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

65 points by petamask ↗ HN
Even compared to other developed nations in Europe and most certainly compared to my country (Korea), the pay range I see for remote jobs from US seems to be in a totally different ball park. There must be numerous contributing factors, but I can't quite grasp how come.

Or maybe not all jobs are paid so well or living costs compromise all that, but do they?

174 comments

[ 2.5 ms ] story [ 248 ms ] thread
hopth
I would also like to know why. I’m at the salary limit for my role essentially everywhere other than the US and so I’m considering a move.
trinovantes
I think it's mostly culture. Compared to other regions, US favors innovation/risk taking and sees software developers as value creators rather than cost centers.

There's also the fact that USD is the global reserve currency which makes it much easier to raise capital.

mousetree
> USD is the global reserve currency which makes it much easier to raise capital.

Could you explain more?

ochoseis
Because it's the global reserve currency it generally means:

1. There's more people around the world with USD who are interested in putting it to work.

2. The US government can easily print and borrow money denominated in USD, which leads to more USD floating around, which ends up in the hands of people from #1.

mousetree
Thanks. Could you explain how that leads to higher salaries in the US too?
ochoseis
I don’t have any references handy, but I suppose it’s a combination of the U.S. being a top destination for investment (because of the currency, risk-level, innovation and productivity), plus high demand for labor.
neximo64
I doubt the global reserve piece is a major part of it, you could just as easily argue its cheaper to raise capital in Switzerland than the US, but devs are still paid more in the US.

Even historically speaking when the US dollar was not the reserve currency, pay was still higher in the US. It probably comes down to productivity and the transmission of that to wages more than anything else.

gnz11
Unless you are at a FAANG or similar company, programmers in the US are still seen as cost centers by c-suite people.
pwinnski
There are software companies outside of FAANG, and programmers at software companies, by and large, are seen as more essential that "just" cost centers.
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Mandatum
Because that’s where all the money is.

Seriously look at global GDP, maybe American citizens aren’t the wealthiest but the country and the businesses that run it sure as shit is.

gigatexal
Haha pay is higher in the US because, sure, it's the world's largest economy. Though there are more millionares being minted in China than in the US every year. Nevertheless I'd sure as shit not want to build my business in China.

I used to think this was because of relatively higher taxes in the EU than in the US but at the top end the highest wage earners are taxed rather heavily. A 500k salary is not 500k takehome.

At least for me, I find the EU (Germany in particular), is hurting for talent enough that my mediocre skills (working on skilling up) are in demand and I'm relatively well paid >80k eur/yr.

abofh
So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to touch the 35% tax bracket on my last dollar earned this year, when you factor in the plethora of deductions, my effective tax rate is currently around 10%, and by year end will likely creep up to 17%.

I've lived in a few EU countries over the years, generally under digital nomad programs that exempt from local taxes - but it's still helpful by way of comparison, that right now, if I were to pay at the same rate in my current country, I'd be much closer to 30% than 20%.

Moreover, those earning substantially more than I am are largely not doing it as W2 (employees) or 1099 (contractors), but as investors earning capital gains - which themselves are taxed at a maximum of 20%.

You can add to the US burden state taxes, but some states don't tax income at all (Texas), or they do their taxation based off the federal AGI, so all of your deductions kick in for the state stuff as well.

If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth - because at the point where we're haggling over that much money, it's worth everyone's time to optimize even a 1% difference - by paying someone to do exactly that.

So yes, a 500k salary isn't 500k take home, but without doing anything different than what I'm doing today, it'd be pretty close to a 400k take-home under US tax law.

Dracophoenix
Which digital nomad programs have used? Any that you currently recommend?
abofh
I'm a big fan of Croatia myself, but their program is one year, not renewable without a break (and starting next year, a full Schengen break), but it'll depend a lot on the lifestyle you want. I want cheap, beaches and quiet at least outside of the tourist season. I've heard good things about Portugals, but no direct experience. Montenegro has announced a two year one that's renewable once that I may give a trial when my current Croatia one runs out, but it's brand new and the government websites are currently under a bit of a DoS so getting details is harder. Germany could be good if you like it there, I think Italy just announced one, and if you're more into the Nordic scene, I think Norway has one.

But I'm primarily in the EU because my partner is here, you can find them in a number of other countries, depending on the lifestyle and culture you want to spend time in. Not all of them are tax free, but most of them are.

