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Ask HN: A US programmer makes 3 times that of a EU programmer. Why?
80 points by ctenb 5 days ago | hide | past | favorite | 139 comments
A quick google to compare salaries of a US software engineer with that of a NL (Netherlands) software engineer shows that the top segment on average makes €145,000 (US) versus €57,000 (NL). How can this big difference be explained?

It all comes down to U.S. tech companies being much more successful, mainly because of the scale of the U.S. market. Any U.S. startup can immediately address a market of $21T (GDP) without any regulatory overhead or language considerations. This causes engineers to be insanely productive in terms of economic productivity. In comparison, Germany, the largest country in the EU, has a GDP of only $3.8T. It's much harder to scale across the entire EU, and even then, the entire EU market is still smaller at $15T.

The second question is, why do international companies like FAANG underpay their European employees compared to their American peers? The reason for that is the prevailing market wage. Any company will pay as little they can while still getting the caliber of talent they need. Given the lower economic productivity of engineers working in local tech companies, the prevailing market wages are lower, so FAANG don't need to pay as much to get the top talent.

The argument that US companies have a larger addressable market is valid, but it doesn’t seem particularly convincing. Israel’s domestic market is tiny, and most Israeli start-ups go global from day 1. Probably partly because of that, Israel’s tech salaries are generally above those in the UK, being second only to US salaries. I don’t see anything that prevents, say, a French tech company from going global from day one and unlocking the same value per engineer as Israeli companies do. Many companies based in Cyprus, Estonia or Belarus plan to go global from day one too.

Also, the global market forces (i. e. the demand for engineers from US companies and the overall increased impact per engineer thanks to globalisation) are driving the salaries upwards globally. However, this effect seems to be less pronounced in the EU than it is in other countries. As an example, in Russia in the last several years engineering salaries (while remaining modest in absolute terms compared to UK / US) have become a multiple of those of other white-collar workers, making engineers quite a privileged class. However, in Western Europe, a senior engineer’s salary and a (for example) bank compliance officer’s salary are still within the same range.

One reason might be that the so-called tech sector here in Europe often acts as a service provider to other, more traditional industries which in turn hinders them to build IP resulting in lower pay.

I'm not super sure it's that. What's stopping companies like Spotify? It's not like they were just trying to address the Swedish market.

And note carefully, from Wikipedia:

> In April 2016, Ek and Lorentzon wrote an open letter to Swedish politicians demanding action in three areas that they claimed hindered the company's ability to recruit top talent as Spotify grows, including access to flexible housing, better education in the programming and development fields, and stock options. Ek and Lorentzon wrote that to continue competing in a global economy, politicians needed to respond with new policies, or else thousands of Spotify jobs would be moved from Sweden to the United States.

The "and stock options" seems hugely overlooked but is not at all trivial. It seems to be one of the most important pressures on US companies to push all developer salaries way, way up.

What is it about stock options that are unique to the US?

Stock options are almost unheard of in Europe. It's changing but very slowly. It's a different landscape too: very few European startups IPO, compared to those in the US, so people aren't as pushy to get stock options when they know well it's just a pie in the sky.

They could compete with each other more aggressively for EU talent, essentially extending the US market for s/w engineers to the EU, but the problem is a huge swathe of the best EU s/w engineers already move to the US chasing those x3 wages.

We're somewhat better off here in the UK, we have a well developed s/w industry in games, defence, embedded systems and finance. The difference is maybe only 2x instead of 3x.

On of my daughters is considering going into s/w engineering, so I'm resigning myself to the thought there's a good chance she'll head west on graduation (I'm a Brit). The pull of the US isn't quite so strong here in london if you get into finance, but if you're a top flight talent in say Ireland or Scotland what are you going to do? There are few local opportunities, and no good reason to go to London as against SF or Seattle.

> if you're a top flight talent in say Ireland or Scotland what are you going to do? There are few local opportunities, and no good reason to go to London as against SF or Seattle.

Actually, London is a bunch easier in that case, as you can freely move there and not need visa sponsorship (specifically talking about Ireland here).

London is far too expensive for the tech salaries though, if you're not working in finance.

Doesn't Dublin now have a hot tech job market? And to some extent other Irish cities such as Cork? If I was a 21-yr old new grad now, I'd be off to Ireland in a flash, live there 5 yrs get a EU passport while you still can. It surprises me more young Brits aren't doing that. Maybe they aren't aware you can still go work in Ireland without a visa. For now , at least... As for SF or Seattle, hasn't the changes to the H1B visa program made that far more difficult for Brits than it used to be?

Not sure about being better though - outside London/Finance sector/FG, six-figure is quite rare, isn't it?

I think you are right, it is because of the US tech companies being much more successful.

BUT, I don't think it is because of the scale of the US market. As others have pointed out, Spotify from Sweden and many companies from Israel are also very successful.

I believe the real underlying reason is the strong VC ecosystem, which was established decades earlier in the US has led to the success of the tech companies there. In mainland Europe, VC is just getting started. My bet is, that we will see similar companies in 10-20 years from now.

For what its worth, I have seen comments almost exactly like this 10 years ago on HN. It its very hard to predict when a real culture shift like that will happen. (I agree its an important part of the puzzle)

Fair enough. Predicting the future is impossible, I agree. But speculating is fine.

I’m not sure that G from FAANG underpays: I stayed in Zurich because I got much better pay than if I moved to US. Also the pension system in Switzerland is awesome. The big downside though was that the male-to-female ratio was beyond unhealthy, so it’s a much better deal for women and men who have a family already.

