
Ask HN: Why do companies outside the US pay so much less? - cwcwcw
As a developer, I&#x27;ve found that it&#x27;s just not worth it to respond to tech companies &#x2F; recruiters seeking engineers, unless they&#x27;re based in the USA. Companies based anywhere else, in my experience, expect to pay <i>less than half</i> the rate that US companies will pay.<p>Why is this? There are possible causes having to do with tax rates and culture, but has anyone really looked into it? How big a contributor is this (rather than, say, immigrants as percent of total population, or university quality) to the fact that the US has Google and Apple and Facebook and Twitter, and the rest of the world has… JustEat and Spotify?
======
ThePhysicist
A part of the gap can be explained by the way that work is organized in the US
compared to Europe. Let's compare e.g. Germany and the USA:

[https://data.oecd.org/germany.htm](https://data.oecd.org/germany.htm)
[https://data.oecd.org/united-states.htm](https://data.oecd.org/united-
states.htm)

If you scroll down to the Economic indicators, you will see that on average
people in the US work around 1.700 hours a year, whereas people in Germany
(and many other European countries) work only 1.400 hours. This alone can
already explain 20 % of the wage gap between the two countries, and in fact if
you look at the average salary per hour worked, it is almost identical (32
USD), which would support this theory. In addition, many things like
education, housing, social security and health insurance are much cheaper in
Europe, which leads to lower salaries (as they tend to follow the cost of
living). Furthermore, regulations in Europe are stronger than in the US, which
makes it more difficult (or sometimes even impossible) to fire people once
they have been employed for some time. Hence the risk of losing your job is
smaller, which should lead to a lower salary as well as companies face a
higher risk when hiring someone, and employees have less risk.

And in extreme tech hot spots like SV or NY there should course be an
additional effect due to the high demand of skilled IT professionals and the
fact that people can usually find a new job very easily, which also makes it
easier to negotiate a higher salary and forces companies to pay above average
rates to attract talent, which is a self-reinforcing effect.

~~~
bgia
My wage in the US is about 3 times what I'd be making home in France. 3 times.
Trust me I'm not working 3 times as many hours as my friends over there.
Actually it's quite the opposite.

~~~
atmosx
But... You're not living in France. There are many people who would rather be
making 3 times less and living in France.

It is a trade off, that's all there is to it, e.g. If you, God forbid, have
get into a severe health condition in the US, you might very well be making 5x
more, you're still going to get broke pretty soon because social healthcare is
virtually nil.

~~~
phil21
Someone making 3x (as a programmer) can very easily afford very high quality
health insurance. When you have it, it actually does work.

Chances are they are already covered by their employer though.

The lack of "affordable" healthcare really isn't a concern for the six figure
tech worker class - those salaries imply quality health insurance as part of
the package.

~~~
atmosx
> The lack of "affordable" healthcare really isn't a concern for the six
> figure tech worker class

Isn't it? Let's do the math... A leukimia treatment drug that is virtually
free in most advanced European healthcare will cost virtually 0 USD/year.

In india the same drug might as far as 2.5k/year. In the USA the same drug
(patent hold by Novartis) costs 70k/year.

Let's say you are living in SF. You get paid anywhere between 80 and 120k/year
at a top IT company and you have to give 70k/year away: 120-70 = 50k. Are
50k/year enough to live in SF, Silicon Valley or the Bay Area?

~~~
curiousphil
Generally speaking good healthcare (insurance) is going to cover the majority
of the cost of the drugs for the person that has it.

~~~
cr1895
Yes, assuming one remains employed and still has this great employer-paid
health insurance while needing this hypothetical $70k/year drug while fighting
leukemia.

I really do wonder though, since there's zero guarantee in the US that one
would remain employed through all of this.

~~~
atmosx
For posterity, the 70k/year is a real[1] number.

[1] [https://www.theatlantic.com/health/archive/2013/04/why-
chemo...](https://www.theatlantic.com/health/archive/2013/04/why-chemotherapy-
that-costs-70-000-in-the-us-costs-2-500-in-india/274847/)

------
sigi45
I don't really care how much someone in USA earns.

As a software engineere in germany you are earning good money.

There are no killings in cities, affordable health care, high quality living
standards, university costs 150$ for 6 month, no donald trump, 30 days real
holiday (i take them, everyone does, every year), seldom over hours, parental
leave.

Btw. IT is more than google, apple, facebook and twitter.

And no we do not have anywhere in germany rent prices like in NY or in SF.
Perhaps, only, if even in the middlest of the centere.

