new taxes, while actively discouraging investing (Olaf, the finance minister, claims not to invest in the stock market and keeps his money in a savings account while at the same time pushing negative interest rates) with Transaction taxes and no tax-advantaged savings account. You could consider that maybe conservative Germany encourages investment in real estate. Nope, you get to pay 6% sales tax and 1% notary fees when you buy a home, with no breaks for first-time home buyers, and you can't write the interest off on your taxes either.
The wealth inequality gini coefficient is not very useful and misleading. You could have a country where people choose to take on debt when they are young, and all of them end up with the same higher level of wealth later in life. This would be a very equal society, but could have a very high wealth inequality gini coefficient. To actually judge the wealth inequality of a society the analysis should be done cross-sectionally, comparing within age cohorts. [https://www.sv.uio.no/esop/english/publications/articles/201...]
And as I've noted in another comment, top 10% doesn't put you in the same socioeconomic class as the actual wealthy (https://www.investopedia.com/personal-finance/how-much-incom...).
There's a gap between FAANG and, say, a janitor's salary; that's just not debatable. The gap is much smaller than between Mr. FAANG and Mr. Top 5%, and for all intents and purposes Mr. FAANG is Mr. Janitor when compared to Mr. Top 1%. That some FAANG employees are in the top 1% doesn't negate this.
To me this feels like falling into perfect is the enemy of great trap. Just because this topic might be affecting you (assuming you're a software dev), and because it doesn't affect the top 1%, doesn't make it smart to widen the gap between the 99%.
Plus having that more money means one can invest a bit, and a generation later dad can give a big gift to help seed the kid's startup.
Wanting affordable home ownership is not contradictory to growth of home asset prices.
I also think your argument about income inequality is not right. Achieving income equality by suppressing wages and paying below competitive market rates is nothing to be proud of - and largely for professions like SWE, it has absolutely nothing to do with income levels at the low end close to poverty, which is what matters when understanding income inequality.
We should be raising purchasing power and unlocking possibilities for people. That’s the real purpose of reducing inequality.
Otherwise we can just take the trivial solution: destroy all technology and return everyone to subsistence agrarian society. Near perfect income equality, near zero societal level wealth.
That does not make sense. How is it below competitive if every company in Europe is paying in same range? By definition it is competitive.
This problem isn't unique to the US, and exists in Europe too, as well as New Zealand and probably other countries too. For this particular point, the US and Europe aren't all that different.
That's true, but the question is, the higher salary you refuse to take as a SWE in Europe, does it really go instead to someone else in need of it? Or is it just pocketed by someone who already has more money than you?
Fiscal policies and budgeting policies aren't "This group of people will pay for that group of people, and that group will pay for the other."
Your taxes become part of a revenue line on various budgets. Who gets what is defined through various public policies, grants, subsidies, procurement. Maybe a chunk of your taxes will be allotted to social programs, another chunk to NASA and maybe another chunk to various endowments such as the Humanities and the Arts.
Moreover, the issue isn't just how tax revenue is spend. The issue is just as much in how taxes are levied. Income taxes for individuals vary from taxes on financial instruments, corporate taxes, value added taxes and various other taxes. Or even the taxes that get tacked on your various utility bills, the estate you inherit from a loved one and so on.
> Or is it just pocketed by someone who already has more money than you?
Money is often seen as a store of value. The more you have of it, the better of you are. But that's only part of the story.
Money only gains real value when it is exchanged. That's how wealth is created. Money acts as "oil in an engine". If money doesn't get exchanged, you have an economic crisis.
The big issue is today is that 50 years of complex global policy making have generated dynamics that pushed holes in the engine, causing that oil to leak away. Where to? The financial markets. Where money is exchanged for debts.
If you want an equitable economy, you have to address fiscal and monetary policies first. Not this "who gets my money" argument.
Refuse to take?
You can, if you give the other groups a ton of money too.
Wages in Europe have stagnated compared to GDP [1] too, so it's not unreasonable to fight for higher wages.
[1]: https://www.robert-schuman.eu/en/european-issues/0289-labour...
Giving more money to everyone is easy, everyone was a billionaire in Zimbabwe few years back. That did not make them "rich".
When everybody have those things, you no longer think of them as "richness". Richness is what sticks out.
150 years ago very few people had running water, electricity, fridge, WC, etc.
Most urban americans live "richer" lives today than the rich did 150 years ago.
This "richness" is also relative: If you own a goat in a village with no goats, you're rich. If you own an apartment in a village of McMansions you're poor.
And let's not mistake comfort with wealth. Just because I have electricity, a WC, a fridge and don't plow the fields like my grandparents did might make me seem rich, but my grandparents owned that land they were plowing while I don't own the "land" I am "plowing" at my comfy deskjob, but the corporation does, nor do I own the land I live and sleep on, but the landlord/bank does.
Our lives are now much more safe and comfortable than 150 years ago, but in the end, most of us who are not asset owners, are set to be serfs for life, just like 150 years ago except that instead of being serfs to a crown we are serfs to banks and publicly traded megacorps.
There are roughly 350M inhabitants, but only about 120M households.
If you want to give everyone a house with a view of the ocean, with plots 10m wide, you need to build them around 8 deep to give everyone a view of the ocean.
It may be easier to do if you stagger the plots.
This is basically a strawman that you built so that you can easily defeat it.
Think of the most extreme possible scenario. An economy where no human workers are needed and only capital is needed to build robots that are equally good workers as humans. The rich will own a lot of robots and no longer be dependent on human workers. Here is the problem. Since everyone else is unemployed, nobody can afford to buy your products. It is actually possible to get wealthier by giving to those who have nothing in this scenario because although the rich own robots, the robots are effectively worthless if they don't do any work. You don't even have to give that money away for free, you can just lend it out.
Lending doesn't work in existing economies because it is very difficult to get access to capital if you have no money to begin with. It's also a chicken and egg situation because you need money in consumer hands to drive demand which then drives more loans. If you spend your loans wastefully then the money will arrive in consumer hands by mere chance. So in theory if you just print an infinite amount of money some of it will trickle down eventually. That's the idiotic policy central banks around the world are following instead of giving out just (emphasis on just) enough money to get everyone back to work.
>Giving more money to everyone is easy, everyone was a billionaire in Zimbabwe few years back. That did not make them "rich".
There is an easy indicator for when to stop. You can stop handing out money once you have reached the 2% inflation goal.
If the previous year over year ROI is 7% and inflation grows by 3% then you have to increase your ROI to 10% just to catch up with inflation. This means only the most productive companies will actually maintain their existing growth.