Where did you move after Zurich?

Back to my home city (Budapest), but in the winters I’m travelling around South and Central America. I invested enough money during my stay in Zurich that I don’t have to worry about it anymore too much.

> It all comes down to U.S. tech companies being much more successful, mainly because of the scale of the U.S. market. Any U.S. startup can immediately address a market of $21T (GDP) without any regulatory overhead or language considerations. This causes engineers to be insanely productive in terms of economic productivity. In comparison, Germany, the largest country in the EU, has a GDP of only $3.8T. It's much harder to scale across the entire EU, and even then, the entire EU market is still smaller at $15T.

I mean it's tech, the US market is open to everyone no? I don't know of many European tech companies that think they'll get anywhere only addressing their local market.

My feeling is that European wages are gradually increasing due in part to the successes like Unity and Spotify, plus FAANG companies effects on local offices. It's a bit lopsided at the moment, someone noted there is almost a bimodal distribution of salary which I'm sure exists in the US as well but is more stark here. Remote work is also starting to have an effect. I earn quite a bit more (still nothing to write home about in terms of the salary I could earn in the US) working remotely for a US based company.

There's probably some spillover / upwards pressure from the successful US companies. But I think the main driver is that in Europe, software is mostly considered a cost centre instead of a revenue centre. In Europe there are not that many successful tech giants, where programmers are seen as essential for bringing in the money. Rather, most programmers work in other industries supporting the main business.

Yeah. This is at least a plausible explanation for the bimodal distribution.

> plus FAANG companies effects on local offices.

I work at one of the FAANGs and this isn’t exactly true for our case. We pay a wage competitive with other local companies, and it’s certainly a fraction of the same role pays in the US.

The reason for the US' success definitely does not revolve around the scale of the US market. It revolves around the scale of the US within the global market and the relaxed regulation building and freedoms of the US onto all markets.

The US was the largest scale market back when tech companies were starting in the 80s and 90s. Not any more though. But the momentum is already there.

Yeah sure.

Only that US companies with offices in other countries pay less than in US

I think differences in cost of living and social benefits do not fully explain it, popular as that line of reasoning may be.

A few exceptions aside, Europe just doesn't have VC capital. VC capital translates in Dutch as "risk capital". We have neither the capital nor the risk taking.

A fitting example of this shortcoming is Blendle. Once called the "iTunes for news", this app would let you read articles across news publications and magazines. Imagine the convenience of that, and the massive total addressable market.

I would expect that a US entrepreneur would easily put a few hundred million (if not billions) into the idea, trying to aggressively seize this new market. To try and replicate what Jobs did for music, but this time for news publishers and magazines.

The Dutch/European way is starvation. A peak of 50 employees and a payout to publishers of a few million. Next, the founders barely hanging on by raising another 1 million at best, which is an amount a SC startup may burn in a day or week or so.

The big capital just isn't there. And you need big capital to pay for large amounts of 150K engineers.

A second factor, not sure if true across Europe but definitely in the Netherlands, is that people doing actual work are underappreciated. Trade-based as this countries' legacy is, the "real" business is the finance, sales and purchasing departments. The rest are just "hands", replaceable units. The idea of an ordinary worker earning 100-200K is quite alien to Dutch society.

>I think differences in cost of living and social benefits do not fully explain it, popular as that line of reasoning may be.

They don't, period. At $45,284 the US has the highest household net disposable income per capita in the OECD (<http://www.oecdbetterlifeindex.org/countries/united-states/>), where "disposable income" (<http://stats.oecd.org/glossary/detail.asp?ID=46>) accounts for healthcare and government benefits.

Not to mention that most goods cost 20-30% more in Europe. The USA is a significantly wealthier country than even the "rich" Western European ones.

If this were true, wouldn't we see those US VCs come running to Europe with their capital? Especially now, when they can attend board meetings over zoom.

Even with wider geographic distribution of US startups, there are still a lot of fish in the US VC pond. A deep-pocketed firm could pretty easily differentiate themselves in Europe with aggressiveness and comp.

VC sector in Europe is 15-20 years behind to that in the US. VC in the US want to play on a turf they understand- the local legislation, infrastructure,etc. When some random guy from Latvia shows up, he gets the money but it's pocket change compared to what the guy from Chicago would have gotten.

> If this were true, wouldn't we see those US VCs come running to Europe with their capital?

Sure but why would they if they can already do that in the US?

I earn less money, but I work 32 hours a week, have 6 weeks paid vacation, and a 5 minute commute.

It's also really hard to "translate" money via exchange rates. Cost of living matters a lot. If food and housing is cheap, then the money goes a lot longer. That's also the sort of goods that the arbitrage pressure of international trade struggles to even out. Maybe if WFH becomes a big international thing, but I don't think we're quite there yet.

I’m 100% wfh in the US and it’s a double edged sword. I brought my daughter to the dentist yesterday at 2pm which would not have worked if I was at the office. But if I take a day and I have some calls I always get the “can you make those work on your day off?” guilt trips. I only get 15 days and probably 3-5 I get away with 0 work. Rest of them is 1-4 hours. Again it’s not terrible but it just makes it impossible to unplug (I’m looking at your slack!)

Are you actually living in the US or in EU and working for an EU company?

Live in US and work for US company.

Not a fair comparison, it depends on the company. You can get plenty of vacation time, good salary and full remote in the US too. (I do, although I'm located in Canada and work for US company)

A lot of the Europeans in this thread will jump on things like health care or other social benefits without realizing that high paid workers in the US are well taken care of in this regard.