~~~
sremani
>> university costs 150$ for 6 month.

This is not a German miracle, its simple demographics, most of the Germans are
in their productive years of 40s and 50s and their population in teens and 20s
is tiny, so their investments are low even though at per-capita level they
look tremendous. This is the reason why Germany's hope is automation. They are
demographically not in a great place. of course, this will come home to roost
in 20 years or so.

[edit] Demographics link:
[http://www.indexmundi.com/germany/age_structure.html](http://www.indexmundi.com/germany/age_structure.html)

~~~
cylinder
Or maybe they figured out that relying on population growth to drive the
economy is a Ponzi scheme. Eventually you can't add more population so you
have to reckon with aging one day, might as well solve the problem ASAP.
Automation combined with exports allows you to grow your economy without
adding humans.

If they still wanted to, they could turn on the migration spigot at anytime.
Plenty of brilliant engineers and scientists to pick off out of Eastern
Europe, Iran, etc. Labor has already come in on its own.

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

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

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

~~~
civilian
Uhhhhhhhh income inequality does not have that kind of effect. Income
inequality may effect the taxes paid by people, but it doesn't change salaries
the way that you're suggesting.

America just has more highly paid jobs, because we've got some of the biggest
companies and highest GDP per capita in the world. And this has the effect of
creating a greater spread of income. It's a bigger, richer, pond.

~~~
CamMacFarlane
>[USA] has the highest GDP per capita in the world

Not quite, it has the 18th highest. Below Hong Kong, Switzerland, and Ireland
all who pay less for engineering.

[https://www.cia.gov/library/publications/the-world-
factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2004rank.html)

~~~
TulliusCicero
The US does have the highest GDP for any major country, though. The ones above
it there are all quite small.

~~~
sokoloff
Switzerland, Singapore, Norway, Hong Kong and UAE don't match my definition of
"quite small". Each of them has several million inhabitants.

~~~
mtanski
The U.S has ~ 320 million people. So 2 magnitudes difference compared to some
others. Additionally the U.S is quite large with many regions and sub-regions.
Some regions have quite high GDP while others lower. So given that it's quite
impressive versus much smaller and less populous countries.

In any case it's a stretch to make an apples to apples comparison when you
have 2 magnitudes of population difference.

~~~
dx034
That way you could say the US is a small country because it only has ~1/4 of
the population of China.

Just because a country has a smaller population it doesn't make it unsuitable
to live or to compare economic data.

~~~
mtanski
You're just being pedantic here.

There's a big difference between countries that above the US (top 18) on that
list where there is a 10x to 100x difference. 1x (US) to 4x (China) does not a
magnitude make.

Even given that I would concede that the U.S is a lot less populous country
than China. Additionally, there's a lot of places where comparisons of stats
are invalid because of that difference.

------
kat
As someone with Canadian and American work experience, I think US wages are
higher because there is more capital in the States. Both Canada and the States
struggle to find qualified software devs. The companies that can afford to pay
more, get their pick of devs out of a very small pool, so the wages increase.
However, in Canada, the companies won't/can't pay as much, so the devs end up
making less, or moving south. Brain-drain is a problem in Canada for a lot of
different industries (healthcare is hugely impacted).

The cost of housing in Vancouver, Canada is right behind New York and San
Fran. I don't think wages has anything to do with cost of living. In general I
think Canadian investments are less risk tolerant, the market doesn't shift as
fast as it does in the States, and therefore less cash flow. Also, its in the
employers best interest to keep salaries down and convince their employees
that living in Canada (Vancouver instead of San Fran) is better (how ever you
define better).

~~~
omouse
There is more _free floating capital_. There are VCs in the US who are willing
to invest in all sorts of things and willing to take chances. There are few
VCs or banks in Canada that would take a chance on Facebook, Twitter, SnapChat
or Uber. Brain-drain is a problem but the bigger problem is lack of capital.

 _Also, its in the employers best interest to keep salaries down and convince
their employees that living in Canada (Vancouver instead of San Fran) is
better (how ever you define better)._

Yes, especially true. I've yet to see any Canadians who have actually received
a raise in recent years. No one talks about it and no one knows whether their
salary will be increased to at least meet inflation. It's a little messed up.