Do some googling, there's always an expat services organization that will offer overpriced consulting (but you may still want to use them, it can be frustrating if you don't speak the local languages).

Also ask yourself if you want to find a new home, some nomad years don't count towards permanent residency requirements, so you may be delaying things while you do it. For me that's fine, for you maybe not.

If you've got the liquidity it's usually worth going for a couple weeks before you make any final decisions to scope out the local territory and see if you can operate comfortably, but I'd encourage anyone thinking about it to look into it, you may find a lifestyle you really like better than home, wherever that is.

gigatexal
I’m an expat here too and I pay a CPA to do my taxes. (1 rental means a biz return and all the deductions… meh) if you can take home 400k from 500k in gross then you’re doing amazingly well.
gnicholas
This sounds too good to be true to me (as a former tax lawyer). If you're being paid 500k in salary I can't think of how you take home this much. Maybe you put a ton into tax-deferred accounts, but that's not the same as netting 80% as take-home. It's kicking the can down the road (to a time when tax rates may be even higher).
gigatexal
Tangent: are you a former tax lawyer turned dev? What’s your story? I am a sucker for folks that have interesting or non-traditional (CS degree -> sw job) journeys into tech.
gnicholas
I did two years of CS undergrad before switching to Econ and Linguistics. Then went straight to law school like a good boy. I worked 7 years in BigLaw and dabbled on the side with a side project. Didn't do the coding myself but knew enough to work closely with the devs doing the work.

One day I posted on HN [1] and it blew up and became the 9th-most popular Show HN. A few weeks later we were in FastCo and dozens of other news outlets, and a couple months after that we won a startup competition at Stanford.

My wife had a baby at that time, so I decided to do the startup full-time to give it a go and also have more time with the baby and supporting my wife's demanding career. The baby is now eight, and it's been awesome to be so involved in her life.

In terms of coding, I'm able to do minor code tweaks here and there, but all the heavy lifting was done by my technical cofounder and a couple excellent contractors. Our main revenue source is actually IP licensing, so having been a lawyer comes in handy!

1: https://news.ycombinator.com/item?id=6335784

gigatexal
That’s awesome! Thank you for sharing
abofh
The big ones are feie, depreciation on us property, some tax deferred accounts yes. Some of it is indeed kicking the can down the road, but by my estimates I'm near the peak of my earnings power and plan to retire early, so future tax rates for me personally are expected to be on a downslope.
gnicholas
What can an individual depreciate that offsets against hundreds of thousands of dollars of wages that are taxed as ordinary income? I get how depreciation helps you if you're renting out apartment buildings, but the tax code revamp of 1986 got rid of the passive investment tricks that allowed doctors/dentists/etc. to offset their ordinary income with depreciation deductions.

Your point about your personal tax rate going down makes sense. Congrats on the impending retirement!

abofh
I still have an apartment in the US that's gone from being a primary residence to an investment property - so straight line depreciation on the asset offsets the rental income, then the mortgage interest and SALT deductions still exist on the property itself. It doesn't offset hundred/s/ of thousands of earned income on its own, but the left pocket takes the loss, the right pocket takes the gain so to speak. My first (income) taxable dollar to just above 200k when combined with the FEIE and everything else along the way. There will be capital gains to be paid if the housing market ever recovers and I sell without replacing, but in the mean time it keeps the cash in my accounts.
gnicholas
> If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth

What would you do to go from 200k to 2M without increasing your tax rate, if you're being paid in cash salary? Can you contribute millions to retirement accounts?

abofh
That's the trick - if you're being 200k, your ability to negotiate how you're paid is limited, if you're being paid 2MM, you can almost certainly negotiate the payments to be a more tax favored solution.
ChuckNorris89
>I find the EU (Germany in particular), is hurting for talent enough that my mediocre skills (working on skilling up) are in demand and I'm relatively well paid >80k eur/yr

Can I ask where in Germany?