The truth is the pay is higher in the US and is not particularly close. It's funny trying to see Europeans argue places like London, Zurich, or Amsterdam are "low cost" compared to US cities to try justify the difference

Having worked in both Stockholm and San Francisco, living in the latter is definitely _far_ more expensive. My apartment in Stockholm was _much_ nicer than the one I had in San Francisco, despite having a much lower salary. And that's Stockholm, which has experienced a housing bubble of its own over the past decade, so it's pretty expensive by European standards.

Now, you can get a lot more for your money outside of San Francisco while staying in the US, but that applies to European cities as well.

Don't get me wrong – US pay still outweighs these lower costs as a young engineer without children. If you're planning on starting a family, things get a little muddier. Having a child is free in Sweden, whereas it ranges from thousands to tens of thousands in San Francisco. Childcare in Sweden is progressively prized and never goes above ~$100/month, while it ranges from thousands of dollars a month in San Francisco, to hundreds in other parts of the US. School? Yup, that one's free too – college and the works. Got elderly parents? Elderly care is also subsidized to ~$300 a month (although private alternatives do exist).

However, there's no such thing as a free lunch, and these things do need to be paid for. This is done by many different taxes. Working as a contractor, you become painfully aware of a few of these – I've contracted for an American company while based in Sweden, at American rates, and I still end up with way less than I did working in the US.

First off you have your payroll tax at ~31%. Normally this cost is quietly absorbed by the employer, so from the get-go almost a third of your salary is gone without you knowing it. After that point, you have a progressive income tax that can go as high as 60% – which is what employees see on their pay stubs.

So they're just different models. The European model largely optimizes for a high common denominator, whereas the US model seems to optimize for extremes.

Also, just because those benefits exist doesn't mean that they're good or worth it. In the UK I often need to access healthcare privately not through the NHS. My projected state pension is a joke even though the National Insurance contributions are significant. I feel like I'm paying a lot and not getting anything in return. Add to that the high cost of living in London and the whole picture looks much worse than the US given the difference in salaries.

Just saying, check what a private health insurance costs in the US vs the UK. Even if the NHS is not the best, it's a big market force which makes it very hard for private insurances to fuck you up in the ass like in the US. At least in my country, having my 4 pax family in a premium private insurance costs me close to 400€/m.

It's impossible to adequately talk about private insurance in the UK: you still have to go to your GP and if the state won't give the service (e.g. MRI scan) fast enough, only and only then the private insurance would step in.. I can't comment on the US insurance but I have a feeling it's quite different.

NHS care seems to depend entirely on the trust.

Both my mother and uncle have had hip replacements. Mother waited 6 months. My uncle was wait-listed for years before going private.

Walk in centres appear to be universally bad everywhere. Canada's are meccas in comparison.

NI is something like 10% up to £40,000 then 1% after that.

i.e. not very much. Like on £100,000, top 1%, you pay £5,879 in NI

The state pensions is higher than that per year. Plus free health care.

So how you feel you're paying 'a lot' when you can get full treatment for cancer, for free, boggles my mind.

Could you elaborate on this:

> without realizing that high paid workers in the US are well taken care of in this regard.

Do these benefits go on if you quit your job? As in can you quit your job and get paid a little less for a while you search for a new one? If you only work a few years in a high paying job the rest in other industries, can you still expect a pension that pays enough money for your last 20-40 years of life? Can you afford proper health care you got in your great job in case you can't work in it anymore for whatever reason?

I'm sure you are being rhetorical but the answer is "no" to all of your questions. Also, few places provide pensions these days.

I see your reasoning pop up as often as the European viewpoint and each time I have the same reflection: what about your loved ones? AFAIK your significant other + children can be covered by your insurance, but what if one of your parents or siblings get in financial straits due to some medical event?

Or your neighbors, best friends? Both systems are really hard to monetary compare in this regard.

And some understate just how fragile the “well taken care of” employee’s circumstances are in the US. All those great perks (and they quite often are) tied to your employment, which can be easily and readily lost in America.

I’m glad that these sort of protections apply to more people in Europe, too, rather than just some small privileged set of highly-paid employees.

Health care always gets brought up but salaries are higher in Canada than a lot of European cities.

There's a lot of variation in Europe, but IME the salaries in Western Europe are comparable to Canadian ones.

Also, the Canadian healthcare is not exactly stellar. For some reason, dental care in Canada is "only cosmetic" and not covered by insurance.

>Also, the Canadian healthcare is not exactly stellar. For some reason, dental care in Canada is "only cosmetic" and not covered by insurance.

This is the case in at least some western european countries as well - for example, dental is not included in Sweden (except for children, which get this coverage for free).

I haven't had a job in Canada were dental wasn't at least 75% covered by my employer. In the UK I never had a job that covered dental.

I had 1500 CAD per year allowance for dental care (IT) which was enough for basic care.

But most of my friends (non-IT) didn't have any such employer coverage.

> that high paid workers in the US are well taken care of in this regard.

A lot of Americans will jump into this conversation without realising homelessness rate is 10s times higher in US and EU country with lowest literacy has higher literacy than highest literate state in US

This is tangential to the salary and benefits. I live in a county in California where homeless is close to 0 and still makes 3x what a SWE in Europe. American companies such as FAANG take care better of their employees than Europe.

