The comments on the sidebar are interesting - lots of Europeans commenting on salary and tax burden vs. cost of education, retirement and healthcare.
I grew up in Germany, enjoyed a free engineering education but moved to US after graduation. My single anecdotal data point seems to agree with a lot of the US commenters on this post: if you're educated and work for a reputable company you're pretty well off in the US. As the situation becomes worse for blue collar and untrained labor workforce it's clear that it's coming at their expense. Wealth inequality in the US is a huge issue and needs to be addressed.
Yea in absolute terms, you are doing well. However, when you account for everything, the salaries don’t look as ridiculous as it sounds.
If you earn 450k for example working for Netflix in Los Gatos, CA (the salaries are geo adjusted so you’re not getting paid like that anywhere), you are essentially making 260k after taxes. Still a great salary.
Netflix is not remote first, so having to buy a house in a reasonable commutable distance is going to cost you around 2-2.3M, which a 30 year mortgage with 20% down is still going to cost you around 13k/month (with taxes and insurance) or $156k/year.
Still a lot of money left every year. ~100k. But once you start adding other costs, you realize, it’s just a upper middle class lifestyle in these expensive areas. The only time it helps is when you go elsewhere or leave your job and move out. Obviously no doubt that’s awesome, but majority of the time you’re living there, you are spending a significant amount of that salary and the govt takes half of it.
Spending 2.3m on a house is a bit extravagant, the median house price in nearby San Jose is currently only 1.2m. That means half are even lower! Of course if you want some newly-built 3000 sq ft house in a top 10% school district it's going to cost even more, so it really depends on what you consider reasonable.
I guess this just supports your argument that 450k sounds like a lot but in practice it only buys an 'upper middle class' lifestyle. Still, many things don't cost more in HCOL areas (travel, goods you can buy online), or only have a slight premium (food). It's easy to overfocus on expensive housing and services. Actual 'middle class' people don't go on frequent airplane travel or dine out multiple times/week, whereas that's very typical among HCOL tech workers.
If you’ve been looking for a house, you’ll realize that 1.3M houses in San Jose either need some work done or are not in a good school district. I am sure someone who makes $450k will always try to move to the best available school district.
Also to your point about expenses. Companies don’t pay you $450k for a 9-5 job. They do that so they can squeeze out as much time of your day as possible. Most tech workers don’t “dine out”, they order in because they have to.
And as far as what I said, it’s not to cry how bad it is for someone making 450k. It is to say that it sounds nice, but in practice you can get a comparable lifestyle in say 80k in India or 200k in Europe. The only difference like I said is when you move out of these expensive places to somewhere cheaper.
It’s the same comparison to saying you can earn $18-25/hour (35-50k/year) waiting tables in Bay Area. But only make 20k/year in Paris doing the same job in Paris.
The difference is with waiting tables you are living hand to mouth. When you’re making $450k, it just takes a little bit of discipline to build up a huge nest egg and then move somewhere way cheaper to up your standard of living.
There's something conveyor-belt-like about some high salaries in some areas that isn't appreciated. A Wall Street salary (comparable to the Silicon Valley) comes with it no remote-first, a questionable commute unless one is paying top dollar, and the very likelihood of continuing to rent versus buy. And who can resist the 7 dollar coffees and the expensive outings with friends or colleagues at a restaurant.
In a sense you can try to save money, but it is hard in HCOL like NY and the Bay Area.
When on paper we see the person with the 300, 400K salary we sometimes assume they have a lot of money saved up or they live very well. And indeed probably they live with many many conveniences that few people on Earth have.
Most of them (us?), though, aren't smart enough to make that much money and figure out a way to retire early on it.
If there's a trick to do so without roommates, I'm all ears.
But that money you’re putting towards the mortgage belongs to future-you (minus interest, and assuming property prices at least stay the same). It’s a savings account.
To get the money back you have to sell your property, and then where are you going to live? Sure it's great if you want to then move to a cheap area, but what if you want to stay near your friends & family?