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badpun
Mediocre skills pay $150k usd in the US now though.
gigatexal
I could never pass the ridiculous white board challenges. Didn’t have any of that drama here. A take home and a relaxed discussion about it after the fact and I got the role.
badpun
I live in Europe, but got a couple of remote US jobs over the years. Didn't get a single whiteboarding exercise in them. At most, there were live coding exercises, but one where they were interested in how well I know the language/frameworks, what is my thinking process, how do I structure the code, how do I handle errors and unexpected states etc. - so, in essence, the things relevant to daily coding tasks, not some algorithmic trivia.
gigatexal
That’s how it should be. That’s how I interview candidates now, too: applicable situations not highly conceptual intellectual navel gazing.
cm2012
Even West Virginia has a higher GDP per Capita than France. The US is just a really rich country (that has a very inefficient medical system)
BeenChilling
What are the best ways to get hired in the US as a software engineer from the UK? I’ll be graduating with a masters in CS from a top university in 2023.
phphphphp
Find a job with a US company that has a UK presence (a multinational like Google, Facebook etc.) and get promoted enough (e.g: to Engineering Manager) to be eligible for an L1 visa, then request to transfer from the UK to the US. The L1 visa process is the easiest, and has a path to citizenship.

https://www.nnuimmigration.com/l1-visa-to-green-card/

(UK salaries are competitive enough nowadays that it's not really worth it for financial reasons, given the financial risks associated with the US. If you want to go for non-financial reasons, have at it.)

toastal
Compensation is competitive now? Last I looked (couple years), anywhere outside London was really low.
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spacejogger
How are UK salaries competitive? Even in London, salaries are, at best, 50% of what they are in Silicon Valley for 'typical' companies. At FAANG companies (e.g.: the Google/FB/etc London offices), they are about 70% of what they are in Silicon Valley. Cost of living is higher in SV, but not that much higher.
phphphphp
I believe that 70% is very, very competitive — I’d go as far as to say 70% of an SF salary, in London, is better. There’s a bunch of considerations, not just the cost of living, but things like healthcare, which allow for a high-earner to better leverage their earnings to improve their quality of life.

There’s a higher density of well-funded companies in the US who can afford to pay high salaries, so it’s easier to find a high salary, but if you find a well-funded company in the UK (of which there are many, and growing) then you can earn comparably high amounts.

If you have a £150k salary in the UK — which is easy enough at Google, Facebook etc. — you will have a very high standard of living, so much so, that moving to the US to earn $300k/year at the same company would have very little impact on quality of life.

nickd2001
+1. Housing costs a fortune in both London and Silicon Valley. London has an excellent rail network so if you could WFH somewhere with much cheaper housing 3 days a week that could work. Although the NHS is underfunded to breaking point, private healthcare and insurance is much cheaper in UK than USA. Reasons to move to the US would be for adventure, experiencing another country, the great outdoors, all the things USA offers. Probably not for financial reasons anymore. This used to be different but UK tech salaries got better. Of course, who knows what the long-term holds for UK, with Brexit, higher inflation than other countries, the union breaking apart (Scotland leaving), political instability etc.. Not that USA is a perfectly stable country either ;)
fxtentacle
Do some cool open source stuff. Since August 9th, I received about 50 job offers mentioning this repo: https://github.com/DeutscheKI/tevr-asr-tool Most of them were senior engineer or AI researcher, with a few CTO / co-founder offers sprinkled in. I'm not in the market and this was a bit unexpected to me, but those emails sounded like they would pay well. And most was remote for US companies.
WastingMyTime89
Apply to an internship or inquire about job opportunities through the career service of your university. Large US companies recruit directly from the few top UK universities and will be happy to send you to the US if that’s what you wish. But if it’s money you are after, I would personally stay in the UK and go work in finance.
nickd2001
This isn't as easy as it once was, I believe. I did precisely this about 25 yrs ago, then ultimately returned to the UK. At that time you could get a H1B visa as long as they paid you the market rate and had advertised the job sufficiently at home first. Once you had a H1B you could transfer the visa between employers if you got another job, although not entirely simple. Since then, rules have changed so you have to earn a lot of money to qualify - though this may be do-able on a FAANG salary after a couple yrs experience. Also numbers of visas are capped so you might not even get one. So you could try L1 route as sibling post suggested, although, then you have to rise in that company a little bit , then you're quite beholden to them if you transfer - once in the USA, not so easy to transfer so what happens if you're unhappy in your job? Maybe you should do a Phd and try to get classified as "alien of extraordinary ability". (I love this terminology ;). ). That opens other doors possibly to visa independent of employer. In short- its not easy for a foreigner to go and work in tech in the US these days, and that in itself may explain some of the salary inflation that is being seen, hence the original Q on HN at all.
fxtentacle
I would say the peak 0.1% are paid much higher in the US. But the median pay might well be higher in Europe.

(EDIT: Wow, look at the numbers cheschire linked to. Median wealth per adult: US is 26th place after Israel.)