That does not really negate the point you replied to. Europe maybe has less inequality than USA, but situation is still not great


Regarding healthcare, sure a US worker may be well taken care of while employed at that company, but what happens later? A US friend, his father, after decades of well-to-do middle class lifestyle, unfortunately got cancer while between jobs and not properly covered by health insurance. I believe that as result the family were worried about having to sell their home, at a time when the real estate market was falling. This could happen to anyone in the US, today's high-flying Google engineer could later have some kind of health problem (especially given some of the lack of food standards or pollution controls in the US - not that I'm saying Europe is perfect either...) then they lose their job and their insurance. As result, if you intend to live the rest of your life in the USA, it seems to me you need to amass some "danger money" to deal with health problems, for yourself or loved ones. Therefore a decent chunk of your salary needs to be used for this, and invested properly to keep pace with inflation which can be a pain/hassle/time sink . That then doesn't make those super high US salaries look so superior. And 1 more thing, price of basic fresh fruit etc, non-junk food in the US seems very high to me compared to other countries

A lot of my US friends are paid a lot but have 0 free time. I'm not paid as much but I have a lot of free time and holiday (31 + public holidays). Also being sick doesn't use holiday days

Are you being paid 11/12th of their salary?

I remember when the salaries in India for a full-stack engg were in the range of $2000 / mo ($24K) and it was considered a "good" salary. We had to work on Saturdays and often Sundays. And I'm not talking of some local company, but the so-called tech leaders like Wipro.

One time I was travelling with a french colleague and while I was given an economy class ticket my friend got a business class ticket on the same flight. We were doing the same work on the same project.

There is so much disparity in this world :(

$2000/month in India is a very good salary. Are you suggesting it is low?

Some companies have a rule that if the extension of the business travel is longer than X you get business class. So if your French colleague came from France and then you went somewhere else together, they could've included a whole business pack for the same price as a tourist class.

Not sure this is the case but FYI.

Only way to make comparable money in Europe is by contracting. For some reason full-time employees are massively underpaid compared to US and don't tell me about living cost comparison.

Life in London for example is just as expensive if not more than San Francisco/New York. We pay for our national health insurance too and probably comparable to what Americans pay for their private.

People can barely afford an average house/flat as a full-time senior software engineer in UK and are not paid too different than any other office based role.

And no it's not because there is more money in US for tech, because a lot of people in UK work for American companies and I guarantee you they get paid less than their US devs.

American companies outsource their tech to Europe for the sole purpose if being cheap especially to eastern EU countries.

> We pay for our national health insurance too and probably comparable to what Americans pay for their private.

To clarify something, in the UK there are two main deductions on personal income - income tax and National Insurance. National Insurance doesn't pay for healthcare, it pays for things like state pension and other support benefits - https://www.gov.uk/national-insurance/what-national-insuranc.... The National Health Service (NHS) is funded through taxes.

NHS has access to some NI funding too about 20% of the NHS budget today comes from national insurance but oddly enough often in the forms of “loans”


National Insurance is also de facto a payroll tax in the UK and a pretty steep one at that it will be over 15% come April if the NIC increases are implemented as is.

thanks for clarifying I always thought NI contributes to NHS. Shame that it's not, makes sense now why NHS is in this state...

It also makes you wonder about NI itself. Have a look at what you're paying every month and how much you'll actually get for your state pension - it doesn't seem remotely worth it. And I get that it's a social service and it should cover the benefits for people who don't contribute - but it's a lot of money to pay for something you don't benefit from yourself.

> We pay for our national health insurance too and probably comparable to what Americans pay for their private.

That's not saying much since the NHS covers far more than what private insurance does in the US. Furthermore, in the US we have to deal with the absurdities of deductibles, co-insurance and "out of pocket" maxes (private insurance in the US does not kick in 100% until all of these are met). So on top of high monthly premiums, you still wind up with large bills and even larger if you go to a facility that is "out of network". Also dental/eye care are most often separate insurance policies with different companies. I'd take the NHS any day over the asinine system we have here in the US.

This basically. If you become a contractor you can double your yearly pay keeping the same conditions.

57,000EUR is low for the 'top segment' in London though, isn't it?

Depends who you ask, it's considered quite low in Finance (Goldman Sachs is paying +£100k total. comp for front-office graduates now), but generally, outside of finance & fintech the salaries are quite low.

only OP said this number for Netherlands but it's not too far off for average companies in London

How does one find a contracting job?

I do have a cheat code for making money in Europe. Freelance as a SAP consultant.

The learning curve may be a few years, and its soul crushingly boring. But once you're qualified and competent at it, you just put on a suit and take your trolley from one large business to the other, whilst charging 200€+ per hour. You don't have to actually implement anything, only advise.

It's like the modern COBOL. Every sizable business runs on SAP, and it's complicated. The demand for high-end consultants in this space has been there for 20 years and won't go away.

As old man I will express caution that money isn't everything. Personally, I'd prefer digging holes into the ground in the streaming rain as a job over anything SAP.

As a former SAP consultant now Microsoft ERP consultant Id argue on the point "You don't have to actually implement anything, only advise." I remember installing SAP on Linux servers, writing ABAP and Javascript, holding workshops to discuss business processes and then implement these business processes in SAP.

To be honest I haven't seen any SAP or ERP consultant who only advises and doesn't implement or write code and I have been doing this for 10+ years. I think its very interesting job because you will get access and understanding to the most granual levels of very different businesses. I mean you work with from general ledger entries to manufacturing to e-commerce while also understanding all the business context.

You don't have to actually implement anything, only advise.

I'm sure those people exist, but every successful SAP consultant I know in Europe also spends a lot of time coding and implementing.

when I was interviewing a long time, the SAP recruiter's pitch was "if you join, you'll never have to worry about making money anywhere in the world"

spent 5 great years there :) inbox is never empty, but yes I would need to wear a suit again

LOL, Office Space.