~~~
nasalgoat
Raising money for an internet startup in Canada is effectively impossible. You
might get some minor Series A angel investors (dentists and vets are your best
bet), but once you start getting into the Series B rounds where you need real
money, you won't find anyone willing to risk it. All they're interested in is
gas/oil/mining.

Very risk adverse. We've had to resort to roadshows down in California and New
York to try and get US capital.

~~~
cylinder
It's not about risk aversion. There's just not enough money going around. US
is a big country so obviously if 1% of your capital will be allocated to high
risk VC it's going to be a much more substantial amount.

~~~
nasalgoat
We've had Canadian VCs tell us it was too risky to invest in internet
startups. Full stop.

~~~
Eridrus
They're not really wrong though. Unless you really know what you're doing you
will lose money, as evidenced by the fact that most VCs do in fact lose money
and venture as an asset class sucks.

~~~
omouse
They aren't wrong but salaries are too low; you can't really bootstrap unless
you're doing a side business and then you're effectively working two jobs.
There's no YC in Canada or at least it's harder to get some funding.

------
schmichael
I'm in the US and a friend just moved to The Netherlands to accept a much
lower paying job. He swears he has more disposable income due to cheaper
health care, Internet, transportation (no car required!), etc. The basic
assertion being that the cost of living is higher in the US.

I would love to see salary vs cost-of-living comparisons globally. I suspect
this might account for the disparity, but I'm afraid I don't have the data to
confirm or disprove this assertion.

Update: Spent 5 minutes googling with no luck. Found some moving company (?!)
sponsored data showing most of the EU having a very high cost of living. Makes
me wonder if that takes into account free-or-cheaper-than-US health care,
child care, transportation (owning a car is $$$), education (most US tech
workers are paying a high student debt "tax"), and other lifestyle/political
differences between the two regions.

~~~
rev_bird
Is/was your friend an American citizen? I've been fascinated by emigrating to
Europe for a long time and am always looking for stories about how people pull
it off.

~~~
RandomBookmarks
This is rather easy for the typical HN crowd. For example, to get a working
visa for Germany (Blue card) you "only" need to find a job that pays more than
50000 Euro/year. In a nutshell, that is all.

[http://www.bamf.de/EN/Infothek/FragenAntworten/BlaueKarteEU/...](http://www.bamf.de/EN/Infothek/FragenAntworten/BlaueKarteEU/blaue-
karte-eu-node.html)

~~~
rev_bird
Had no idea about this, thank you for passing it along. This part is
particularly interesting:

> Holders of an EU Blue Card can enter another Member State without a visa
> after 18 months and apply for the EU Blue Card of that Member State within a
> period of one month.

And it looks like Americans (at least for now...) can go to Germany before
they're even approved:

> Exceptions apply to nationals of Australia, Canada, Israel, Japan, the
> Republic of Korea, New Zealand and the United States of America. They can
> enter Germany on a visa-free basis and can apply to the competent
> immigration authority in Germany for their future place of residence for an
> EU Blue Card within three months of entering Germany.

------
YZF
Supply and demand?

I think there's a large variance in the US as well between different
geographical areas. I would expect you can find x2 differences even within one
geography.

There are a lot of factors in play:

\- In SV there's a lot of "easy" money and a shortage of people.

\- There's a lot of friction preventing this from equalizing. Immigration
policies being one example.

\- There have been significant currency movements over the last couple of
years and those take some time to reflect back to things like prices and
salaries. The strength of the US dollar means that at least temporarily you
make that much more if you work in the US.

\- Cost of living. If you have to pay more to own a house, pay for your kids
education, commute, health, etc. then you can expect upwards pressure on
salaries to make up for that.

\- Risk premiums.

I think it's important to realize that these things can take a while to play
out. When I look at today's salaries compared to 10 or 20 years ago I don't
actually think they're very high but that's against a backdrop of erosion in
other middle class salaries. Time will tell.

------
ThrustVectoring
I suspect a partial cause from right-to-work laws. It's much harder to fire an
employee in Europe, so companies are less willing to bid on employees, and so
compensation is lower. Plus the employees themselves value the job security,
which substitutes for wages when evaluating offers.

For specific predictions from this model:

1\. Public-sector programmers in general should get paid less than private-
sector programmers, due to employees valuing the job security

2\. The public/private gap should be larger in the US than in Europe, since
there's a smaller job security gap

3\. Public-sector programmers in the US should have higher wages than public-
sector programmers in Europe, due to having to compete with more vigorous
private-sector activity in the US

