
Ask HN: Why are London devs paid so much less than SF/NY? - LondonEng
London is supposed to be the next best market outside the US, yet from recent salary threads, developers are paid half or less of US salaries.<p>For example, with 5 years experience, I am on £75k ($110k) in a startup as a Senior Dev, and that is considered pretty good. I could get maybe another 10-20% if I had 10 years experience or was really exceptional. A Team Lead with 7-10 years experience can expect around £100k ($150k).<p>But my salary is only comparable to a fresh graduate at Google in SF. A Google dev with 1 year experience in SF will earn as much as a Team Lead in London with 10 years experience!
======
madaxe_again
It's mirrored in how tech firms are valued.

In the valley, you can have a so-so idea, land a huge investment, sell the
product to other businesses for crazy money, and pay staff high wages.

In the UK, technology is this weird nerdy flash in the pan that "serious
businesspeople" want nothing to do with, and investment and customers who
value tech are in similarly short supply.

I write this as the employer of 50 people who'd love to pay everyone more but
can't because our end customers undervalue our product, and investors are non-
existent.

We saw this first hand when one of our clients sold our "worthless technology"
for over $100m - yet in the UK £10k was the best valuation we could find at
the time.

I sit in meetings with prospective customers who honest to God think that this
system they'll be using to drive their entire £50m business through should be
free because "it's just software". Simultaneously they'll happily pay a lawyer
£200k to argue about the contract they're going to spend £20k with you
through, because lawyers are real actual people, and we nerds are just
soulless computer child-people. SEO agencies need paying well too because they
have a marketing background, and marketing is also real.

Tech is seen as a utility like water over here. The people who provide it are
viewed like sewer technicians.

So - it's not that employers are stingier, it's rather more that there's a lot
less money in the ecosystem.

Finally, you're comparing to Google, who are a company who think nothing of
putting a liberal arts grad with no experience on $600k to lead the spin fight
against taxation in the UK - they pay crazy money, particularly to well
connected people.

Oh, and fwiw, I'm cto/co-founder and I earn considerably less than you, so
count your blessings.

I might have a small chip on my shoulder regarding this.

~~~
bobcostas55
This raises the question: why don't more reasonable VCs move to London? If
valuations really are that low, there's incredible money to be made.

~~~
madaxe_again
The valuations are low because tech spending in the UK is comparatively low,
so only if you can pivot a UK firm into the US market would you find yourself
a bargain.

------
alkonaut
Social security and taxes is one factor. Overall salary structure is another.
In Scandinavia where salaries are even more flat, I as a developer will likely
not make more than 3 times a cleaner or 2 times what a teacher makes, almost
regardless of supply and demand. The overall structure of salaries, the taxes
in high income etc will dictate the ceiling. Not just the supply and demand.
High taxes (50-60 margin) also means cash comp becomes less attractive after a
certain point. At $80k with 55% margin tax rate I'll happily take a sixth week
of holiday over another raise.

Job security is another thing. I'd want better pay if I could be fired on the
spot. UK is more flexible than Scandinavia (which in the case of Sweden is
basically last-in-first-out even for high tech workers, with exceptions
allowed after expensive negotiations, think a years salary in severance for
ditching the underperformer with longer tenure). This is not the case in the
UK, and obviously not at all the situation in the US.

Same thing with holidays: If I had to take an unpaid leave holiday to get a
month of continuous holiday, then that's a cost I'd want reflected in my
salary.

So to do my Scandinavian math which might partly apply to London (living
expenses, supply/demand differs): I make $80k. If I had to pay anything of
that for healthcare or daycare for kids, I'd want that money on top. If I
didn't have 5-6w paid holiday I'd want that money on top. If I didn't have
practically unlimited sick days and paid leave to care for sick kids, I'd want
that money on top. It doesn't matter that none of that is paid by the
employer, it still affects my salary requirement. If my total effective income
tax rate was 20% instead of 35%, I'd need less. And so on.

------
ownagefool
You can earn north of $200,000 or even $300,000 a year in the London contract
market.

Given that you apparently don't get resonable time off when earning the big
bucks on SV, my Ltd would gross around $300,000 p/a if I billed for all 253
business days and I only work 9-5.

Basically, if you're actually good, become a contractor and move into a niche
paying the higher rates.

Edit: Plus it's not really just about headline rates, it's what you're left
with at the end. Let me break that down for you.