Compare that to a deflationary environment where every warm body with a big bank account can get 7% ROI without even trying or even do annoying things like employ workers.
Normally we measure wage growth adjusted for inflation.
In my case I referred to wages as share of gdp, which has been going down over the last decades. There is no reason that shouldn't at least be a fixed amount. If it's not, it means that people who make money outside of wages (shareholders etc.) are capturing a steadily larger part of the total economy.
>I expect most of the additional pay will end up in higher housing prices.
It will _justify_ existing house prices. If inflation picks up the interest rate will rise and the cost of housing will stop growing. The increased wages can still afford the same housing price, but not a cent more.
Sure, but you can still ensure that the lower classes have a good standard of living. Most wealth isn't zero sum. People talk about income/wealth inequality in the US, but to me, based on the complaints people have, it just seems like a proxy for poor standard of living.
> Well, this is a lot like the housing conversation in the US. "I want my house to go up in value, and be a great investment!" Also: "Why can't I afford a house?"
The big difference here is that the supply of land is fixed, and thus (almost all) housing wealth is zero sum. But for other things, this is not the case, so you can't apply the logic of housing to other things.
Most solutions to inequality seems to be zero sum. "Tax the rich".
This does not mean that devs are supposed to earn millions, but 2x or 3x average salary is not the inequality that's ethically bad.
The inequality exists between those who need to work for a living and the ownership class that does not.
If you're a SWE on a half or even a third of an SV salary, you're still in the top 5%. Do you feel rich? No. Are you easily able to buy a house in the southeast early in your career? No. But for every person earning more than you there are twenty earning less than you.
The number of super-rich dominating the conversation, the political donations, and the housebuying is surprisingly small, and most of them make far more from investments than from salary. Actual income for "work" caps out at a few million for celebrities and sportspeople.
Even among the ordinary I know people who've been out-earned by their houses - that is, the annual rise in the value of their (mortgaged) house was more than their salaried income.
The remote work proposition in particular is extremely enticing. Getting paid in a currency with 10-20% more buying power while still receiving the same government services was pretty swell.
I think when it comes to Europe people should specificity the countries. If you take Europe or even the EU as one entity then it is one of the most unequal places on Earth when it comes to income and wealth.
Bulgaria is an EU member state and in 2018 had an adjusted net national income per capita of $8,148.[0] Luxembourg is part of the EU as well and in 2018 it was $60,189. Denmark was at $52,641. Poland was at $12,954.
All of this varies enormously from country to country.
If you were to compare the roots of Computer Science and its culture to other professions, it initially stemmed from the nerds and nerds were always trained to see themselves as low status, in fact by definition being a geek would make you an outcast amongst others..
It just so happened by pure luck that many successful startups grew thanks to our field and being a SWE became suddenly desirable.
So I'm not surprised that demanding a fair wage or forming unions are some of the things we struggle with.
Our industry is constantly trying to bring its own value down (anyone can code, it's easy,..), you never hear about other industries complaining they are "overpaid" or belittle the value they bring to people and businesses.
It's an unfortunate truth about studying CS and if I may be boldly controversial on HN, it might also one of the reasons we don't see too many women in this low status field.
Many of my colleagues in Europe, make far less than 1/2 of what I do from a compensation perspective. However, they're able to live essentially the same lifestyle I am. Nice flat in a vibrant, walkable, top-tier urban locale with the ability to afford most things in life. They're able to do so because they have less worry about surprise medical bills, paying to care for their elders, saving $200k for the kids' college, etc. My employment is also at will. I can leave or be forced to leave at a moment's notice.
Obviously, I'm only offering anecdotes here, but (IMHO) once that lifestyle moves out of reach, then companies will be forced to increase pay.
I think that makes up a large part of the difference. In the US, those things are pay on use. In Europe, they're done through taxes that everyone pays.
If you don't have kids, that can be a substantial difference. I do not, so I don't have to pay into a college fund, or pay for healthcare for kids, or private school, etc, etc.
I think once you take it as a given that you pay for those things one way or another, it evens out a bit. Probably slanted a little bit towards more pay in the US, but not by nearly the gap between a single 20-something SWE in the US vs the EU.
I calculated moving to Europe as a SWE would lead to a drastic lifestyle change for me—even with retirement, healthcare and children's education considered (with 2 children, Europe wins at 3 hands down).
"Isn't it inconvenient that you have to work for someone else for 8 hours every day, only so you don't need to start a fire?"
I'm positive you can do all of those things with an average salary, at least in northern europe. There is little to worry about once you have a roof over your head. You may not have that Tesla though.
I don't want to skip on modern medicine and shit, but it does make you think...
[*] https://www.youtube.com/watch?v=Yocja_N5s1I
Gathering also doesn't make sense as a full time occupation, as most plant species only fruit / produce edibles infrequently, and even then you are competing with wild animals (birds eat far more from the local wild raspberry plants than I do, even when i think to try picking some).
Farmers, conversely, often work from before sunup to after sunset. Whether it is sowing, harvesting, animal husbandry, or maintenance of buildings, fences, equipment, there is no shortage to be done.
All this is to say, hunter / gatherers didn't have some secret to a life of leisure, they minimized energy output to deal with food insecurity and general difficulty actually hunting amd gathering.
Curious - Can you explain your calculations and did they include a difference between price vs value?
Its stress reducing in itself and versatile.
Nonetheless i also think its a better strategy to become rich enough fast and then retire earlier to have more time for myself and to cook more and do other normal things myself more often again.
As long as i don't have a realistic chance of getting so rich, that i can buy an island, or/and travel for 20 years firstclass, my life will not change anymore in any significant way with me earning more money.
Why?
To me that seems like a non-sequiter.
There is no reason to suspect that the optimization (with respect to whatever objective you desire, e.g. total happiness) of a large, complex, chaotic, system (such as a society) can be best achieved by using 'ethical correctness' as the only criterion for decision making.
At least, that's my opinion. I hope that doesn't make me an indecent human being.
Because anything else is wishful thinking at best and destroys society at worst.
I guess people can have different definitions of "destroying society."
I grew up in the USSR where you literally lacked physical stuff in your life that people in the rest of the world took for granted decades prior. A huge contributor to that was that people's work was rewarded on a metric other than their productive output, as measured by what society was willing to pay for in the free market.
To put it another way - we need people to produce. And we need them to produce the right stuff. The best system we have to deciding what's right is what other people use their dollars for.
If we paid people on some other metric we'd end up with a lot of bullshit work, no aspirations, and physical shortages.