~~~
thehardsphere
California, Massachusetts, New York, and Washington do not have right-to-work
laws, yet software salaries in SF, Boston, New York, and Seattle are among the
highest in the world. If that were the cause, Austin, TX should become the
high-pay Mecca that every programmer would migrate to, because Texas is a
right-to-work state.

~~~
vonmoltke
GP is confusing "at will" with "right to work". All states, except Montana I
believe, are at will, meaning employees can be let go without cause. Right to
workis much less common, and prohibits things like closed shops where an
employee is required to join a specific union as a condition of employment.

~~~
thehardsphere
That would make more sense.

------
jrmurad
Everyone throwing around "free" healthcare as a valid explanation for this
wage gap needs to account for taxation levels too.

using estimates via Google:

"average programmer salary usa" -> $84,360

"average programmer salary in sweden" -> $54,264

According to
[http://www.economist.com/blogs/graphicdetail/2012/10/focus-4](http://www.economist.com/blogs/graphicdetail/2012/10/focus-4),
average effective taxes in the USA (including social security) are 25%... but
35% in Sweden. Even if those particular numbers are off, the point is that
higher taxes may further expand the gap with lower pre-tax foreign salaries.

So the Swede keeps $35k and gets state-sponsored healthcare. The American
keeps $63k and probably has decent health coverage from his employer. I'm not
sure about this but I suspect that the American can use a fraction of that
$28,000 difference to upgrade the health insurance to Swedish levels or
better.

(There are also smaller but still significant expenses like housing, affected
by property taxes, and consumption taxes like New York City's 8.875%
relatively-high-for-the-USA sales tax vs Sweden's 25% VAT.)

~~~
ted_dunning
The averages don't work well when you divide. You need to look to medians for
the income and then compute average tax rate _for_ that* income.

~~~
jrmurad
That's true. I didn't look into how exactly Swedish rates are computed. A 25%
effective rate sounded about right to me for a single-filer US salary in that
range in most states which have income taxes on top of the federal+FICA. A
Nordic country having 10+% higher effective rates likewise seemed reasonable
but I certainly don't know for sure.

------
tedmiston
Five things:

1\. We are taxed on income _heavily_ in the US.

2\. Insurance is expensive here.

3\. In the hubs, rent is _very_ expensive.

Take-home pay after considering these three things is a lot less than you
might think. And also:

4\. Generalizing the salary of positions across the whole US is misleading. An
average engineering job in the midwest or outside of a hub can pay half the
salary of SF or NYC.

5\. It really depends (1) where the company you're considering is based and
(2) if it's a remote gig, whether they adjust your comp based on your
location. One example of this is Buffer's extremely transparent salary
calculator [1].

The holy grail is to geoarbitrage by getting paid by a company in a location
that pays highly while living remotely somewhere the cost of living is much
lower.

[1]: [https://buffer.com/salary](https://buffer.com/salary)

~~~
alimw
> 1\. We are taxed on income heavily in the US.

I was surprised at this so I looked it up. From the article [1] it looks as if
income tax in the US is lower than in most of Europe. But yes, higher than
Russia, Saudi Arabia or Mexico.

[1]
[http://www.bbc.co.uk/news/magazine-26327114](http://www.bbc.co.uk/news/magazine-26327114)

~~~
tedmiston
There are a couple issues with that article.

1\. "For each country, they calculated how much a high earner on a salary of
$400,000..."

That number is way higher than programmer salaries. Most programmers are high
earners but not that high.

2\. It assumes a constant salary amount in any country, but this isn't
reality.