£700 p/d x 253 x 1.2 (vat) = £212520

\- subtract 14.5% flat vat rate = 181704.6

\- subtract 8k tax free income = 173704.6

\- subtract 20% copr tax = 138963.68

\- subtract 32k tax free divs = 106963.68

\- subtract 6k expenses (laptop, travel, phone etc) = 10000.00

You now have paid yourself £40,000 to live on (and don't have to pay for
travel yourself) and you have £100,000 ($144710) saved in your company to
invest, etc. I'd be suprised to see a single male in SF living that lifestyle,
but it's not uncommon in London.

~~~
Silhouette
_I 'd be suprised to see a single male in SF living that lifestyle, but it's
not uncommon in London._

£700k/day is not uncommon? For experienced specialists in the right niches,
it's certainly possible, but "average developers" aren't going to command that
kind of rate even in London.

~~~
ownagefool
Not eveyone will earn at the higher end of the market in SV either but £600 to
£700 a day isn't terribly difficult to achieve in London.

Basically we're talking about being a semi good and modern Java, Node or
Python developer. Alternativly a system administrator who's not afraid of
automation.

You'll probably need to work in Government or Finance, but like I said, it's
not uncommon.

~~~
Silhouette
_You 'll probably need to work in Government or Finance_

That's the kicker, and what I meant by "the right niches" before.

I know plenty of people doing contract software work in and around London who
aren't getting close to that, and surely would be if the general market was
that high. These are pretty well qualified (often PhD) and experienced (10+
years) people who know what they're doing and have decent track records, they
just don't enjoy working in intense environments like trading.

I'm curious about where you think the Government gigs at that rate are found,
if all they need is being semi-good with one of the popular languages. I can
think of quite a few people who'd be interested in that kind of opportunity,
but if any of my close network are doing it right now then they've not
mentioned it.

~~~
ownagefool
That'd be the kicker if it was extremely difficult to get into either
Government or Finance but it's not.

Either way, places that'll pay this in Government are The Home Office, DWP,
DVLA, MOJ & GDS. Pretty much every arm of central Government pays decent
rates.

But rather than me just talk crap, why don't you just look:-

[https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197F...](https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197FA79410EA1)
[https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197F...](https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197FA79410EA1)
[https://www.jobserve.com/gb/en/JobSearch.aspx?shid=6E57F8DA8...](https://www.jobserve.com/gb/en/JobSearch.aspx?shid=6E57F8DA8E00AC2897)

~~~
Silhouette
Sorry, I'm not sure what you meant to link to there, but I suspect what you
actually linked to wasn't it.

In any case, based on people in my network, it doesn't appear to be guaranteed
that people working for civil service departments such as those you mentioned
will routinely attract the kind of rate you're talking about even at high
levels.

~~~
ownagefool
The link seems to lost the settings, but either way, jobserve, contracts,
select by rate and search the programming languages.

Anyways those rates aren't guaranteed but the money is out there. However, you
won't get them by not asking for them. Why would you? :)

~~~
Silhouette
I won't get those rates anyway, as my career has taken a slightly more
entrepreneurial path recently. :-)

However, I'm half interested on behalf of various friends and former
colleagues who are still 100% contract/freelance, and half interested from the
point of view of not giving an overly optimistic view to anyone reading this
who isn't familiar with the contracting market.

As it happens, I did check several sites including the one you mentioned when
I first posted, and based on that it looks like it's still fair to say that
£700+/day rates are achievable particularly in London and in the right niches,
but they aren't (yet?) the norm even for quite good developers.

~~~
ownagefool
I never said they were the norm, just that they're uncommon. That said, if you
want solid advice for your mates, it's simply this.

Be resonably competent, pass a technical interview that's mainly talking
based, get your foot in the door at £600 a day, ask for more after you
establish yourself.

If you actually deliver your network will be completely different and you'll
be able to command those higher rates for quite some time.

More importantly, don't bottle negotiations. Your competition isn't amazing,
they're just guys who know the framework de jure and make sure they're
buzzword compliant.

------
UK-AL
Lack of respect. In the UK software developers are just considered "techies",
nerdy and replaceable for a dime a dozen. Anyone with serious skills and
ambition goes into banking, finanance or maybe a founder.