I am sure your definition differs.
Define "rest of the world" because for the time period when the USSR was in existence, my part of the world was either actively being colonised or foundering in the neocolonialist wake of independence.
And that's the crux of it, isn't it? The world's foremost capitalist states (and the imperialist states that preceded them and laid the foundation for their current success) aren't less destructive than the USSR or than Maoist China. They simply had/have the dubious luxury of externalising the destruction and misery (and hiding it where it exists at home, in the poor and marginalised). The West built (and still builds) its abundance of "physical stuff" on the sweat, tears and sometimes literally blood of the developing world. Today's "free" market runs on the back of sweatshops, destabilisation and child labour - there has to be inequality and suffering elsewhere for companies to afford to put up the prices that consumers have become entitled to.
But hey, that destructiveness is not in your own backyard, so I suppose it doesn't exist.
I am not sure the crazy town you are taking this to. But in case it somehow helps you understand - the USSR was horrible to its own people and to neighboring countries, forced labor and all, and still wasn't able to provide basic shit to anyone but the party elite.
Practically, giving someone a direct incentive to do worthwhile things works out far better than some central planner deciding how much they should produce and how much they deserve. Somehow it always turns out that the central planner deserves way more than everybody else.
Check history of the Soviet Union - it was a glaring issue there.
Which famously struggled because it didn't overpay its software engineers enough. So instead of doing productive work like optimizing ad impressions and creating DRM they all became garbage collectors and cleaners.
No, I'm not trying to engage in constructive debate right now. Apparently I lack whatever skill is needed to debate liberals without triggering their COMMIE!! reflex.
I've just mentioned Soviet Union as prominent and well-documented example. Don't put words I haven't said in my mouth. Thank you.
Heck, this issue is not even specific to communism.
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
- Pay one person ($1k) with an excavator
- Pay ten people ($100/each) with shovels
There is a scarcity of talent here too but in order to take advantage of it you typically have to actively seek higher pay. I just don’t want to switch jobs, it’s not that I don’t want higher pay.
The skill you bring to the table is worth a lot more than their skill. Although everyone in the world is important, some are more important than the other.
Its the Google that changes the direction of the world not the general guys.
that's what drives down the price. as long as other people are willing to create the same output for less money, you will be paid less
Also if you somehow manage to increase your income, over half of it disappears in taxes and social security contributions.
In Germany (where I reside), the first €9744 (2021) is untaxed, then 14% until a certain amount (can't find it atm) and max 43%. However, if you do your tax returns your effective tax rate will drop significantly. I'd wager that most pay around 25% in total income taxes, excluding things like the health insurance and other taxes.
However, we indeed do not worry about saving up money to put our kids through school.
Earning 65k which what most companies in the tech scene now offer to lure them in as a SWE in Germany is a great salary realistically, considering for example an architect with a masters degree will earn around 55k and no real improvement in sight.
Also don't forget to factor in that the concept of being fired for PROPER reason is nearly impossible in most European countries. Even if an employer hits hard times they cannot just lay off an entire department to quickly green out the numbers in the books, there needs to be proper grounds. I currently need to give my employer 3 months notice before I can even leave, same goes for them to me.
Of course, this isn’t true for Americans in general. I want us to adopt European social policies; however, for SWEs, the financials are just better in the US.
See, that's the point. In Europe it works well for everyone, no matter how much you earn. It's a mentality-thing in the end (where the US position is hard to grasp for Europeans).
... until you get a really expensive chronic disease. And then it fails miserably.
I know upper middle class parents whose kids got a disease which need ~$5000/month meds for a few years (and nontrivial infusion center costs on top).
It worked ok for some, many had been informed that the insurance company decided not to pay - requiring lawsuits (some settled, some ongoing).
No European, Canadian or Israeli parent that I know of kid with the same disease ever had to fight or pay out of pocket - it was all covered by the single payer with no hassles.
And since it’s a “savings account” I can invest the tax-free savings into the stock market with index funds. I’ve actually had a decent amount of growth in that account just from stock market gains.
In Germany you can have private health insurance (if you make more then 63k a year you can opt-out of public health insurance) and there the out of pocket is usually around €350. In the Netherlands the out of pocket is also something like €300, which most already consider too high.
The option to get it to zero is of course possible but usually doesn't offset the savings.
However the notion of having to need savings to be sick is... to me extremely foreign and strange.
White collar workers, especially STEM ones have largely coasted through this pandemic.
You still need to save for a pension in almost every European economy, one isn't given to you (state pensions in Europe, even in the UK, are contribution-based). Welfare systems in Europe are not redistributive like in the US, they are typically contributory (you get out what you put in). So there is no sense in which your fundamental needs will be met irregardless of anything else.
I think the issue with the US is that you have a very redistributive political economy, and so many people believe that those elements are the same everywhere AND they could have all the free healthcare...it doesn't really work that way (marginal tax rates on middle-class incomes are above 50% in some European economies, and top rates are usually lower than in the US...try doing that in the US).
Uh, no? Pensions are contribution based but that contribution comes from taxes on your salary. Far from me to say that the system is perfect but you basically just need to work.
Welfare is absolutely not contributory in Europe, it wouldn't make sense as those who need public welfare the most are those that can contribute less. Some countries like Austria have a healthcare system based on insurance, but employers are required to pay for it, students have it for free and unemployed as well.
In some countries, e.g. NL/DE, unemployment however is contribution based and you always pay for it (it's tacked on next to your normal taxed), which when needed is limited to 2 years based on 60% of your last net income. The idea is that you should still be able to afford your current way of living without too many compromises when you got laid off and haven't found a new job yet.
In Germany for example welfare isn't great, it's around €400/mo though the state pays your rent directly.
This is just incorrect.
In Ireland, there is a contributory state pension [0] of up to €500 a week, which you are entitled to if you spent enough years in the workforce making tax contributions. There's also a means-tested non-contributory pension [1] of €237 per week which you are entitled to if you don't have other savings or income, such as the contributory pension. In addition to these, private pensions exist: basically savings vehicles with certain restrictions and certain tax advantages.
There's a similar two-tier system for unemployment assistance and certain healthcare entitlements. I understand many other European countries have similar arrangements, despite your assertion.
[0] https://www.citizensinformation.ie/en/social_welfare/social_...
[1] https://www.citizensinformation.ie/en/social_welfare/social_...
That is exactly what I said or are we not understanding each other? Your pension comes from the taxes on your salary.
The existence of private pensions doesn't deny my point. I thought it would be irrelevant to mention them as they exist everywhere.