If someone makes $250k as a programmer in the US, it might equate to
$100k–125k in another country. US tax rates are tiered (see "Marginal Tax
Rate" at [1]), so someone that makes $250k pays more than double the taxes of
$125k.

[1]:
[https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...](https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2017)

~~~
alimw
If you scroll down a bit further, you should find that both your points are
addressed in the second set of figures. US tax rates looking even lower there.

~~~
tedmiston
These percentages are misleading because they don't paint the full picture.
Especially considering insurance and rent.

It's a very apples to oranges comparison.

------
FennNaten
Hum, I don't know how the system works in the US, but in France a lot of money
is taken from the salary to cover for health insurance, unemployment insurance
and retirement plan. Plus we have 5 weeks paid vacation automatically
included. And I think cost of life is lower than in the US, even in Paris
which is the more expensive area. To go with numbers, I currently earn 50k€
per year (gross), which makes for 3k€ per month (net). I don't have a car (no
need in Paris). This income is enough for me to live my life without any
privation, going to bars, cinema, restaurant, weekend trips, etc whenever I
want, and still save 10 to 40% of it each month. Last year I bought a new
computer, a new phone, and 2 weeks vacation in Iceland without even touching
my savings account. All that knowing that if I go unemployed, I stay at full
pay several months, if I'm sick I'm covered, and when I reach 65 yo I'll get
retirement rent until end of life. Oh, and I'm only in my early 30's, meaning
I get to get paid more and more. After my next raise, which should occur this
year considering I got a title upgrade, I'm even considering stopping asking
for money and asking for additionnal time off instead. So, I don't know how
your 100k+$ reflect on your life in the US, but sorry I don't feel any need
for it :)

~~~
rb808
In NYC a decent 2 bed apartment in second tier areas (ie not in Manhattan) is
3k€ a month, I'm surprised Paris is cheaper.

~~~
FennNaten
Depends on what you call decent and how far from the center you go. I'm
currently outside of Paris, having 15 minutes on foot plus 15 minutes on train
plus 15 minutes in Subway to go to work. I share a large two bedrooms flat (73
square meters) with a friend, and my share is 700€. (this includes water,
electricity, heating, garbage collection and unlimited internet connection)
Sure if you insist on having a big flat right inside Paris it may go up to 3k,
but if you tolerate commute time you can find better rates.

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

------
thehardsphere
A possibly flawed analogy follows:

Hollywood is the biggest city in the world for acting, followed by New York,
and maybe Vancouver is in third place. I'm pretty sure people working as
actors in any of those three cities are going to be paid more than actors
working elsewhere, because there's greater demand in Hollywood/NYC/Vancouver
than there is Omaha, Nebraska.

The biggest cities for software are San Francisco, Boston, Seattle, New York,
and Austin. Probably not in that order anymore, but that's where most of the
action is. If you're not working in one of those places, you're probably not
making as much because there's less demand in your area for software people.
All of these cities are in the US and none of them are in Europe.

~~~
astrange
There's also video game industry, which produces software, and traditionally
the only kind of software normal people enjoy using to the point of getting
emulators for.

It's a little more distributed: [http://www.gameindustrycareerguide.com/best-
cities-for-video...](http://www.gameindustrycareerguide.com/best-cities-for-
video-game-development-jobs/)

I'm surprised SF comes up so much still. Isn't the rent an existential threat
to the industry?

~~~
thehardsphere
The rent is a minor expense if it gets you access to a competitive labor
market and venture capital you otherwise would not have.

Plus, I imagine that many of those studios may have gotten their start before
things like Unity and Steam made it possible for anybody with enough time on
their hands to make and publish their own games very inexpensively.

------
LeoSolaris
There are a few reasons I have seen.

The US has a higher cost of living than most other countries. Those who are
comparable pay somewhat more competitively with US jobs. This becomes really
clear with remote work. Outside of the major tech hubs, the pay for IT drops
off to comparable levels with European companies.

We have a culture that doesn't require a business degree to open a business
that investors would take seriously. As a result, companies pay highly skilled
IT employees more to keep them happy enough to not start up their own
business.