Software developers in sf/sv are considered highly talented respectable people
which companies will fight over.

~~~
mabbo
I'd argue reverse causality in your argument.

In SV, software guys _were_ disrespected, considered replaceable until they
became the company breadwinners. Good finance guys are in the same situation
in other places, like London perhaps.

The respect follows the money, not the other way around.

------
hkmurakami
What do Googlers in London make vs those in Mountain View / SF? If you're
comparing a cohort to Googlers, the only applicable cohort for comparison is
other Googlers (or FB). This is because even in SF/SV, they make significantly
more than your average VC backed hot startup dev, factoring in total comp and
liquidity considerations for equity packages.

If you're at a VC backed startup in London, then you should compare your
compensation to other VC backed startup devs in SF/SV. I'm not familiar with
NYC salaries, but $110k base is definitely much more than "half" of what your
typical startup senior dev is making in SF.

------
adwf
Contracting pays far better in the UK than salary. I remember being offered
£1k/day just to travel round the country installing servers. I didn't take it,
as I work on the data science side of things, but was still very tempted to
just chuck it in for that sort of cash...

~~~
BjoernKW
Contracting doesn't seem to be that well-paid throughout. From time to time I
get enquiries for contracting work in London (mostly for the financial
industry) with a 'maximum budget' of 450 quid / day.

Compared to market prices in metropolitan regions in Germany that's on the
lower end of the range and by and large those though prosperous are much less
affluent than London.

~~~
ukeucontractor
I started contracting two years and was earning £500/day as a 'senior
developer' writing Rails remotely for a company based in London. If I was
onsite I would have asked for more.

To get higher rates for contracting you need to have the right contacts, by
the time it ends up at a recruiter you need to end up paying their cut which
can be substantial (10% - 35%, it's not bad for just sending a few emails :D).

~~~
BjoernKW
> To get higher rates for contracting you need to have the right contacts

That's what it comes down to regardless of location. If you're willing to
share some of your London / UK contacts, that'd be much appreciated (contact
info's in my profile).

------
kami8845
If you're a decent dev in London you can quite easily land a ‎£400/day
contract.

Congrats you are now making ~£90k or $130k / year!

(This is where it starts. £400/day is aiming low)

~~~
SandB0x
The problem with contracting is nobody is paying into your pension, you have
no paid leave and because of the (real or perceived) lack of security it is
extremely difficult to get a mortgage and harder to even rent.

~~~
peteretep

        > The problem with contracting is nobody is paying
        > into your pension
    

You can take up to £40k out of your Ltd company tax-free in to your pension.

    
    
        > you have no paid leave
    

220 days is the magic number to use to value your contracts. Public holidays,
some leave, weekends, etc. 400 * 220 = £88,000. Plus flat-rate VAT bonus. Plus
you pay yourself in dividends. Plus you claim some sensible expenses, and
shirk your NIC obligations, and your take-home is about £6,000, which is
actually equivalent to earning £112,000. With four weeks of leave included.

------
TempLDNAccount
Things are getting better. Five years ago startups were not paying £75k to
developers.

The big US tech companies now have an increased presence here and are raising
salaries across the city. Your estimates of the max you can earn are
pessimistic: I work at one of these companies at the level below Senior and
make about the same as you do as a base salary and about 1.5x the amount in
total comp. Finance also pays developers well in London.

Many of my colleagues have been hired out of startups, who have to pay more to
find replacements than before. My friends at companies trying to offer £40-50k
to experienced developers simply can't hire anyone with the skills they want,
whereas a few years ago they used to have no problem finding people who would
take £35-40k.

There are plenty of companies that treat development as an "IT" cost; the
stereotype of the awful British version of Initrode and Initech. I have worked
at one of these before and it is horrible working at a place that _everyone_
is desperately trying to leave. It is up to you to try and politely avoid
these places, and if you have to take one of these jobs, work incredibly hard
([https://blog.stackoverflow.com/2015/09/how-to-be-
awesome/](https://blog.stackoverflow.com/2015/09/how-to-be-awesome/)) to
expand the options available to you.

------
henson
I recently wrote an article comparing London to San Francisco from a tech
standpoint: [http://jh47.com/2016/03/01/london-vs-san-
francisco/](http://jh47.com/2016/03/01/london-vs-san-francisco/)

I currently work as a contractor based in London for a company in SV, but I
totally agree with what's said here in that it's a matter of differing
viewpoints. There's an inherent stinginess here on the whole, a disparagingly
utilitarian viewpoint that software engineers are just "IT guys" \-
technicians who maintain the digital plumbing. There was a lot of pressure
coming out of university to go into finance.

But on the other hand - there is a lot of hot air and shaky foundations out in
SV, a lot of money changing hands that is likely to dissipate when confidence
is lost in the ecosystem. One could argue that while devs here are paid too
little, devs there are paid too much - relatively speaking.