In my opinion, the cause is strong competition for the top talent worldwide. And because raising money is easier in the US and because taking risks is more common in the US, they will compete more strongly for the top talent, too.

Also, some jobs just have to pay really well to make them acceptable. In the area where I live, $60k annually will pay for a very nice lifestyle for a small family with kids. Little house with garden, hiking in nature, free childcare, schools, university, etc. But if you have to live in San Francisco, $60k annually with kids is almost impossible. Rent over there is like 5x to what I pay, so it makes sense that people will need 3x the salary to do okay. And if you then add the cost for childcare, school, and university, you really need 5x the salary in San Francisco to get a comparable lifestyle to rural Europe.

grecy
The US not having healthcare and higher education for all is a big factor. They also have worse infrastructure (condemned bridges in use...)

So you get low taxes and lots of money into your pocket, but then you fork it out again. Remember, those grads landing a job at a FAANG have hundreds of thousands in student debt that is attracting interest to pay back.

It’s also the cheapest developed country to buy “stuff” For similar reasons - cars, appliances, electronics. Even food, beer and cigarettes are drastically cheaper than other Developed countries.

refurb
The US not having healthcare and higher education for all is a big factor.

It's a big factor in wages? I mean my employer was paying $24,000/yr for my families healthcare plan on top of my salary. You'd think it would push wages down, not up.

But regardless, there is plenty of healthcare (my friend's friend came from Thailand on a green card and signed up for free Medicaid right away) and higher education ($10k/yr for tuition at a top-ranked global school is pretty good in my opinion).

permo-w
the outcomes of WW2 are a large part of the answer to this question
gwbas1c
Which partially is because the US is an island nation with no threats at its borders. There is very little threat of ground war in the US. Historically, the border with Canada was a formality; and the border with Mexico is small.
whiddershins
More realistically the Revolutionary War.
permo-w
I completely disagree
whiddershins
Then why don't Mexican software companies pay really extra well? Mexico wasn't damaged by WWII at all!
permo-w
it’s not that the US wasn’t damaged by WW2, it’s that it hugely benefited
sixhobbits
Compared to Europe there is more upside and downside risk in the US. You can earn more but you are more likely to be financially wiped out if you get cancer or have an accident (high medical costs). Most countries in Europe have more social support built in at every level, not just healthcare, so its unusual to go from living comfortably to being on the street. Some argue the US way is good (more downward mobility is necessary for a lot of upward mobility) but it also leads to a lot of survivorship bias. The people who fall off do not get talked about much
blackhaz
I live in London. Developed a persistent headache which goes on for a few months already. Just got appointment to a neurologist for August 2023. Today is September 2022. Although, is UK in Europe?...
badpun
Yep, that's how the coveted socialized health care system looks like in practice in many European countries. Sometimes the queue is short and you can use it. Sometimes it's not and you go to a private doctor instead. Sometimes, the nececessary drug is refunded and you get it for nearly free. Other times it's not and you buy it out of pocket. If it happens to be expensive, it will bankrupt your family just the same (or, more often, just die instead, because you don't want to do that to your family for an off chance of surviving the illness).
brnt
> Yep, that's how the coveted socialized health care system looks like in practice in many European countries.

The NHS really stands out negatively in Europe, no matter how great the Brits think it is. Unfortunately, English-speakers living where they do, this is not really voiced in the English press. Out of all of the Anglophonic world, yes, the NHS is probably the best.

nabogh
Australian healthcare is pretty good. NHS sounds much worse to me but I've only heard horror stories.
wbsss4412
Meanwhile my friend here I’m the US has to wait until may 2023 to see a dermatologist.

Long wait times exist in the US as well, we just like to pretend that it’s a socialized medicine thing.

credit_guy
Yes, but it's most likely a top dermatologist. There are lots of dermatologists around. For the first visit, it's normal to have to wait one or two months. Almost one year is definitely not normal.
wbsss4412
> Yes, but it's most likely a top dermatologist.

It is not. It is a dermatologist.

> Almost one year is definitely not normal.

I would like to believe that too, but I don’t know what to tell you.

SamReidHughes
This is not the experience of my family members.
wbsss4412
Never said it was typical, only that it exists.

When these conversations come up, people always trot out the wait time line, and it’s true, wait times are generally on the lower end for the US compared to other countries. However, they are not zero. Depending on the need, the region, and the time, you have to wait in America, just the same as in other countries.