But I don’t need to save for their education or anything like that. I don’t save explicitly in their name.
OP seemed to be saying that because of all the benefits it was okay they were paid so poorly. But we can have similar benefits here, so they can have similar pay there.
You realize in Germany these "benefits" are available to literally every citizen, right? That means _every developer got this deal, here.
So here is the thing: You can get obscenely rich here, too.
What's your point, really? That you can get rich in America, as a dev? That rich people get all the benefits? Your take on parenting?
Really insightful information there. Thanks for sharing....
A lot of things are possible but not probable.
You seem to be completely unaware of how wildly the cost of education has increased even over just the past decade, especially for 4-year institutions.
I just want to point out how incredibly, incredibly rare that is for anyone to have that experience in the US today, where according to you:
1. You were able to graduate debt free, and since you say you had no debt "through scholarships and grants", I'm taking that to mean your parents didn't pay for your college. While that is certainly possible (e.g. some colleges offer free rides for very top students), it is VERY rare.
2. You intend to save nothing for your children's education. That is not only exceedingly rare, pretty much all financial aid packages expect/require a certain amount of parental contributions. You better hope your kids get lots of scholarships and grants, otherwise they won't be going to college.
Personally, I went to a top US university. I had some grants and scholarships but my parents still contributed a good part to my first 2 years, and I graduated with considerable but manageable debt. I've worked in software jobs over the past 2 decades, including 1 company where my stock options were worth a considerable amount, so I've saved a lot. I work considerably more than 40 hours a week, so honestly I'm quite envious of your "20-30 hours a week" story - I don't know any job where you can work that little and still get paid that well. I see a very large portion of my salary every year go to healthcare and retirement, and as I am childless I don't have to save for my kids education.
I mean, I'm doing quite well, and I still have anxiety about all the things I need to save for. I can't imagine making a more median-level salary, with today's cost of education, and with kids, and not being much more stressed at the prospect of having to handle everything financially.
That's a pretty scuffed mindset, man. Set your kids up for success. There's no virtue is going head first into crippling debt.
I haven't got billionaire status ambitions, but I also don't want my elder years to be effectively dictated by the vicissitudes of the political environment.
This means the number in my wallet and bank account may look smaller, but I still live a rich life with money to spend however I want.
It's the exact opposite of complacency.
You can't count on politics being constant, but "there is a large welfare state here also in 15 years" I consider about as likely as the sun rising tomorrow.
A disaster would mean I get perhaps 60 or 70 or 80% if my projected pension - but I’d live ok on that too. I’m not saving nothing personally, it’s just where I live you usually have to invest in a house if you want one. So the situation is you trust either the pension system or the housing market to hold up. If both were to fail I’d have problems.
I always find this kind of prepping unrealistic, the best thing you can do is a solid social group. If society collapses, even the best prepared loner will be dinner for the nearest somewhat organized group of people :-)
I think this is part of your company's culture, not your society's culture. There are also lots of Dunder-Mifflin type companies in America where nobody has any ambition and everyone just coasts until retirement.
It works, until it doesn't. In America you can compensate yourself for this risk by simply getting a job where you are paid a higher salary than the average. Then you don't really care what happens with the social safety net, you've already hedged against it by saving and investing for yourself, and possibly becoming very rich.
Personally I'd be stressed if I were in your position. Government welfare isn't some liquid asset. If you decide you want to go live in some other country with a higher standard of living, such as the United States, is your government going to give you $100k or more to go start a life there at the same standard of living you're used to? I doubt it. You'll have to start from scratch, little to no savings, no real credit history, and paying much more for things that were a lot cheaper back in your home country. And if you were to retire in the US, I have a dim view of your future if you have no savings for retirement. If you are already close to retirement and haven't saved anything, you simply will not be able to retire.
Basically you're locked in to your home country, and have no realistic options for leaving unless you become richer. If the country goes to shit, so do you. This is not the case somewhere like America, where how well off you are is decoupled from how the country is doing as a whole. Government risk is eliminated, your cash flow and net worth is all that matters. That's much easier to understand and helps you sleep at night.
Be careful.
> In America you can compensate yourself for this risk by simply getting a job where you are paid a higher salary than the average.
Oh wow! If I want a more secure life, I'll just get a higher paying job. I didn't think of that before!
The "ladder kicking" part misrepresents their point. I see nothing they said which would preclude another person from following their same path.
As for getting a higher paying job, the problem isn't whether you thought about this clever plan, but whether you are able to actually implement it in you country.
United States is the country that's most likely to go to shit. All of us wealthy professionals here are sitting on a powder keg of inequality and delusional politics, and nobody will be decoupled from it when it blows up.
I plan to stay for a few more years, then return to my safe North European home country with a solid stash of savings. My kids can go to good schools where teaching is in their native language. When they get older, they can go to free college if they're willing to put in the effort. When I retire, I won't need to worry about exhausting my savings because I've got a home fully paid and a sufficient baseline is guaranteed from the national pension system. There doesn't seem to by anything that would make me want to stay in America — perhaps the worst place on Earth to retire.
What inequality does is ensure that there will always be two markets of consumers: one that needs goods at low prices and one that can afford higher prices for luxury goods.
As long as the lower price market exists, hoarding sufficient wealth guarantees you’ll be able to at least afford the minimum standard of living, allowing you to safely retire. If everyone was wealthy everything would be expensive and then no one would feel wealthy enough to retire.
...what if "health care" is viewed as a luxury good as it is in the statse?
The people cosplaying here by repeating the values that Peter et al want them to quake will be the ones left behind.
There was even a leaked secret recording of heads of banks, where they basically agree that the party is coming to an end for Western Europe (due to demographics) and admire Merkel and Holland for hinting that to the population, as opposed to ignoring the problem altogether.
Running out of money to pay pensions is much more common, and it seems somewhat likely given the way demographics are headed.
If everyone does that then it just drives the average salary up. In other words, the system can't survive unless there's a strata of people at the bottom who are below average and, by your definition, relying on a government that possibly won't help them.
In Europe as most people rely on the government everyone has an incentive to vote for parties that won't fail those people.
I'm not from America, but moving there as a high-paid, still-young software developer was a reasonable choice for me. I might advise others in my position to do the same. I'd be less likely to tell people "you should run your country more like America".
That said, living in Europe doesn't always equal good living conditions and stability - it depends on the particular country you're in as well.
My net salary is just over 1000€ per month as a software dev. My living expenses eat up around half of that. If a quick search turns up that in USA the median salary for a dev is around 100k$ per year ( https://money.usnews.com/careers/best-jobs/software-develope... ), that means that i'd need anywhere from ~8 to ~14 years to save as much as they could in a year (depending on their disposable income, taxes, currency value etc.).