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

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

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

~~~
thehardsphere
>The US has a higher cost of living than most other countries. Those who are
comparable pay somewhat more competitively with US jobs. This becomes really
clear with remote work. Outside of the major tech hubs, the pay for IT drops
off to comparable levels with European companies.

This is partially true but I thought the cost of living in Europe was
generally higher than in the US.

~~~
CalRobert
Eh, I don't have to own a car, I have cheaper health insurance, vacations cost
less (but only because I used all of them to go to Europe before I moved
here), and my rent is cheaper. Also, remember that you're getting at least a
month off a year, by law, which even now relatively few US companies do.

------
mallipeddi
It's simply due to the competitive hiring environment for the best software
engineers in USA. The difference in pay cannot merely be explained simply by
the difference in cost of living. I have personally worked in Singapore as a
software engineer before moving to USA (worked for companies in SF & Seattle).
A very good senior software engineer in SG might make SGD100-120k/yr with 10
years of experience. Singapore is a world-class city but it's also a very
expensive place to live. In USA, the same engineer could be making
USD400-500k/yr with 10 years of experience provided they work for top-tier
companies like Google/FB/Apple/Amazon. These numbers obviously include stock-
based compensation. The key is to be in the 95th percentile - I think the
difference in pay (between USA vs world) is less drastic if you are just in
the 50th percentile.

------
cperciva
Don't underestimate the impact of social norms. If I were looking for work in
the USA, I'd expect a salary which I would feel very uncomfortable asking for
in Canada.

------
cwcwcw
So a lot of the comments have argued the relative merits of one economy over
another, or simply invoked "supply and demand" or "availability of capital" to
explain the difference.

What I very often see in Europe isn't a marketplace of employers saying "We
will pay X" and then finding a developer who will work for that. Rather, it
often is a company _desperate_ to hire a talented engineer, but when quoted a
totally-not-outrageous-by-US-standards salary, respond with "Oh, we'd never
pay that".

I suppose in some cases the employer literally couldn't pay that, but to me it
seems more like there's some kind of cultural block, like "engineers make this
amount and that's all there is to it".

Managers/executives don't seem to have any such restriction, again based on
what I've been privy to, so I don't think that it's (completely) a case of
just "salaries are lower here"

------
GordonS
Since salaries are so much lower everywhere but the US, doesn't it make more
sense to flip this argument around and instead ask: "why are software
engineers' salaries so much higher in the US than everywhere else?"

~~~
omouse
Because devs get to keep more of what they earn? That should also be true for
other workers but it isn't. It's really difficult to hide how much wealth is
created through software.

I always like to point out that even the most junior developer can automate a
task and save a company hundreds of thousands of dollars.

~~~
pmontra
True, but companies don't reward employees if they don't have to. If anybody
can save them hundreds of thousands of dollars then they'll get a normal pay.

They get so much because they'll be somewhere else instead. A race to higher
salaries started at some point in the past and it's still going on. It's a
difficult bubble to deflate until there are more jobs than people that can do
them.

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

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

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

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

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madarco
The main reason seems to be linked to the cost of living: salaries in EU are
lower only numerically. 50K€ have the same purchasing power of 150k$ in SF (EU
devs pay rent, a car, savings, have holidays, etc.)

However the really STRANGE thing is that only a few USA companies exploit that
by hiring EU devs for remote working. (ie: paying only 30% of a USA salary for
an almost as good developer)

~~~
djrogers
> 50K€ have the same purchasing power of 150k$ in SF

You can't compare the entire EU to one of the most expensive cities in the
world - in spite of what the media may have you believe, most people in the US
don't live in San Francisco or New York.

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calvinbhai
Other than the cost of living, (compared to India) I think one of the reasons
is that most US jobs are "at will" where an employer can fire any time or an
employee can leave anytime, with no notice. But often, employer/employee gives
adequate notice (2 weeks) in US as a courtesy.

In India, most jobs are tied up to a contract. If you have a 2 yr contract
with an employer, and you want to leave after 18 months, you have to pay the 6
months salary to the employer. If you dont, you wont get the next job, because
the next employer expects a "relieving letter" from the previous one, which is
given on completion of the contract or on paying the fine. Sounds atrocious
right? Such practices, bring down the salaries or at least keep them from
going up, unlike in US.

I dont know how often such contracts are enforced in India, especially when
companies were going on a poaching spree.

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tracker1
A lot of it is cost of living in a given area can vary a lot in the US. Also,
if you're looking for an EU job, that may well be post-tax, include better
medical benefits (US contract jobs often don't), not to mention potentially
better retirement options and last, but definitely not least upwards of
8-weeks of pto/year.

A lot of US jobs, you're lucky to see even 2 weeks of PTO, and even then, if
contracting, you don't see that. I wound up taking about a month and a half
off due to a bad relocation/project cut experience last year, and that has a
huge impact on your hourly/annual salary. The culture is just different and
the tax models very different.

In the US variety in income taxes at the state level, or cost of housing can
vary a _lot_ and you'll see similar variance in IT/Developer pay as well.

------
droopyEyelids
I haven't heard anyone suggest that overall demand for developers is higher in
the USA.

The US has more companies that can see how to make more money off tech talent.