Useful reference point: https://www.oecd-ilibrary.org/sites/242e3c8c-en/1/3/2/index....

p1esk
How many dermatologists have you called before giving up and agreeing to wait until May? In my experience it takes 3-5 calls to find someone willing to see me within a few days.
wbsss4412
I don’t know, I didn’t interrogate them about it. I would imagine they considered that, but, then again, maybe not.
thephyber
Anecdote: my friend in Silicon Valley is having debilitating headaches and her soonest (employer sponsored health insurance) neurologist appointment was 4 months away.

“The” US health care system in practice is extremely broken unless you have a concierge doctor or you donated enough to get your name on a hospital wing. Rural areas of the US are losing access as hospitals have been closing and urban/suburban areas have seen hospital consolidation. Our system is not an envy of the world, despite the marketing that makes so many people think that.

Scoundreller
No longer, because 350 million pounds a week was being diverted from the NHS into Brussels.
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beardyw
The pitch was the other way around, that £350 million going into the EU (if you believe that figure) could go to the NHS (it won't).
quickthrower2
Sounds typical UK. But, how much is your health insurance costing, and could you land a $500,000 bill if you go to the wrong hospital?
blackhaz
Costs nothing if I'm dead, I guess.
whiddershins
No, if you have health insurance this isn't true. None of this is how it actually is in the US. Outside of addicts and the severely mentally ill it is rare to "fall off" middle class status.
molotovh
And for the kind of jobs we're talking about (outside of maybe start-ups that haven't got benefits figured out quite yet), the commercial insurance offered by employers tends to be quite good. As a personal anecdote, my wife has a union job and I do not. She switched to my healthcare insurance because the benefits were better than what the union offered. (In a pure analysis, my job is technically less secure, but realistically I am in no danger of losing it. When correctly managed, increased risks yield increased rewards.)
thephyber
note this comment is likely very misleading.

> According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness. The study found that even the Obama administration’s landmark Affordable Care Act (known as Obamacare) has failed to change the proportion of bankruptcies caused by medical debts, with poor health insurance cited as one of the main culprits.[1]

530k households into medical bankruptcy annually from medical costs in a country with 123,600k households. In 30 years, that would be more than 10% of the country, on average.

[1] https://theguardian.com/us-news/2019/nov/14/health-insurance...

TMWNN
>> According to a study published in February 2019, about 530,000 bankruptcies filed annually are because of debt accrued due to a medical illness.

That's the same bogus study that Elizabeth Warren has been pushing for years, which attributes any bankruptcy in which medical bills are involved to mean that medical bills caused the bankruptcy. Only 4% of US bankruptcies are because of medical bills <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...>. A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect.

thephyber
You bring an interesting point. I completely admit that I didn’t research the source of the study or any refutations of it.

> The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect.

An obvious counter observation: Isn’t an extended medical issue likely to cause a person to lose their job and health insurance?

Remember that in the USA most health insurance is company sponsored. When you lose your job, you either pay premiums at COBRA rates or you lose coverage.

And although it is illegal, companies do fire people (or find creative substitutes) for employees who are very expensive to cover.

TMWNN
>An obvious counter observation: Isn’t an extended medical issue likely to cause a person to lose their job and health insurance?

You are correct in that most US health insurance is tied to employment. But the discussion point was the claim that "[insert high percentage here] of US bankruptcies are because of medical bills".

Any illness, extended long enough, is going to cause people to lose their jobs, whether in the US or elsewhere. Certainly any illness long enough to exhaust COBRA coverage. That said, in the US that's where Medicaid will step in, assuming that the loss of income is sufficient to trigger Medicaid's income-based eligibility.

thephyber
If you have an illness long enough to lose your job and your health insurance, you probably aren’t able to pay all of your bills. Hence medical bills are likely a distal cause.
TMWNN
Right. But, again, a) the job loss is going to happen anywhere, in or out of the US, and b) having medical bills among the debts one can't pay without a job is not the same thing as "American with job gets hangnail = bankruptcy!!!", which is what one would believe based on the typical rhetoric on the subject.
0xBDB
If 92% of American households have health insurance, which they do, and by law there is an annual out-of-pocket maximum on health insurance, which there is, I find it somewhat unlikely that 10% of the country will be medically bankrupt in a generation.

I'm not saying it's impossible to go bankrupt on a capped 10k of medical bills, given that so many Americans live paycheck to paycheck. But if it happens there may be confounding factors. Or, you know, it's possible people facing bankruptcy have some incentive to exaggerate to a federal judge the reason they're standing there.

thephyber
You aren’t being creative enough.