In my opinion, part-time work is much more common in the EU.

Also, there is a cultural difference. If I can earn what I need to finance my lifestyle with 15 hours per week, why work more? The drive to become rich is a lot less strong in the EU because you can have health insurance and retirement money even when you're not extraordinarily wealthy.

Also, living costs are quite low. 2000€ net per month is enough to feed a family and live within waking distance of supermarkets, schools, doctors. You don't need a pricey car.

And lastly, most young people in the US have student loans to pay off. My university was free, so I started working with 0 debt.

I’d take this one step further: the whole system in Europe is designed to keep everyone at “average” wages across the board.

Due to the (extremely steep) progressive tax system, there’s a lot of friction in (serious) pay raises. Why give someone a raise of €1,000/month when at the end of the day they will end up with less than half that?

Or why would you keep working full-time if by working 4 days you only give up 10% of net pay? Your ‘hourly wage’ actually goes up.

And it doesn’t stop with progressive taxation: a huge number of expenses are income-linked. So with your net pay increase of €500/month, you also start paying a lot more for child care or loose other benefits.

Instead, you could start working 4 out of 5 days: 1 day less to pay for childcare, and the cost per day of the remaining 4 days also goes down because your pre-tax income went down by 20% (all while net income only reduced by 10%)).

So in the end I don’t think people are getting paid less in Europe simply because taxes are higher or because there are more general benefits, but rather because there are actual systemic incentives to getting paid less. And I think this really affects typical upper-average income, where realistic incremental pay raises just aren’t really worth it for a lot of people. There’s a hurdle to reach a much higher level of income (let’s say top 10% bracket) where the increase in expenses and loss of benefits becomes insignificant (or you’ve already reached maximum levels of income-linked expenses) compared to the massively higher income level.

I used to think like you when I was on my 20s. Now on my 30s, the salary I make is more than enough to life a decent life but only if I keep working until I’m 65. I don’t want to work (for others) until I’m 65. I don’t want to be rich either (too much effort), but I do want to own a house I don’t need to pay anymore when I’m 45. I want to stop working for others when I’m 45. Now this decent salary of mine is simply not enough to own a decent house in a decent place in Western Europe.

Just do the math; let’s take the 2K Euro you are talking about. That’s 24K in 1 year. 240K in 10. 480K in 20. Now, 480K euro is the price of decent house in Western Europe. Let’s say you are able to save 50% of such decent salary, that means you’ll need 40 years to pay the house (I’m keeping it simple for the sake of the example: no inflation, no taxes, etc.)

The software engineers at the top segment in the Netherland are not working full-time jobs, but are instead pulling €800 per day (or more) via long-term contracts. Assuming you're working 48 weeks per year, this amounts to €192k per year.

Yeah, this strikes me as bizarre because it goes to show that the money to pay these salaries exists but companies would rather hire contractors than employees.

Fine by me, I went solo 4 years ago and never looked back.

It's more difficult in Europe to fire people with a permanent contract. That can make companies more reluctant to hire. As the say of another profession, "I don't pay them to come over, I pey them to go away afterwards".

It's completely true that companies prefer that. It looks better on the balance sheet, or so they and the representatives of their shareholders think. Contract salaries can be put in another column, and they keep telling themselves that they can get rid of this expense whenever they want. Any day now. Right?

How many contractors work 48 weeks a year?

And what do you think US software contractors make?

> How many contractors work 48 weeks a year?

Everyone I've known (and I've known dozens of contractors across many companies). In Europe, contracting practices truly are a normalized pathology.

I don't know the US contracting market, and if the pathology is as normalized as in Europe (i.e. if you can reasonably expect to treat it as a full-time job).

What are the practical differences between long-term contracts and permanent contracts? Just the duration?

My take is that there is just a lot of money in the tech sector in the US. The larger “English-speaking” market makes it easier for businesses to make it there. Whereas in Europe, your addressable market is much smaller, and if you venture into other countries, you’d have to deal with another language/culture/bureaucracies/laws etc.

However, current day tech companies that can potentially address a global market from wherever(Europe for argument) are in a spot where they need to compete against US labour. I for one get paid significantly higher than what you posted in NL. It’s just that the average includes local markets and lower pay(or really pay online with other local jobs) in Europe.

There are always exceptions- San Francisco salary should not be compared to Amsterdam for example - cost and style of living is very different. I pay €3 for a cappuccino and not $8 :-) I pay €600 for my kids day care whereas in SF it is definitely substantially more. I can buy a family home for €700K here, whereas in SF I can probably get a garage for that… you get the point.

If one is single, and many of these perks don’t apply, US is the best place to be and make a shit ton of money and all the connections. Once the perks start to make sense, Europe it is.

There are a lot of hidden perks and benefits that us Europeans never see (even though we pay for them) such as healthcare, childcare, higher education and elderly care. Just as an example a former colleague moved to the US and his spouse stopped working because the cost of daycare was basically one full salary.

I’ve heard of that happening in Netherlands too, where it doesn’t make much sense for one spouse to keep working due to the cost of child care. That’s not universally cheap in Europe.