~~~
omouse
That's also possible. They know how to herd the cats and get them to move in
the right direction. In Canada for example, there are few companies that do
this correctly and the best ones are influenced by the way US companies
(especially Silicon Valley companies) work and manage their employees.

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

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

~~~
qq66
Since the average starting salary of a coal miner is $60-70k in the rural
geographies where coal is mined, I'd say that yes, a coal mine in San
Francisco would likely pay $100k.

~~~
walshemj
And for experienced pit deputies in the UK the going rate for a single 12 hour
shift in a deep coal mine at the weekend was £2K and that does count towards
your final salary pension

------
eb0la
There is a chart in Piketty's book, Capital in the 21st century, a that shows
GDP PER CAPITA for several countries, including the US.

I guess US companies pay well because their share of the global GDP is higher
(although it is decreasing slowly from he peak in the 50s).

Before seeing that I just thought it was that way because the US makes stuff
(now intellectual property not physical goods), thus making profit of whatever
is produce outside its borders.

------
Karlozkiller
In Sweden as far as I know the percentage paid on top of your salary by
companies is around 33%, and I'm not sure that includes all of the fees and
taxes related to hiring someone. From what other people write here that's a
quite high number even compared to European standards, but it sure does
explain why the salary paid to an employee would be lower here than in the US.

------
bgia
Tech companies in the US are extremely profitable and there is a stronger
demand vs lower supply than in Europe. A typical tech company in France
usually manage to make $100k of revenue per employee, so it is understandable
that they can't pay them more than $60k on average. Then it's "market rate".
Foreign companies just have to pay what local companies do.

------
conductr
The non-US companies either don't see the ROI potential or may actually have a
capital problem. Or, they may know that world-wide they can get someone to do
the work at 1/2 of what their US counterpart would pay.

The US companies paying double what everyone else does could be caused by them
having the capital and ROI to do so. But, I don't think so. Within the US, why
do so many tech companies open shop in SV. They value the culture and team and
integral parts that lead to success. They want top talent. Even when they hire
out of the US, they don't want to subject the project to the risk of failure
by being cheap and hiring cut rate developers.

There's also a culture of paying sticker price. And perhaps, price ignorance.
We know what things cost locally, but we aren't the best judges of knowing
what a top developer should cost if they're based in another country. Maybe we
pay them 75% of local rates and that's still 2X what they would get paid from
a non-US company, we don't really know.

------
thinkloop
I wouldn't mind seeing a chart of effective salaries around the world. In the
US, San Francisco is one of the lower paying hubs, Austin the highest:
[http://posts.thinkloop.com/top_tech_salaries_by_city_adjuste...](http://posts.thinkloop.com/top_tech_salaries_by_city_adjusted_for_cost_of_living/index.html)

------
drivingmenuts
Well, there's way more software out there than just the ones you mentioned -
some companies you won't hear of unless they're hiring.

As for the pay, a lot of it goes indirectly to Quality of Life. You might not
be paid as much, but benefits are generated in other ways.

Here in the US, if you have money, you can have a great QoL. Conversely, if
you don't, well, you won't. Personally, I think I might like living in the EU
(maybe The Netherlands), once I got over the culture shock.