Health insurance companies know about the annual caps and have strong incentives to deny as many costs as uncovered as possible. The out-of-pocket maximums only apply to covered costs. There are lots of costs that health insurance companies deny coverage for: - Incidents that the covered think are emergencies, but the insurer thinks aren’t. - Any time the insured doesn’t follow the policy procedures, such as visiting a specialist without first getting a recommendation from their primary care physician - Out of network providers. - Claims received after the insurer says the policy is cancelled

And there are dozens of reasons related to ineptitude (bad coding, mistyping, lack of cost transparency).

a blog article listing the top 10 types: https://mbamedical.com/blog/8-reasons-why-your-insurance-cla...

0xBDB
That's true, though as another comment in this thread points out I still don't think the math works. But also it doesn't seem to be what that study found:

"A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found."

So to compare the U.S. to Europe we'd need to know how many are due to bills, which only really happens in the U.S., and how many are due to being out of work due to medical issues, which happens everywhere and apparently causes 8.2% of bankruptcies in the U.K., for example.

https://balancingeverything.com/medical-bankruptcies-statist...

viraptor
Things to keep in mind in comparisons like that:

- Where in the us? SV will have absurd salaries, but also absurd cost of living.

- What do you pay for in your country? How much is your health insurance? GP visits? Family education?

- What's the environment like compared to a $random_us_location. For example do you need to own a car to survive and do you spend lots on daily driving?

- What are your benefits? I've got twenty something days off and take even more. Had a paid months of leave as a parent. This is not common in the us.

whiddershins
My US-based remote job pays for all these things.
viraptor
Yes, I'm sure there's non-zero amount of people who get lots of benefits. And you're likely aware how lucky you are. The point was: it's not common and not required at state/federal level.
whiddershins
But the question was literally about remote development work. Unclear why so many people decided to use it to make random criticisms of the US. Or perhaps it is very clear why.
viraptor
Remote is an overloaded term. I assumed "work from home in proximity of work in the us". If the OP meant US remote from Korea, that's different, but then we're also likely talking about contracting rather than employment.

> to make random criticisms of the US

It's not criticism, it's comparisons that matter to your enjoyment / impact the total compensation.

gwbas1c
It's because the areas around the US that employ software developers are expensive to live. Software developer salaries are similar to what doctors and many other middle class people make.

What pushes salaries into the higher part of middle class is demand and value: It's very hard to find good, trustworthy software engineers who can work without lots of supervision, and the overall value of the work to the company.

I tend to point out that software is an "economic force multiplier." The value of what software implements (automates) is often many multiples of what the engineer is paid; so why would a software engineer accept a low pay to work on low value work?

jleyank
The us is more of an individualistic than social country. And it’s only for certain jobs in certain areas. Some things, however, are the responsibility of the individual rather than “society” and I suspect raising children is one such area. There’s more to life than money, so consider all aspects of any transition to/from the us carefully.

Edit: there are good comments on this thread. Props to the HN community on this one.

Edit2: cars. City centres, for the most part, are not anywhere near as liveable as elsewhere. If you’re used to living on foot or on a bike, and shopping for food on the way home, etc, it’s not there.

bantunes
When real estate is at such a premium in big cities (even with recent slides)[1], good schools free from teachers having to pay for their own materials expensive[2], and going to the emergency room potentially costing you thousands of dollars[3], you need a lot of money to attract and retain people.

Also, profits are higher because companies pay less tax[4], so even with higher salaries it's still good business to pay more to attract higher talent.

[1]: https://www.redfin.com/city/17151/CA/San-Francisco/housing-m...

[2]: https://newsdirect.com/news/teachers-spending-more-out-of-po...

[3]: https://www.talktomira.com/post/how-much-does-an-er-visit-co...

[4]: https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...

badpun
Houses in for example Munich are more expensive than houses in SF (2.3 mil in Munich vs 1.5 mil in SF), while no one in Munich is making anywhere close to the FAANG salaries. The solution is that the coders don't live in houses, but rather in smallish appartments instead (or, if they want a house badly enough, they live far away from the city and have long commutes).

Western Europe is basically poor-ish compared to the US, and US people who imagine average W. European to be as well off as average American (but with better security, free healthcare etc.) are deluded. They overall standard of living is way lower over here, we're just used to it so we don't complain.

bpfrh
I would say it is because of less social security.