------
dizzy3gg
Contracting is pretty popular in London. Is contracting as popular in SF? I
don't hear much about it. In London a decent mid-level developer can earn £500
a day, the shortage of developers at the moment, it's a no brainer for me.
Obviously it's not for everybody. Any idea what a Senior/Team Lead earns
contracting?

~~~
k-mcgrady
Any idea how to go about getting those contracts? Is it all about connections
or do you go through recruiters? Also how long do they usually last before you
have to find a new one?

~~~
ownagefool
[https://www.jobserve.com/gb/en/JobSearch.aspx?shid=6450B5D05...](https://www.jobserve.com/gb/en/JobSearch.aspx?shid=6450B5D059DCA17214)

------
shivinski
Software devs in Banking are paid slightly more, but again compared to a
baking software dev in the likes of NY it's still low. I work in a front-
office team (so effectively on the investment side) at a bank as a quant dev
VP, 3 years experience and earn £105k (that's including my bonus).

------
binarymax
This is not just technology. Salaries in general are paid less across the
board in the UK than in the US. If you think you have it bad, take a look at
the average salary of a GP, who went through 10+ years of education, just so
they could earn £45k per annum.

~~~
id122015
So why does a Macbook cost more in the UK than in the US ?

~~~
binarymax
20% VAT and high import taxes.

------
agounaris
Is there a rule that in every country in the world the salary levels should be
the same? Also whats the cost of living in SF? London is expensive, but
apparently SF is more expensive...

[http://www.numbeo.com/cost-of-
living/compare_cities.jsp?coun...](http://www.numbeo.com/cost-of-
living/compare_cities.jsp?country1=United+Kingdom&city1=London&country2=United+States&city2=San+Francisco%2C+CA)

------
mirekrusin
Maybe it's an artifact of currency exchange drop in 2008/2009 where 1 gbp ~ 2
usd dropped to 1 gbp ~ 1 usd.

------
ldnthrowaway123
I ask myself this question also. And to my eyes I agree your salary is pretty
good for London.

I'm on ~£60k in London as a development lead with about 6 years experience.
Mostly PHP though and php roles seem consistently lower paid than other
languages, even though it shouldn't matter.

------
mabbo
The answer is very simple: supply and demand.

Silicon valley has a demand for talented developers and a limited supply, so
developer wages are high.

This is also the generation that is least likely to be willing to move for
work, here in the Western world. This makes imbalances in wages between cities
worse.

London's supply better meets it's demand, and so wages are lower. Companies
like Google will pay more in London than usual for the city because employees
at different offices will compare salaries- but I'll bet you they still pay
less in London than they do in California.

This is also a key point in the American immigration debate- you can indeed
hire as many people as you need in SF, but only if you'll pay enough money.
Immigration increases supply, lowering the price.

~~~
UK-AL
Which is weird because we're constantly told there's a massive shortage of
developers in london

~~~
mamon
There is a shortage of GOOD developers, because many people only enroll to CS
universities tempted by higher than average salary, not because they really
like programming.

Also, UK is a part of European Union, which makes London based developers
compete with immigrants from countries like Poland, Hungary, Romania, who will
be happy with much lower salaries.

~~~
madaxe_again
_who will be happy with much lower salaries._

You'd think that but you'd be wrong. It's true that fresh immigrants might
have a low salary ask, but folks wise up pretty quickly to their worth in the
UK - which is just as well, as otherwise it'd lead to exploitation and would
drag overall salaries down.

No, the supply and demand bit doesn't hold true - it's cultural. We undervalue
technical skill here, severely, and have for several generations. It's seen as
somehow dirty.

~~~
polotics
You are spot on: it's cultural.

The British class society has inbuilt superiority for some, regardless of
economic contribution. It _is_ a monarchy after all, what should we expect.

Reminds me of facepalm moments in Bracknell a while back. Maybe things have
improved since then, I wouldn't know: I left that country.

------
radicalbyte
It's better than in The Netherlands, where Leads earn 60-80k EUR with a higher
effective tax rate than the UK/US.

It doesn't really make sense to work for an employer anymore, contracts pay
better and if you can build your own business it's better again.

~~~
raverbashing
Do you have a comparison/breakdown of contractor vs. perm earnings?

~~~
radicalbyte
Of course, because I'm hiring both.

Perm: 30k-80k depending on experience for Java/C# & good Javascript devs
Contract: 50-80 EUR / hour depending on experience.

I'm a Tech Lead / Architect so can demand more as a contractor, although for
the higher paid (perm) jobs I have to travel.