Answer: 1. Because European programmers havent rallied together to demand more 2. Because if larger companies can offshore to places like Poland and save 20-50% in a long term labor play then they will and when 4-5 large companies employ 95% of the engineers in that city, they can define salary bands and keep them where they want 3. In the US, there is a bit of a disconnect on which jobs pay what, for example a social worker in the us makes like 35k USD per year, if you have a masters maybe 50k, compare that to Switzerland where they make like 75k without a masters. Or a hair stylist, lieklynot making very much money in Switzerland but in the US you can make a ton and they typically charge more in the big cities in the US than they do in European ones. At the end of the day its all supply and demand and what value the culture puts on things. 4. Basic supply and demand - lot more tech types in EU than in the US from what I have seen, larger labor pool drives salaries down

As an American engineer working in Switzerland I see this far too often, people wanting to come here from Germany, Poland, Czech Republic etc as the salaries there are crap, and really cant blame them. Germany for example, highest tax bracket is reached at like 50k and things arent that cheap relatively speaking. If it were me and I lived in any of those countries, I would be starting my own company or moving to a higher paying country immediately and working the majority of my career there, then retire somewhere cheap.

ad 1) Have US developers ever rallied together? ad 2) can US not outsource just as easily? ad 3)/4) disconnect or supply and demand? Your theory does not appear very convincing.

Interesting question I thought of reading about "safety net/services" comments from the people who worked in both the EU and the USA, i.e. those that have moved at least once.

Let's say you are from the EU. Why wouldn't you work for a while in the US, accumulate wealth with low taxes and no social safety net (but good insurance, etc.), then when you don't want to work, move back to Europe and retire (or work much less) with the social safety net and your American wealth? ;)

Moreover, if you are not from the EU, but have an in-demand skillset, why wouldn't you make the money, and then get a gig in Europe for however long it takes to get PR (looks like it's only 4 years in Germany), to get the benefits? :)

first of all, 57k in NL is definitly NOT top segment. thats mid level. top segment for seniors is more like 80k to 95k.

thats a huge difference already!

also mind that those online figures not necessarily include 8% vacation money, 13th month, 25-30 days pto and pension fund (up to 100%, usually 50%)

source: i had this salary myself after 6 yrs and subsequently hired a lot of people in this segment for roughly that amount.

contractors can demand even more. its not unlikely for React senior people to charge 100-120 p.h.

8% vacation money = 13th month. 57k in NL is low medior salary, with 80-95k being the average non-FAANG senior range, wih the exception of possibly Booking.

> 8% vacation money = 13th month

No, quite often it’s both. The holiday allowance is by law but an additional 13th month is also often paid out. Depends on the company.

That's not what I find when looking at various pay comparison websites. Do you have any references to support those numbers?

pay comparision websites suck. never found them reliable.

i dont have sources but as I said. i was hired for that cash and already hired multiple people for that amount myself during my tenure as Director at a boutique consultancy

edit: check this: https://www.codeguild.nl/software-engineering-vacatures/?spe...

first result. java dev 93.5k

second: 95k + 5% bonus

Why isn't anyone pointing out it's likely the median US engineer is far above the median EU engineer skill wise and talent wise?

Let's look at it this way, if the top 5% of EU engineers can make literal millions in a few years working in the US, at least some percentage of them will end up in the US.

Then let's consider that money influences what careers people pick. If very high IQ people who are ALSO ambitious see that they can choose between going the MD route, or finance, or SWE, or big law, and all of them are somewhat equally lucrative, some large % of those ambitious high IQ people are going to go into SWE.

In the EU if the only way to big bucks is finance or consulting, and SWE is a normal peasant like life stlye, aren't ambitious high IQ folks going to be more likely to choose finance or consulting instead of SWE?

Isn't it likely the median US programmer, because of incentives, is going to be higher than the median EU programmer? This isn't to say there aren't brilliant EU programmers or that the US on average is smarter than the EU, it's just a combination of brain drain and what smart people end up doing.

One explanation is there is simply more money sloshing around in the US tech sector. Creating a startup and raising a few million dollars in VC is just a lot easier in the US than in NL, so a lot more companies are simply able to pay those salaries.

At the other end of the scale, the largest US companies are simply more efficient than NL companies. Just compare the revenue pr employee for the 10 largest NL companies to the revenue pr employee for the 10 largest US companies and you'll see a stark difference. More revenue pr employee means more money to pay salaries (very simply).

There is some self selection. Some of the Europeans who want to make more maybe moving to the us. Same with india being 5-10x lower salaries. Tangentially I offered to double an engineers salary in india to quit his job and work for me remotely. And he (an hn user) turned me down, saying he wasn’t ready… now, I don’t know if he had severe impostor syndrome or I am the impostor. it’s like when x-bezos calls someone to offer them y million dollars and they hang up on her.

You haven't stated your source, so can you clarify whether these are both pre-tax or post-tax or whether one is pre-tax (US) and the other is post-tax? thx

The main difference is that, at least in my country, my salary represents a part of what my company pays for my employment. AFAIR if I earn X my company is paying X*1.5 that goes into taxes, social security, etc. While in the US the salary is mostly given to the employee and they have to pay for all of the above. In your example, that company in NL could be paying something closer to 80k-90k which depending on the exchange rate is close to US$100.000

OTOH, we all know how some salaries are crazy high in high COL areas like SF, which I'm sure don't represent the whole of the US. I work with devs in Florida and NC that don't get pass the 6 figures.

US has competition between FAANGs driving salaries upward. Europe with the exception of, maybe, London - mostly doesn't. It would be interesting to see how shift to remote plays out here.

Fun historical fact: Apple, Google, Intel and others didn't like salaries growing so entered into illegal anti-poaching agreement. [0]

[0] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

The US programmer probably owes some money for their education that they need to pay back, while also having to deal with higher price of housing.

This EU programmer got his education for free, and despite owning two houses, has never had a loan.