In short, i'd much prefer not to spend a decade to get to the point where i'm as financially stable who's worked for a year, if even that.
People oftentimes mention purchasing power parity, but it breaks down in a global economy: for example, i cannot afford AWS and most SaaS/PaaS tools.
That's just one of the reasons why one could look for a better financial situation. Compound interest and investments in general could be another. Stability and peace of mind, although not guaranteed, could be a third.
I would like to know what country/city you are based out of. In the US, that wage is well below the poverty line.
In fact, even in the first world countries like Italy or Spain it's not uncommon to earn less than 1700€ net.
Here in Finland, 80% of the US GDP/capita btw, some entry level positions are at 2000€ net.
That's really low, even for poorer European countries. Decent middle-level software engineer in, let's say, Ukraine (no offense meant - it is a good country, just isn't one famous for high incomes), easily makes at least 2k (and I say "at least" - that's awfully underpaid).
> that means that i'd need anywhere from ~8 to ~14 years to save as much as they could in a year
That's a bit exaggerated figure. It's 100k before taxes (so, around $5.8k/mo), and rent (or mortgage) costs are significantly higher (I believe it's around $1-3k/mo, highly varying depending on where you live and how comfortable you live). And it's not just rent but other expenses as well.
He said net salary. I know a lot of engineers from C schools in mid-size towns in France who are paid less than 2k euro net.
Engineer: "yes, of course it is normal to be a trainee for 2 years, then a junior for 5, then a medior for 5 and of I'm really good I'll be a senior. I would be really thankful if you consider hiring me." With this mindset you don't expect high wages.
Hacker: I am a ninja rockstar, I don't need any certifications and you should be happy if I decide to work for you because I should actually be working at FAANG.
The main thing that such an internship-apprenticeship system guarantees is that the newer generation is well-versed in the ways of the old generation, and will likely have a similar record.
In a conservative industry, such as civil engineers building bridges, roads and buildings, and electrical engineers building high-voltage electrical distribution systems, this is what you want -- those industries have converged on good safety records. You want a few people who innovate, but otherwise much prefer to delay the future by 10-20 years than to the potential risks of bringing it sooner.
If the same was prevalent in software, we'd likely still be coding in COBOL on IBM mainframes.
Tesla is a very interesting case study - actually managing to bring the future sooner (with relatively small accumulated damage so far) in a field where being conservative is considered a virtue.
If you'd rather work with the apprenticed person, this model still exists in banks, who are willing to pay big bucks to maintain their cobol backends.
And it taking 5 years of work experience for you to call yourself an experienced engineer does not mean we'd be stuck with COBOL. It usually takes that long where I work and it's not a bank. You're very likely to use our products right now.
[1] https://mon-entreprise.fr/simulateurs/salaire-brut-net
But even so, the average net salary in this country is even lower than that (overall, not for software developers) and i don't have kids or a car to take care of, hence others could also have those expenses to consider.
Thus, factoring those in, it might indeed take a substantial amount of time to create any savings. For example, i presently have 25k€ in my bank account, though it has taken about 4 years to get there.
That's not to say that people in US or other places also don't have similar factors to deal with, like healthcare costs or student loans.
They just continued to pay the same salary after I graduated.
Until you reach senior level, the best strategy for maximising salary is to switch to better paying jobs every ~2 years.
Also, I assume you are from Latvia as you have LV in your username - 1k is waaay to low. I have friends making 3.5k eur a month. You can find mid level positions that pay more than 2k/m
There is also something to be said about working for different companies and experiencing different approaches to development, different tools, tech stacks and all of the other stuff you might not see if you stick at one place for a long time.
Though that's more of an auxiliary reason for switching jobs, whereas OP was talking about finances in particular.
You would be underpaid in India, where I live, let alone Europe.
Now that companies are cozying up to remote work, I think I’ll jist do more frequent 3 month trips and work in the evenings when I run out of vacation days. Then I can keep my cushy American salary and afford to travel, avoid dealing with VISAs, and France get my cost of living / tourism money without me taking a Frenchman’s job. Seems like a better arrangement all around.
Hopefully countries will also warm up to remote work and will create legal avenues for individuals to do remote work while still paying taxes.
VISA is a name of a company. What you mean is just "visa".
You're way underpaid even for Latvia. The national average now is 1100 EUR gross, or 812 EUR net (https://www.lsm.lv/raksts/zinas/ekonomika/videja-alga-uz-pap...), but for the IT field the average gross is 1829 EUR, which I believe is around 1300 net. Unless you're somewhere in Latgale where everything is much cheaper, or unless you just graduated last year, your net income should be at least some 20% higher.
Obviously, you'd have much higher living costs and the weather would be slighty worse, but lets face it no one lives in Latvia for the weather either!
Very different. I cannot imagine staying anymore more than two years - aren't you bored?
Of course this means that you're actually not doing the exact same thing at the same company all the time. A good company allows for that. Either because you can easily switch projects, switch teams, move up, move sideways etc. Depends on things like company size, structure, culture etc. And yourself obviously.
Having fun is one of the most powerful forces in human history. Not always for good.
With the highest salaries perhaps 20-40% higher than mine and marginal tax 50% making that 10-20%, the prospect is basically, would I switch jobs a few times for that little, when I like my situation?
If the ceiling was higher, I’d switch. It’s a self fulfilling prophecy :)
In other industries, engineers (software or not) just make products and products are built and sold with "normal" margins and limited growth opportuntites. A healthy company can make a 10% profit every year for a century. Scaling up means having more people because you need more sales, more manufacturing and so on.
In some more pure tech industries like SaaS, Games etc, the profit margins can be much higher. I'd be upset too if I was at a company that made $1M profit per employee and I didn't have a cut. That doesn't apply to most software jobs (at least not here) though.
There doesn't have to be someone capturing profit if the whole industry is priced lower.
On the other hand, if you get hired by FAANG and work on the "next big thing", like, say, new operating system for smartphones, then the amount of money that can be made from it is virtually unlimited.
The difference between the US and Europe is mostly that: cool, product-focused jobs are all in America, Europe only has the boring, low-risk, low-reward ones. Europe needs to innovate more, that's it.
This is also true in the opposite sense. A mediocre programmer at a bank or a high-profit company could still create a lot of value because of the surroundings or simply the industry. And they're probably compensated for that, at least in part.