At the higher end you need to be really good: i.e. know more than just web
development - being able to knock together CRUD apps with Rails/PHP won't cut
it.

Pay and rates for PHP/Ruby are much lower - the talent pool is also less
capable. Strangely enough C++ has the same issue - it has been explained to me
that the best C++ devs have jumped ship already so what's left isn't that
good. Whilst that can be the case it's more likely to be a question of demand:
Europe doesn't build systems-level software in the way America does..

~~~
raverbashing
Thanks

I wonder what's the cost of the extra bureaucracy around contracting more or
less

~~~
radicalbyte
Contracting:

40 work weeks are workable 15% fee for agency 200 eur / month insurances
8k/year pension Slightly more favorable tax

The 40 weeks is 6 weeks holiday, 6 weeks downtime/sick. Insurance covers
longer-term sickness (thus the cost).

When you consider that the best developers tend to go contracting the rates
actually start to look low.

------
over
There's just way more capital per capita for developers in SF. You might want
to consider why bankers in SF are paid so poorly relative to London.

------
devopthrowaway
I've often seen contract rates well and above salaries rates in London, more
so than to make up for the potentially unstable nature of the work.

For the last 5 years or so I've been fully employed in devops roles, primarily
containerization and deployment. I have been thinking a lot about turning to
contracting, but have zero idea how I would start.

------
ldn_throwaway
Reading these threads, I can only assume that I am a terrible interviewee, or
a bad developer. I have 1.5 years Rails / JS experience and currently earn
£25k.

What do I have to do to get into the £35-40k bracket? I've had numerous
interviews and a couple of offers, but none will move out of the £28-32k
range.

~~~
Symbiote
That's low, it's what I earned straight out of university when I worked for a
charity 8 years ago. (I thought of the charity work as a good donation to
society and an opportunity to learn; it was but perhaps I stuck with it for
too long.)

But I don't think it's that unusual for a new graduate position in a non-
software company. Also, compare with any friends from university in science
etc and you'll hopefully feel better about it.

At least make sure you're learning new things. Testing? CI? Agile?
Configuration management? Cloud deployments? That's the things I pursued, but
there are many possibilities. Hopefully you have done freedom to explore on
work time. Identify what's needed most and looks good, get it done. If it
doesn't get you a promotion at your current job, you'll at least be able to
talk about it with confidence at the next interview.

------
spoonie
With 3-5 years experience (was at the job for 2 years) I was making £46k, so
it could be worse. ;) I was getting 20 vacation days a year, plus public
holidays, plus some number of sick days.

I talked to my friends at FB and Google in London and they all said they were
paid less than if they were working in SV.

~~~
UK-AL
46k in london is bad. 46k outside of London is respectable.

~~~
coroxout
I'm elsewhere in the southeast, studied comp sci 15 years ago at a moderately
well-regarded (though possibly not for CS) university, and most people I know
from university or from previous jobs are on 30-45k AFAIK.

Of course, we may be too old, and earn less than those with 5 years'
experience who have better knowledge of this week's single-page JS
framework...

(my sample group includes some pretty dedicated, smart people as well as
barely-adequate slackers like myself)

But we do all get decent holidays and sick days, which is a definite bonus.

~~~
Silhouette
There's certainly an element of having the right buzzwords for a lot of the
most lucrative contract work, at least for the gigs that get advertised on the
serious forums or filled through recruiters.

Cloud plus Agile still seems to be the flavour of the month. There are always
opportunities in serious back office/infrastructure programming (Java, C#,
C++) in fields like banking, too, but those positions often require relevant
experience of their field as well as the programming skills, or at least say
they do in the ads.

Whether a 15-year vet would do a better job picking up this week's buzzwords
on the go than a 3-year newbie who has never known anything else is a
different question, of course.

------
mchahn
If you want to see first hand the image Londoners have of techies, watch the
hilarious sitcom The IT Crowd.

------
pfortuny
What about social security and taxes?

~~~
Symbiote
Property tax is around £800-1600 per year, depending on area, for the whole
home. A large house could be up to around £2500 in some areas.

Someone earning £75k will take home £51k after tax (which includes healthcare
and social security tax).

You can stick numbers into
[http://listentotaxman.com/](http://listentotaxman.com/) if you'd like to
experiment. "National Insurance" means healthcare and social security.

~~~
pfortuny
OK I get it. We do the numbers differently in Spain, hence my confussion.
Thanks!

------
homiegbro
You're comparing your salary in a startup with Google. Great thinking is
great!