Keep in mind that in the States health insurance is a function of full-time, reasonably well-paid work. When this ceases, you have, I think, 18 months of COBRA which lets you pay 100% rather than 20% of your previous health insurance while you look for work. This number can grow rather large as one's age and/or family increases. This also acts as a problem-to-surmount when retiring before 65.

Housing costs might/will be higher in parts of the States than elsewhere, and one pays in life quality to get the cash at times. It depends on what you're interested in doing I guess.

It's not so simple. The places you can earn these wages in the US have incredible high cost of living usually. Something that is way less extreme over here.

Then health care, social security and pension costs. That could easily half your US income to get to the same standards. Also taxes, NL or DE has very high taxes comparingly however NL also has a amazing public infrastructure you get for that. You won't need a car for example.

Best of both worlds is Switzerland. Wages are more or less in between your examples, taxes are low, standard is super high.

Americans love to bring this up but half of a six figure US income still leaves abundantly more than £32k at 6 years experience leaves outside of London. Without a car, dependents, and with private healthcare costs (because the NHS is far more flawed than propaganda would have you believe), I'm not the only one living alone in a mould-infested flat that isn't even suitable to keep a pet, unable to move because of trying to cling on to the lower-but-still-too-high rent price ridden through the recent massive increases, putting no savings away, in a country where recent delivery shortages make your fresh food shop a roll of the dice.

I'm glad to have the shelter, warmth, and relative security that many others don't, but living as a software engineer in this country is nowhere near comparable to other 'similar' countries, whether the US, Canada, or European neighbours.

Well I think it also depends on where you are in the EU. I make slightly over $145000 a year (consulting though) in Denmark, but of course most of that disappears in taxes.

I suppose the big attraction of the U.S is being able to keep the money you make and pay less for a lot of things, but for the people talking about attractions of the U.S I don't think I know a lot of people willing to go unless earning a lot more (or if leading companies and have to be in SV for a bit)

I can think of two reasons

1. Productivity - US is a large English speaking country, the mobility and productivity is great. Having a slight edge over others will make you very valuable, especially considering that many US companies are global.

2. Unionisation & socialism - At least in the Scandinavian countries my observation is that management/govt/unions holds a position that software developers should not be paid a lot more than other employees. And developers accept that, because "that is how it is down here". I pity the condition of highly qualified doctors, who after spending a decade in study/residency get only a small premium above average. And in contrast taxi drivers who started early in life own a lot more in assets.

That sounds dystopian

> holds a position that software developers should not be paid a lot more than other employees

I've seen this first hand. Was trying to help a Swedish company recruit for a new customer request. They would not budge their fixed mindset on salaries. Not even 10%. In the end they lost the contract, costing them on the order of SEK20M/y.

I think it is competition for local talent. I worked for a US tech company in a remote office in a smaller Scandinavian city and at senior levels we got comparable salary/stock compensation. There was a slight adjustment for COL, ~10%.

There are other US based tech companies in the city which helped drive up the compensation. And at senior levels (staff+) employees are much much harder to replace.

I would like to add that I know some engineers getting paid 75-90k € (some even with some unlikely stock options added) in Barcelona, Spain.

These are individual contributors with 10 years of experience.

These same engineers were getting paid 50k 3 years ago, but the current job market (and I guess, competition from remote work) increased wages that much.

Adjusting for cost of living, I would say that very close to SF.

What about the median and other characteristics of the distribution?

Looking at tails seems to me to be more prone fluctions based on outliers or other characteristics. The median might be a better comparison, and would likely be less than 2x. Employer costs/benefits/taxes would also need to looked at, and then compare total comp vs salary.

Labour compensation per hour worked was roughly the same for US, UK, DE, NL for 2019:

* https://data.oecd.org/lprdty/labour-compensation-per-hour-wo...

The US jumped much higher in 2020, but they've been historically very close.

Proximity to Eastern Europe, with some Eastern European nations now being EU members.

Not sure where the stats come from, but €57k is not even that much in EE. Currently making slightly over €100k in Eastern EU state. Magic word "contracting".

Contracting or not, very few East European developers make six figure yearly amounts.

> Magic word "contracting".

Contracting will make you even more money in US too

This is a funny question. And it's telling that European vs American is clearly unfair while Indian salaries, got example, aren't considered.

Economies are faith-based.

This only tells us that it’s primarily Europeans taking part in the conversation.

First you have to compare with social benefits, then you have to add the fact that European countries are usually more egalitarian than the US

I think that is due to a variety of factors, most importantly a massively screwed comparison.

Not every software engineer in the U.S. works at FAANG or even in the bay area or other hotspots. If you'd exclude venture capital backed companies and limit the statistic only to companies with a sustainable business model that will stick around for longer than they can raise new capital, then your average will certainly be a lot lower (and it will still include extremely high salaries by FAANG companies). But venture capital brings me to the first key aspect.

Venture capital barely exists in the EU. There are some VC funds and there are some European startups that managed to raise a decent amount of money, but they don't reach anywhere near the valuations of even early stage US based startups. With more money being in the game, it's obvious that those companies will pay impressive salaries to attract the top talent available. The have the means to do it and having a company with many FAANG devs onboard is almost a guarantee for a successful next capital raising round.

The next thing is the difference in how software is approached. For most European companies software is a cost center, not a profit center. The biggest EU based companies have a few digital products at best, most of them only being complimentary to the products they actually sell and make money off. That is a stark contrast to the US (especially certain areas) where a strong focus on digital products exist. And if you don't make money off your digital products its obvious that you want to keep costs down.