In my country your pay will be significantly lower, but we get "free" healthcare are insured against unemployment&unable to work because of injury/sicknes, have a pension and have various social programms, etc.

refurb
It's not like the US doesn't have that, or at least California.

During Covid my friend got $4,000USD per month in unemployment for over a year. A relative of another friend immigrated from SE Asia and signed up for Medicaid when she arrived. Pretty much free healthcare.

If you get injured, you can qualify for SSI payments and healthcare. I mean, we have a "crisis" right now because of all the disable men who no longer work and live off of government payments.

I mean, you can argue that maybe the US isn't quite as generous as Europe, but it's not like there is no social safety net. The federal government spends 50% of tax revenue on social programs.

bpfrh
I would argue that covid was a special occasion, or is that always the case?

Afaik medicare only allows you to be insured if your income is less than X?

I don't know how your SSI payment structure compares to the one in my country, but isn't there a big problem with healthcare and the things and doctors it covers?

I don't think the US has no safety net, but I think on average it has a worse one than my country.

If you compare Europe as a whole I don't know, as Europe is very diverse in how they handle social care issues.

ivolimmen
I would really advise you to look into how stuff is organised in the US compared to your country. I once did and came to the conclusion that it looks like they earn more. I pay a really low healthcare insurance fee compared to the US. Their system for pension is also completely different from other countries. They have a 401K. In my case my company pays for my pension. I am Dutch from my stance it would be unwise to move to the USA. Certainly if you take in account that (in my POV) the country is moving backwards (Gun violence, abortion, right-wing, etc. etc.)
chrisseaton
> They have a 401K.

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

ivolimmen
Well I am kind of unique and have a pension that is paid by my employer, and I have a personal pension (sort of a 401K). Do keep in mind that pension fund in the Netherlands are really well guarded (loads of laws). An employer or intermediary could never withdraw anything (neither can you unless you are at pension age).
chrisseaton
What happens in 20 years if the company hasn’t invested enough to pay your pension? A big downside of corporate pensions is when they fall short. For example British Airways has like a 3 billion deficit. I bet they wish they just got their money invested by a third party instead!
ivolimmen
They have a payment obligation. Required by pension law. Employers are kept up to date by their pension funds (are required by law). Employers are always kept in the loop how their pension is doing and are offered the ability to add to it. There is even a limit into what you can add to it. We also have a pension that is paid by the government. So in the end you get a sum: monthly income = government pension + company pension + personal pension (if you want one)
chrisseaton
> They have a payment obligation.

How can you obligate someone to pay in enough to cover inflation, at an unknown level?

Everyone at the time thought BA would be able to cover their pensions - but you can’t predict these things for certain.

cheschire
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

It’s really interesting to sort that country list by median, then by mean, each time looking for the USA.

lucumo
That's wealth though. OP is asking about income.
cheschire
Yes, so isn’t it interesting that all that high income isn’t translating into high median wealth?
whiddershins
not remotely interesting. Software developers aren't median, why would you expect them to move the median?
pwinnski
The question was specifically about software developers.

It could be that the US underpays on average relative to the rest of the world, but they definitely overpay software developers relative to the rest of the world.

cheschire
Where did you infer OP was talking specifically about software development? The question states “remote jobs” which can refer to any number of knowledge worker positions.
pavlov
Mainly because USA developed multiple geographic clusters where software developers are in high demand (Bay Area for consumer tech, New York for finance etc.) and the funding ecosystem is both deep-pocketed and culturally supports paying for talent. Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those startups don’t grow into big companies that would pay for talent.

It’s worth noting that the meteoric rise of Bay Area software engineer salaries is a fairly new phenomenon. In the mid 2000s, salaries were actively suppressed by a wage cartel that included Steve Jobs. The companies paid out a $324M settlement to employees [1].

Mark Zuckerberg is often said to have been the crucial CEO who broke the cartel. Facebook started paying higher salaries and hiring aggressively from Google and others who had been suppressing wages.

[1] http://www.equitablegrowth.org/aftermath-wage-collusion-sili...