Even more interesting – the cafeteria workers, cleaning staff, etc at those companies also produce more value than their colleagues in less fortunate companies/industries. But they're probably not compensated for it, because markets.
He /should/ be paid commensurate with the value he produces.
In reality, he is paid the market rate.
Honestly this part of the European mentality is hard for an outsider understand. I lived there for ~10 years and heard this argument countless times.
I want a fulfilling life and part of that is a fulfilling job. It's hard to believe a job on the same company can be fulfilling for 20+ years. Changing jobs is part of professional growth IMO.
Different strokes for different folks I guess.
If I was working in web/db/internet stuff there would be much more jobs of the same kind. Then I’d switch more too I think. The reason I’m sticking is also because I work in a niche (which I like).
Switching every two years to make more money would invariably mean that you switch from fulfilling jobs to less fulfilling ones (Assuming no fulfilment comes from the switch itself)!
I don't see why not. I have never worked for small companies (always 25k+ sizes ) so my view may be skewed but the scope of these companies are so large that changing a project can mean totally different ways of working and sometimes totally different industries. Can it be that it's easier in europe to change your job context within the company and not so in america?
> Changing jobs is part of professional growth IMO.
Actually it's hard for me to understand why this is taken for granted in America and my home country India. Sounds like KPI chasing to me.
Changing jobs every 5 years-or-so is forcing yourself to learn a new culture and new set of skills.
I don't know why you are so sure. I work with plenty of europeans who have spent 10+ years in a single company. They seem pretty smart and their ways of thinking are pretty much on par with my american counter parts. If you have some source to cite on this except for personal experience, which is tainted by the culture around you, that would be great.
In my experience, the only companies I’ve been in where all my coworkers were first class was in the Netherlands.
I cannot see myself working 20 years in the same company in the US or Japan, but I think I can see myself doing it in the Netherlands.
I've seen people (including myself) trying to change the lifestyle, thus money is a vehicle to do so and to build something with. Not everybody has got rich parents or sugar daddies, some people start from nearly zero and try to climb the social ladder.
A higher salary can unlock multiple benefits, in terms of long-term economical security (e. g. in case of market crash and companies go bankrupt / berserk mode, laying people off) and maybe buy yourself a house/apartment.
Plus, saving for children's future is one of the best gift a parent can do.
Coming to an end: having a salary which is similar to what in SF are offered would be really good
Others are: having connections that result in value for a company, and having a scarce skill so you can do something valuable for a company. SWE falls under the latter, for the companies that can leverage them highly enough.
Single family house zoning? Really? Who the hell needs that? Heck, I will go one step further and declare that nobody needs exclusive residential zoning. You are building a von Neuman bottleneck (separation of commerce and residential areas) into your society. A lot of social issues stem from this incredibly bad idea.
I'd like to know this: if I got 2x the pay in the US, could I instead ask to work 1/2 and get the current pay level I have?
Most likely no, right? So in what way is that higher pay actually helping me pursue passions? I'd be working at least as much as I do now, and most likely more, for that money.
When exactly are those passions supposed to be pursued? When retiring? I'm pursuing that now. I have had 6-8weeks off in summer the last 10 years. I like to travel, etc.
If your passions require more money than you have, it doesn't matter that you have 6-8 weeks off. You still can't do the things you want to do. You can relax, travel (limited due to funds though), which are both nice for a while but eventually become frustrating.
My passions are expensive - too expensive unfortunately. For example I could really do with a house to build things in, but I can't afford to buy a house, so I can't build the sorts of things I'd like to build in one. And you should see the small factory I wish I could afford.
Even small stuff like attending conferences is too expensive if you can't afford the travel and tickets.
As I've gotten older I've come to see there are many situations where, if I'd had more money, things I tried to work on would have turned out very differently. That's the #1 reason I now pay more attention to income than I did for a long time, when I focused on voluntary work for what I thought was worth investing time in, with "SWE side gigs" to pay the bills.
> When exactly are those passions supposed to be pursued? When retiring? I'm pursuing that now. I have had 6-8weeks off in summer the last 10 years. I like to travel, etc.
Depending on what they are, it may have to be evenings, weekends, or when retiring.
That'a definitely a compromise. But if you don't have the money and your passion projects need money, it will probably be never.
I realize things can change though. If I were to suddenly be divorced for example, I'd probably value having a much higher paying job suddenly (at the expense of less free time, more stress, less interesting work etc), to be able afford life.
This!
I'm not familiar with all European countries, and not extremely so with the US, but I think this is an important difference: Free time. 5-6 weeks paid vacation is common, and employers expect it to be used. It's often easy to get unpaid leave for whatever reason, such as studying or starting a business. Parental leave is paid and the expectation is that it will be used. Employers demanding overtime or "crunching" or whatever is generally frowned upon.
Etc. etc. My strong impression is that those "low-paid" European jobs are often a lot more balanced, with more room for life than their American counterparts.
(I do live in Scandinavia, maybe we're on the extreme end of this, but still )
Nearly all employees would accept more pay if they were offered it, nearly all employers would pay less if they could - so like any market it is always an equilibrium between the two. And frankly in some job markets the salary is negotiated better than others.
There is a sort of learned helplessness to 'I don't deserve more for this job' etc. in the eternal words of Unforgiven - deserve's got nothing to do with it.
I completely agree.
I certainly would accept more pay. But I wouldn't switch jobs just to get it. There are several reasons, most importantly that interesting jobs in my niche are scarce. So my employer has a resource that is perhaps scarcer than myself!. Second (and this is the part where it becomes self-fulfilling), because there are no super high salaries, I'm close to a kind of ceiling. I'm not sure what that ceiling is and you could always be lucky and find some extremely well paying job, but let's say that for a job I'd be willing to do, the ceiling is within 50% more than I'm currently making.
If marginal taxes are 50% (at least), then that's a net 25% pay rise. It's basically $1500 more a month net, and it would require me to make probably several job switches. It's certainly not insignificant, but it's just not significant enough. Had there been jobs across the street paying 3x what I do, then certainly I'd start chasing more money. But I value my 6-8w holidays, I can already afford to travel etc. I'm comfortable.
Only if you’re not paying any taxes currently :-)
My main contention really was with the assertion that you don't see why you should get rich - as if it were about what is deserved whereas of course it is a market where the correct price is the one people are willing to pay.
I myself trade off a number of factors in my career which don't equate necessarily to salary.
For most us devs, especially in europe where a larger fraction of us developers work, I imagine, in traditional industry rather than "in software", there just isn't a situation where we create this massive value. We create more than we earn, sure, but it's not exacly Netflix money. The company I work for, like almost all companies, have a huge number of employees and a profit margin that has looked pretty similar for a lifetime.