Next I want to go back to my initial reference to the SV area. The reason why salaries are continuing to rise is the extremely high cost of living around those companies. Is a $10,000/month really that high if you have to spend 3,500€/mo on rent alone (I have absolutely no clue about rental prices in the U.S.)? There is no doubt, software engineers in the bay area are far from poor, but especially with salaries that are so far above what you'd find anywhere else, its important to consider the actual cost of living for the area where those kinds of salaries are actually paid. As soon as the cost of living decreases, the salary decreases as well, even within the U.S. And the discussion about FAANG companies wanting to cut salaries for people who are full on WFH just shows that the costs of living are an important reason for the high salaries. The costs of living also include things like education (incl. higher ed), childcare, elderly care, health insurance, etc. All of those things are largely taken care of by the government in most EU states, unlike in the US.

Another reason for lower salaries is the actual cost of having employees (this is limited to my experience in Germany; can differ from other EU countries). Here in Germany taxes, public health insurance and public pension premium is deducted from your salary. But the cost of the employment goes far beyond the salary since your employer also has to contribute roughly the same amount to public health insurance and pension as you have to from your salary. So take the salary of a employee, multiply it by 1.2 and you get the true cost of the employees salary (excluding benefits like vacation time, bonuses or the 13th salary). Additionally, most EU countries actually have employee protection. Not being at risk of loosing your job from one day to another is a pretty nice thing if you'd ask me, but it also reduces the employers flexibility.

To summarize: American software engineers probably really make more money, even if you'd adjust to all the factors I mentioned above. However, the difference is nowhere near as dramatic as the numbers mentioned by OP make it seem.

because that is not true

how much of that data is flawed because of inflated prices in California?

75k a year in NY


I'm a software engineer that recently moved from California to Dublin, so here's my take on answering the questions (and not the dick measuring contest of US-vs-EU):

* Making $1 in the US != making $1 in the EU: There are all sorts of things built into the society here that simply don't exist in the US (or Cali anyway). For example, in Cali I was absolutely required to own a car, which means paying registration and insurance and fuel costs. Here in Dublin the public transit is good enough (amazing from my standard, but don't talk to a German about it) that I can get around perfectly fine without a car. So that's something like $10k/year that I don't have to pay.

* School/University: This is a big one. When I graduated from a California State school (great education, fairly cheap), I had about $25k of student loans to pay off (way on the lower end of the spectrum). I was able to pay these all off in the first couple years of professionally writing code, but someone in the EU wouldn't even have to think about that. So there's around $10k/year for the average engineers salary that just literally doesn't exist (not taking into account the stress and economic inequality caused by having a system based on giant loans to teenagers).

* Childcare: Although I dont have kids, plenty of my Bay Area co-workers did, and were paying on the order of $3k/month for childcare. This is absolutely bonkers nutszo crazyness, but it's a fact of life for many in the US. Doing a quick google search tells me (I have no practical knowledge here) that childcare here in Dublin is something on the order of $250/week which although expensive is still waaaaay cheaper then what you would be paying in California. So here's another $20k/year price difference between the US and EU.

Adding it all up, cost of living here is something like $50k/year cheaper then in California (without even talking about house prices), so getting paid $50k here you're going to be seeing roughly the same value as someone making $100k in Cali and although it might shock some of the hackernews crowd, <i>not all US programmers make $100k/year!</i> I havent done an in depth analysis, but if you look longitudinally across all costs, I would bet that the average software engineer in the EU is being paid in more value (not $, but life value) then the average engineer in the US, especially since people here (on average) report having much higher levels of life satisfaction, and live longer.

Exercise for the reader: I have a friend that recently took a huge pay bump to move to the Washington are and work for Microsoft. He just paid $1M for a 3 bedroom house. What does $1M get you in the EU? Is he actually making more value by taking that job, or is he effectively paying microsoft for the pleasure of living in Seattle?

You must be having the definition of a laugh:

> I had about $25k of student loans to pay off... EU wouldn't even have to think about that.

I went to UK university after 2012 meaning the price per year was £9000 so for 3 years that was £27000. Then I did a master degree and the loan cost of that was £10000 so here we have £37000 on education which is over $50000. Literally paying double than what you are paying and I'm on a lower salary than US so check that.

>He just paid $1M for a 3 bedroom house. What does $1M get you in the EU?

It gets you a 2 bed average flat in a bad area in London, assuming you can even qualify to get one

Continental EU (if you still consider UK European) university is often free. Costs pile up in associated requirements (e.g. housing, textbooks, whatever) but you don't have to take out student loans is the point. So GP's point stands.

Brexit aside, I think most people think of Western/Northern continental EU when talking about Europe than UK.

not sure if Americans make the difference

This American does.

Sounds like you dont live in the EU.

> childcare here in Dublin is something on the order of $250/week

This is crazy low, it's more like 300+ euro per week, which is a lot of money.

>He just paid $1M for a 3 bedroom house.

Sounds like munich.

we are just worth more

Not really, the same person is worth more for the same work if they're doing it in SF versus London.

Market economy. In the US there is a perception of shortage and so wages are artificially increased (as compared to other industries of equivalent skills/experience/challenge) to account for that perception.

The reason that perception exists is a misalignment between how developers are produced, the skills required by industry, and the things employers are willing to do to compensate for that supposed gap.


Making things up. Got it.

It's an opinion so I am not sure what you are hoping for. If you are actually interested in the subject, as in doing more than trolling, perhaps you could find citations of your own and post them here.

The US pioneered programming and has had a lot of success because of it and therefore they value it. The rest of the world, not so much.

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