One commenter brought up the killings in the US. It's not like there's killing
all around you every day - it's spread out over a very large geographical
area. The USA Death Panels work to ensure that the killings are distributed
according to an arcane metric that no one understands.

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

If you want to get a better idea of specific compensation at tech companies,
check out
[https://www.transparentcareer.com](https://www.transparentcareer.com)

We collect data in native currencies as well. Full disclosure, i'm the
founder, but if you have any specific questions about data in other currencies
i'd be happy to pull information for anyone who asks.

------
mbrodersen
Your salary is irrelevant. What matters is your _buying power_ in the country
you live. Plus safety, health, vacation time, racism, culture etc. etc. It is
a complex issue. In the same way that choosing a job based on salary only is a
big mistake.

------
bsvalley
If I were to make USD 200K/year as a Software Engineer in Bangladesh, I'd
probably be richer than the CEO of that company.

I believe you're referring to the ration salary/cost_of_living rather than
comparing difference currencies, countries, politics, taxes, etc. In this
case, I'd say that the ration is fairly even, minus stocks/bonuses. The base
salary puts you in a similar spot in terms of buying power in your respective
country if you're a software engineer. That's the beauty of this job... you
can work anywhere in the world and maintain roughly the "same" buying power.

------
rb808
One reason right now is that the US Dollar is high right now. 10 years ago the
Euro was 20% higher, GBP was 60% higher. AUD was 5% higher(but getting
stronger).

Despite forecasts I think in 5 years the USD is likely to fall back again.

------
praving5
To me, it is just currency difference and does not matter on engineer or
skill. For example, when I was offered to move to the US from India, I was
offered 3 times my Indian Salary to suit US expenses. Basically, the pay you
get should match your expenses. So, if you earn in Dollars, you spend in
Dollars providing your net savings be same as someone who earns in GBP and
spends in GBP.

If you choose to work remotely, the story is different. You may want to
negotiate to suit your local expenses and then it is up to the hiring company
to decide if it can match your local expenses.

------
thinkloop
The way to calculate pay is:

(monthly salary + equity) - (studio apartment rent + tax + health care + 30
cappuccinos + 8 steaks + 50 lbs of tomatoes)

edit: times 12

~~~
miguelrochefort
(4000 + 0) - (800 + 1000 + 0 + 150 + 150 + 150) = $1750 CAD = $1336 USD

~~~
thinkloop
Times 12 is $16,032 - sad face - need to triple the $4k.

~~~
miguelrochefort
It's impossible over here (Montreal).

------
b__d
It doesn't make any sense to compare salaries solely by numbers and without
comparing the buying power related to the salary in the given country. This is
the most basic economic understanding. It just does not work out, no matter
what you take in account to "justify" the the higher or the lower one.

------
ddorian43
............................................................................
these countries still pay remote contractors like shit. They don't get "free
healthcare" or whatever shitty free thing you get in there, and also get the
lesser pay.

------
LoonyBalloony
I'm an outsider to a lot of the tech world, and not a tax guru, but could it
be because US corporations have such low taxes to pay?

------
d0m
In Montreal, with 70k (53k USD), you can have a nice house, free healthcare
and send your kids to the university.

~~~
lacampbell
I somewhat doubt that. Care to break down the numbers?

By "have a nice house", do you mean mortgage one for decades?

------
nicomfe
Developers in Australia and New Zealand are really well paid.

~~~
plaguuuuuu
Still not paid nearly as much as US devs.

Unless maybe I should start looking for my next job :|

~~~
jimako
Do you know that for a fact, or are you assuming that is the case? Developer
salaries, especially in the non-cubicle-dweller sphere, are really VERY high.
Of course, most of the jobs are in Sydney or Melbourne where the cost of
living is also very high, even after taking into account the universal health
care.

~~~
plaguuuuuu
The majority of dev jobs here in AU probably are in the 'cubicle-dweller'
sphere. I've looked around at various roles advertised in syd/melb and there
are very few jobs in my are (.NET 5+ years experience) paying more than, say,
AUD$120k, unless some specialised knowledge is required eg trading, machine
learning, etc. That's the equivalent of US$92k which seems lower (like.. >50%
lower) than in comparable cities in the US.

Of course you'd then have to live in the US, which is a downside.