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badpun
Most coders don't work in tech or startups, but in regular businesses. An yet, they still make more in the US than in Europe. Perhaps it falls in line with general lower compensation in Europe - I mean, for example there are plenty job offers for accountants in London (super-expensive city) which advertise sub 30k pounds pay per year. I don't think there are a lot of accountants in NYC who would take a job for the equivalent $35k...
stingraycharles
Isn’t the cost of living in US, especially in the “clusters of high demand”, generally higher than Europe as well?
badpun
Not hugely so. Properties in top cities in Europe are probably as expensive as in top areas of US (NYC, SV). Rent is higher in US (that's because, if landlords charged SV/NYC rents in Europe, then the flats would just be empty, as the rent would be more than 100% of salaries of most people), but mortgage is comparable. Other typical cost of living expenses are somewhat higher in US (according to https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...). Salaries, on the other hand, are massively higher in US than in Europe.
legacynl
I don't agree.

You get higher wages in the US, but you also have to pay more in the US. Healthcare (or saving money for when you need healthcare), schools, having to drive everywhere, etc.

In most of western Europe you don't actually need that high salary. There are no crazy medical bills, your children can go to school for free, you don't have to spend a couple of bucks for gas for every errand.

Also i think your comparison is a bit skewed because afaik Paris and New-York are famously expensive. I think using this comparison is more realistic: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

0xBDB
I live in the Dallas area. A typical salary in my corner of tech is 150k. That's about 30 percent in income taxes. Sales tax, etc. is (more or less) deductible from that. Like all of the 92 percent of Americans with health insurance, my annual out-of-pocket expenditure on healthcare is capped, in my case at 10k. 2 years of community college and 2 years of state school for my kid will probably run about 60k, one-time. Love your rail networks, but a "couple of bucks for gas" here isn't a liter; that will get me 2/3 of a gallon which is 30 miles in a Honda Civic, which is 10 errands.

If I moved to London for example the salary would be at most 100k (U.S. equivalent; I've looked), 50% would be tax, and while your site tells me that overall cost of living is only about 5% higher, I find that highly improbable. I am not disputing that the peace of mind factor in Europe is worth something. I don't think there's any reasonable price you could ascribe to it to make the math work out for even a single year, let alone a career, however.

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moomoo11
I live in the US but almost all the apps and services I use, and that my multinational company use, are all headquartered and founded in the USA.

I don’t think we use a single service that’s based out of Europe or Asia.

I don’t know any European startup or big company whose services I use frequently besides Spotify. Meta, google, Netflix, a bunch of database and infrastructure services, AWS, etc. are all based in the USA.

It seems to me like 90% of the innovations come from the US. Whether that is software, hardware, medicine, defense, etc. all the things at massive scale at use in the world come from here, and maybe later on get moved to being made elsewhere. Maybe that has something to do with it?

Even the company I work at, which was at one point a unicorn before ipo, and services a massive global industry, is based here and has auxiliary offices (support, sales) in other countries.

Anything mission critical is built here, even if it’s only for an international market.

Maybe there are some industries that pay well overseas compared to here because they are better innovators and more mature?

merek
> Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those startups don’t grow into big companies that would pay for talent.

I wonder if startups have a better chance of becoming profitable in the EU than in the US, despite the on-average smaller company size.

Reasoning: careful cost management gives a startup more time to understand the problem and to test more ideas. Compare to a startup with a high cash burn rate, the window to test and iterate is much smaller.

Would anyone know of any sources that may support / reject this idea?

Sevii
On the other hand, at will employment in the US allows startups to have big layoffs when things go wrong allowing them to more easily survive through hard times. That is not easy to do when you have to give months of notice before firing anyone.
cm2012
Even West Virginia has a higher GDP per Capita than France. The US is just a really rich country (that has a very inefficient medical system)
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JohnJamesRambo
https://fred.stlouisfed.org/series/M2SL

I think you could make a good case that like all things going up and up the past years, it is just money printed at the FED. Thinking long and hard on the implications of that can inform your moves in the coming decade.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

edmcnulty101
Because it's expensive as hell to live in the US.. Health insurance and rent alone is the typical salary in another country. And don't even think about having a major illness, it will bankrupt you. We have shitty public transportation so one needs a car. And we have shitty safety net so a huge chunk of your money goes to retirement or savings to avoid homelessness at all stages of life. We also have numerous levels of taxation, Fed, State, City, Municipal, Local, Sales, Property. We also have massive insurance requirements on everything from health to cars to housing which is almost like another tax. Then we have to pay for our college which is the most expensive in the world, or get massive loans to repay.

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

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

Barrin92
One factor for a minority of jobs is extreme profitability of large American companies, (FAANG mostly), but the bigger portion is that they need to pay that much.

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

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

dudeofx
infrastructure, it pays but we also have to pay for it