What's unfair is perhaps that there are instances of such companies, where the developers really could and should be rich because they write software that make billions. If such devs were paid better, then I could also be paid better, because I'm paid in competition with them. More likely though they'd be paid more and the jobs that aren't in that category would be done elsewhere. So in a sense, I'm also a tiny bit happy that the pay structures aren't as widely distributed as they are in some places.
And the maximum you feel you can get away with. It’s a market, after all.
In the UK, at least, I'm not sure this is still true. On retirement, I planning on getting nothing from the government once I get there, and it's looking increasingly likely that I won't be allowed to retire until slightly later in life.
That being said, I have paid off my student loans in less than 10 years of work, so I can't complain about the cost and quality of education.
In the UK ever less is expected of the government. I keep reading "I don't expect a state pension" on the Internet. Of course, some people look at the finances and economic outlook and arrive at that conclusion on their own, but I feel a great many others are being primed for this situation. We just expect to be screwed by our government now and it seems like defeat. :(
Tbh, I'm happy to save for my retirement, but I'm slightly biased towards a slightly less welfare society (though not as far as removing essential support and health care). I can choose to save more now for an earlier retirement, for example. I think the auto enrollment has gone a long way there.
So the question is: why are managers, HR, etc. paid so much more than SWE in Europe? They bring less value to the company.
Doctors are paid around a 1/3 of what doctors get in the US
Nurses around half
Lawyers vary, but quick googling suggests it's around half to third
Finance, insurance and real estate pays waaaay less
Store managers at Walmart get about twice as much store managers at Lidl Europe
The skew in upper management pay is even higher
and on and on...
Partly because even though productivity is comparable, Americans just work more (longer hours, fewer and shorter holidays), partly because the system is just more efficient: single market, just 1 language, great centralized soft power that opens many doors.
I’m also from Germany. There is significant wealth inequality, but making €40-60k pre-tax a year is very attainable for most developers here. In Switzerland, it’s even higher (€60-70k+) and they have to pay fewer taxes (with a higher cost of living).
But the „average life“ in Germany for a developer is very good. About 4-5 weeks of vacation every year, no expectations of working more than 9-5 (at the average employer), and after 1 year working at a job you’re eligible for unemployment insurance which means you get 60% of your net salary for 1 year if you’re unemployed.
With regards to attaining riches:
You can live comfortably with €2000/month net as a single (and easily with €3-4k with two incomes and two small kids in a smaller city), so for most people, it’s possible to save 500+€/month (most don’t because of lifestyle inflation, but that’s a different matter). With side hustles (small freelance work) you can easily save €500-1000/month which means that after 5-7 years you are able to save €80,000. Continuously investing in stocks, pension plans and ETFs (what most Germans also don’t do) means that you can accumulate half a million euros by the age of 45-50.
And this is the average developer, no 10x rockstar. Having a net worth of €700k to one million euros when you’re 67 years old with a very good work-life-balance is nothing to be ashamed of. With more ambition, you can freelance for €75/h which translates to a six-figure income. With that, it’s possible to build a net worth of 2-3 million over 20-30 years.
For people who want to be a millionaire in 10-15 years, this is not very attractive. But when you consider the work-life-balance and the labor rights, it's easy to see how people would choose that. For high-achievers, I would also recommend working in the US or Switzerland. But for average developers, it's not that bad of a deal.
I would rather reduce the wages of those richer than SWEs by taxing them more and using that to reduce housing prices, increase wages of health workers and educational staff, and pay for more social programs to get the poor out of their misery.
Optimally, it's my firm belief that we should be working towards UBI to reduce bullshit jobs everywhere. I want people to be able to work on things that matter and things they care about, while living in a place they care about and for without having to constantly sweat about money.
If European SWEs wanted to raise their wages, we would have to unionize and demand a greater share of revenue. Also, we would have to vote for politicians that want to force large companies to pay their fair share in taxes. Google, Amazon, apple and others have a leg up because they can make billions without paying our countries their due taxes.
Sure, but if you are a really good engineer in software, someone is going to get "very rich" from your work. Why not (partly) you?
Of course, plenty of people work for themselves, that's the beauty of the free marketplace.
But to assume increasing salaries _is the way to go_ feels like such a capitalist/american viewpoint that it's hard to understand why it's trying to be applicable to Europe too.
The short answer is that he is replaceable, while the owners are not.
Exactly this. European social democracy allows people to have relatively calm life without burden to start their careers with huge school debt. Or worrying about health insurances. Once you will have family (OP), you will see that not saving for their health insurances and school also helps a lot and I wouldn't change this for USA system. On the other side, it is very simple for software engineer to get a job anywhere in the world, but do take into account pros and cons.
Anyway, to the topic, the way of raising salaries in any sector has always been the same. Form a syndicate, get enough people to join and go on strike (and if you live in EU you are very well covered and protected regarding syndicate activities).
I see this opinion a lot and I do take it personally.
I come from a workers family and getting into IT was hard. I still pay off a (small 10k) debt from university. It took me years to get into the industry, working for very little pay. All the while I didn't do anything for my pension. Now I have a good income, but income alone is not enough to buy a house near the city. Having a migration background in Germany might not have helped.
Do you really think engineers, bankers, administration, lawyers, teachers and real estate agents have it worse?
In an industry that's created to destroy jobs, why would I work for less?
This is the most European thing I've ever heard. Most people would not like to take risks and would not even think about stepping outside of their comfort zone. Personally, I think this is the reason why there are less startups in Europe compared to US. No one would like to take a risk unless it's absolutely necessary.
> I have worked 20 years in the same job and so have my colleagues.
I do not mean to be offensive and I know everyone has their own cup of tea. But 20 years doing the same the job?? This would literally be death to me personally as a software engineer. Changing your job is part of your career growth in-order to expose yourself to new challenges, problems and new environments. Of course this comes with a risk factor and personally, this risk and excitement is what makes life interesting. I would kill my self if I got stuck in the same job for 20 years.
If you have a good job with a stimulating environment, colleagues, and decent pay, then the perception of being stuck does not exist. Over time the role will change to reflect the changing organisation and role.
I do not know anything about US work culture from first hand experience. I'm a software engineer from Sri Lanka working in Germany as a software engineer. It was my personal opinion and as I've said everyone has their own preference.
> Over time the role will change to reflect the changing organisation and role.
If the role has evolved, then it will not be the same job you did 'x' number of years ago. But according to original post, OP says "I have worked 20 years in the same job". Maybe I understood it incorrectly, but it seems like the role hasn't evolved or changed at all.