(Yes, there are some alternatives like HELOC or reverse mortgage, but I don't think they are generally that great except for very specific situations)
Sounds easy, in practice it’s much harder. Spend years building a life making money, have your entire social circle and your kids’ lives somewhere. You don’t just leave. Why do most of our parents still live in the same place or move to near where their kids live (also other HCOL areas)?
Because most parents didn't have the foresight to only invest a few years to kickstart their career and bank accounts to greater heights and leave after.
Times have changed and the writing is on the wall for individuals to GTFO after a few years now. Gentrification is far more rampant and obvious, and anyone moving to a big city has a wealth of information to draw from.
Is this life hedonically adapted to live on $450K sustainable? I would prefer the social system of Germany, France etc where there are safety nets for me and my family.
Very true, we've lived in Oregon for 30 years but all my inlaws lived in the Bay Area the whole time. Now that they are ready to cash and move out their property values are a great asset but it's also very painful to pull up your roots at that age.
Nope. Their CEO literally wants people back. I interviewed with them recently and they said, they have the pandemic policies in place, but eventually they want people back. The job I was interviewing for asked me to be in office at least 3 times a week.
I worked there until very recently (in an SE role for 4 years). I left Los Gatos and haven't looked back. While I'm in another major city where they have an office, before I left I hadn't been in months. Half my team ended up moving to Austin.
During the pandemic they made the open statement that people could permanently move, people did (bought houses and the like). They've openly admitted internally that they're stuck with that decision. They even went as far as sharing remote adjusted salaries based on the "tier" of city you were remote in.
Not to be prickly, but you're wrong in the broader sense. The hiring manager was saying that to YOU because they don't want to hire YOU as a remote worker.
The team you interviewed with wanted you there three times a week, that's not a global policy across the company. Go look at roles in the security org for example and you'll see nearly every one of them lists Remote, United States as the location.
>13k/month (with taxes and insurance) or $156k/year.
Keep in mind that most of that is going to be tax deductible. So depending on marginal brackets and other write-offs someone can make, the $150k per year might be more like $100k
1) Can only claim interest tax deduction on the first $750,000 of indebtedness [1]
2) Only can claim up to a maximum of $10,000 deduction for state and local taxes on the federal taxes. [2]
3) At the beginning of a mortgage are paying mostly interest and have maximum available tax deduction. But as time goes on it switches to being more paying towards principal. So at the end of the mortgage it is very little interest and thus very little tax deductible.
The average work in the US has far more purchasing power than german worker. The problem in the US is: housing, education, and medicine - three areas where the government has strongly distorted the market and driven up cost.
That implies the average US worker can afford more despite lower median wage (before the US dollar took off, anyway).
>housing
Housing is nowhere near a problem compared to most of Western Europe. Americans live huge and house prices are still low relative to CoL. Unless your measuring standard is a megapolis in, you know, the most desired place in the world.
And I'd say healthcare is the biggest problem. The average price per square foot of housing hasn't gone up as much as people think. The problem is that people want to live in a big house in a specific place. Education is expensive but if you go to community college for two years then a decent state school you can come out without crushing debt, which you can pay off if you study something marketable.
Healthcare, on the other hand, is out of control. I'm nearing the end of my career and am well-off but have to assume that getting sick could wipe out our savings.
> The problem in the US is: housing, education, and medicine
Honestly I'm confused; These are very crucial, these are basic, and if they are out of reach for an average worker, does the higher purchasing power (assuming it's actually higher in US) even matter that much without them?
Medical expenses was (is?) the leading cause of personal bankruptcy in the US.
Housing is a mixed bag. Some areas are cheap. Some are extremely expensive (all the big west coast cities included). You can find a balance in some second or third tier cities.
Education is a racket. This is a relatively new problem. Costs outpace inflation and wage growth by a massive margin.
If I was in my twenties, and looking to start a family, I’d seriously consider renewing my UK passport or getting and IE passport (via parents) and moving to Europe.