Results? Unimpressive, fails over fails.
I know value the steady job I have and I keep tearing myself for not opting for this sooner. I don't know if I would be already burnt out if I haven't tried, but timing wasn't great, that's for sure.
I can still see some uncomfortable situations ahead of me, but I'm not afraid to embrace them.
A lot of people prefer work to live, while others prefer live to work. Both strategies are perfectly fine.
If you just "work to live", then you'll be just an average employee, with average salary. High salaries and other perks are for high performers.
Or for loud mouths with increased tolerance to risk.
We like to think that the world is much more meritocratic than it is ("just world hypothesis").
And I say this from the camp I'm describing above.
Thank you
> This would literally be death to me
I think how often you change jobs depends on the challenges and type of work. My first project was over 10 years from start to initial release.
I don't think switching jobs is that necessary if you can be challenged in your current job. Ever changing problems are exactly why I'm staying. I tried switching to do some web work in a couple of places, but found that I really hated it and that most things in the "web stack" are just crud and it's really hard to find really hard or complex problems in the space (Where the complexity isn't in something tangential like ops/configuration/scaling...). I'm an engineering/math type person so it's a bit scarce.
I keep a constant lookout for new jobs, but I filter out 99% of positions simply because it looks like generic web tech jobs.
In some sense this is true, but lets not get carried away. The American Startupism is all about the flash, big growth, big impact, big IPO. In EU you have companies slowly grinding a hard problem for 20 years that also have huge impact but no flashy news. Look at things like vertical farming, ASLR, fintech. Thats all thanks to low risk and stability.
The Germans go back to their hotels, plan the trip, shop the needed equipment and set off according to their planned route and timetables. 99 will get to the top, but no one will get the prize - because the American already has been there... sums it up.
It's mostly a rational calculation. Because of crab mentality and stigma of failure, the downside is worse in Europe. The expected value of risk is lower than in America.
That everyone should aim to be super stinking rich, or everyone is living in the gutter, but there's no inbetween
Unis are telling people that they can be the next zuckerberg or bezos, instead of telling them that they can earn well enough to have a very comfortable lifestyle for the rest of their lives
Lower wages for this amount of security seems a great deal to me.
In a sense you don't, depending on how you count. My gross salary is after the pension is deduced. The gross includes my kids university costs, but they are deduced as taxes so don't show up on the net. An american deduces the kids university costs from his net salary (and there could be more, e.g. pensions).
Comparing pay as a simple number "gross pay" is extremely difficult. Comparing net pay purchasing power or similar after necessary expenses including savings (and kids university) is probably more accurate.
Which country? You should definitely be saving for retirement
Also I don't think I'll want to retire very soon which helps the calculation. Saving durig a 50 year career to live 10-15 years is very different from saving for a 40 year career to be retired 20-25 years. I'm hoping to work to at least 70 or longer and that makes a huge difference too. I some times hear US devs talking about wanting to retire at 55 or 60 - which I'd want too if I didn't have summer off every year!
Another way to think about this is that your job generates certain value in the economy. If labor's salary doesn't capture that, then that value is going somewhere - either to your governments via taxes or to capital owners. I understand that some Europeans will not have problems with the former, but are you comfortable letting capital class capture all the remaining value after taxes? If not, that is a good enough argument because allowing that to happen is what is driving wealth inequality to high levels.
In a similar vein, you're describing a lower headline salary buying a comparable standard of living because you aren't paying a mortage-equivalent sum for healthcare and education.
It’s how Silicon Valley reached those salaries after all...
Dont know where to begin unpacking the falsehood of this. Maybe a counter question serves best: how is non-competitive behavior not worthwhile?
Ultimately it's more a question of supply and demand as to why US SWEs are paid so much.
Even the best area identified in [2, 3] re: 5-year mortality for cancers is misleading as the US notoriously over-tests early on, detecting disease early, but isn't actually more effective at treating the disease, and folks die at the same time as they would in European systems. This naturally makes the 5-year mortality rates look good, but doesn't change the fact you're still gonna die at the same time.
While admittedly cherry-picked, it's also the only developed country in the world where mother's mortality rates during childbirth are rising. A mother is 5X as likely to die giving birth in America as compared to Canada (where healthcare costs half per capita and covers everyone).
Also, consider the median amount of tax collected in the US (excluding private $800/month tax your employer pays to insurance companies on your behalf) is actually higher sometimes than Canada now. The top marginal rates are also higher, consistently. [4]
[1] https://www.commonwealthfund.org/press-release/2017/new-11-c...
[2] https://www.oecd.org/unitedstates/health-at-a-glance-united-...
[3] http://www.oecd.org/health/health-at-a-glance-19991312.htm
[4] https://www.cnbc.com/2017/08/07/canadians-may-pay-more-taxes...
Otherwise it seems like raising salaries would help here, since the system would be better funded.
Unless of course raising salaries somehow screws up the system.
But if a country did, it seems that they would want higher salaries so that they would have more resources to fund these systems.
The culture at companies is extremely dependent on the company - a traditional employer might expect the prototypically Japanese extreme deference/obedience to hierarchy, but it also seems that there are plenty of companies that "get it" and don't play that game, as well as the full set of FAANGs and foreigner-run companies that follow a totally different set of rules than the old school businesses here; and it's also subject to change considerably now that model companies like Toyota are moving to merit- instead of loyalty-based promotions, but that kind of shift takes a long time to take hold.
Your job options are much smaller if you don't speak Japanese, but jobs exist, I know people who have gotten them, and they tend to be in the international- or international-style companies. Wages for foreigners strangely are generally decently higher than for locals, I hear, even if not knowing Japanese is more of a handicap than a help lol.
Edit: To expand further, think like this: The easier it is for companies like Google to hire good talent in Europe the more they will hire talent in Europe and the more development they will do in Europe. They already do quite a lot of development here as is, there is no reason that couldn't be expanded.
FAANG offices in the EU pay significantly less.
So generally speaking, they’re only worthwhile for people that have important company secrets.
Companies want developers and will pay market rates. We will converge towards a global rate for devs.
If by "take care of" you mean put downward pressure on European wages, then sure. Unrestricted remote competition would benefit 3rd world developers and the 1st world employers. But not the 1st world employee.
There are plenty of US companies that hire devs that do not have these economics, but they’re forced to pay more or loose the few developers they have.
What reduces the upside of European companies hiring?
[1] Calculate the revenue per employee of Facebook, Apple, Google etc to see how much money is involved.