Except for housing, the governments failure to intervene in these distorted markets is the problem - not the government itself distorting the markets. Even for housing, there are plenty of high level policies that could be implemented regarding zoning, tax assessment, etc. that would ameliorate the issue.
Yeah I think Europeans are comparing situations for average US workers to those of tech workers, who definitely aren't average. With a country with such large wealth divide the situations don't compare. For anyone in the top 10% (which tech workers are) you'll have far more disposable income than your European counterparts[0]. You'll have good health care that won't cost you much. You'll have access to good schools. You'll live in very safe neighborhoods. Comparing these two classes of people is apples to oranges. Both roundish fruits but there's nuance that matters and if you bite into an orange thinking it is an apple you'll get a big surprise. Wealth inequality is definitely a problem in America but it also needs to be considered in the argument because it is a problem.
There are some factors that I think do matter. College education matters but we need to consider decades worth of these salary differences, which likely make up for the cost of education by a lot (an expensive private school will cost $120k total and you're making that difference in a few years). But there are also personal preferences and those matter. Europe is far more dense and you can have access to a wide breadth of cultures relatively easily. Things like this can have a high value to people. Or maybe the high value is that your neighbors get subsidized college too? Potentially that's what people are saying but not conveying well.
Still, I don't think the equation is quite simple, but it does seem like Europeans deserve a bit more in salaries.
I'd need to see quite a bit of evidence to support the idea that high STEM salaries are at the expense of the blue collar workforce. Unless you mean the specific industries that are moving money from traditional sources and funneling it into tech companies, in which case it's intuitively true. But I worked blue collar for the first 20 or so years of my career, and salaries were under the floor long before tech really started taking off.
> I grew up in Germany, enjoyed a free engineering education but moved to US after graduation
The idea that you can get the education in X but not pay the dividends for it there, instead getting paid much better in Y, wasn't really your point. But there are limitations to giving your life to everyone too. Germany can't educate free workers for the US forever.
That said I don't think there is a competitive election anywhere where voters decide benefits based on an ROI. It's not about the ROI.
Singapore by comparison requires you to come back and work if the S. government pays for your foreign education. You can ask Singaporeans how they feel about that. Even though, on the face of it, like a lot of things in kind of fascist Singapore, it "makes sense."
> the situation becomes worse for blue collar and untrained labor workforce it's clear that it's coming at their expense... Wealth inequality in the US is a huge issue and needs to be addressed.
The most interesting thing about wealth inequality is, whom do you include in your denominator?
First in a whole economy perspective: Do I include the people in China who manufacture my shit cheaply? That reduces cost for me, giving me real wealth, in exchange for paying them less. Common sense. [1]
Both US political parties had, at alternating and even sometimes coinciding times, thought wealth inequality was related to immigration policy: that people from Latin American countries would come and work below cost in exchange for their kids being able to grow up in America. [2] [3] Same common sense energy.
Has wealth inequality gotten worse, or are we just measuring it better? Are there things that force it to be measured better?
Germany has the same forces at play, it's the reunification economy. [4]
[1] In 1995, "Estimates by Oxford Economics show that workers in China’s manufacturing sector received an average wage of 40 cents per hour in 1995, equivalent to just 2% of the average hourly rate of US$17 paid across the G7... If common prosperity leads to centrally-mandated increases in wage growth that far exceed productivity, then it could spell trouble [like inflation]. " https://www.schroders.com/en/us/insights/economic-views/is-c...
[2] Bernie Sanders: "I’m paying you [an illegal immigrant] $5 an hour, O.K.? You don’t think that’s going to lower the wages that [an American] gets?... I think that’s kind of common sense. It’s called a race to the bottom." https://www.nytimes.com/interactive/2020/01/13/opinion/berni...
I grew up in Germany, enjoyed a free engineering education but moved to US after graduation. My single anecdotal data point seems to agree with a lot of the US commenters on this post: if you're educated and work for a reputable company you're pretty well off in the US. As the situation becomes worse for blue collar and untrained labor workforce it's clear that it's coming at their expense. Wealth inequality in the US is a huge issue and needs to be addressed.