While this might explain why Tech salaries are high in general, it doesn't explain why US Tech salaries are so much higher than Western European ones (let's not even consider the gap with Asia/Eastern Europe).
Heck, there is a significant gap between salaries in the US and UK which pretty much eliminates nearly every cultural factor as well.
Why are employers paying over 2x to a SW developer in SF than they are one in London? There is no language or even educational advantage (I'd argue UK comp sci education has historically been far ahead of US education even)
Why are those non SAAS companies not simply hiring up all the London based developers? Why are the SAAS companies paying their SF developers the salaries they are when they could double their workforce for the same amount by hiring them in London instead?
The obvious (and possibly wrong) explanation is that companies genuinely value employee colocation and were willing to pay a premium for that, and the obvious choice to colocate was the US since the largest absolute number of top tier SW devs are in the US.
Another possibility is that the demand/clients are largely located in the US so there's a benefit to hiring people living in the US who would better understand the market. I don't think much of this explanation though, both because it's not true that the US is that much bigger a market (and for most companies RoW is bigger than the US) and also because of the prevalence of US culture most people (especially in the SW dev industry) are probably well aware of US cultural peculiarities.
At a 2x difference it's probably not worth it to have to deal the hassles, immigration, labor laws, relocation, time zones, cultural/language differences (yes, even between US and UK there are differences!). But compared to India, with 10x+ the wage difference? Suddenly it's worth it.
I don't think 2x is actually that high a differentiator between any two people doing the same job... it's easy to believe that someone can do the work of two other people, or twice as well as another particular person. It's within a believable variance. But 10x, 25x, 100x...? Not so much.
And in fact, it probably suggests where US wages SHOULD be -- similar to Western European ones -- if our market was more realistic and not driven by VC money. Well, with some affordances for our different social safety nets and costs of living too.
Heck, there is a significant gap between salaries in the US and UK which pretty much eliminates nearly every cultural factor as well.
Why are employers paying over 2x to a SW developer in SF than they are one in London? There is no language or even educational advantage (I'd argue UK comp sci education has historically been far ahead of US education even)
https://www.levels.fyi/t/software-engineer/locations/london-... https://www.levels.fyi/t/software-engineer/locations/san-fra...
Why are those non SAAS companies not simply hiring up all the London based developers? Why are the SAAS companies paying their SF developers the salaries they are when they could double their workforce for the same amount by hiring them in London instead?
The obvious (and possibly wrong) explanation is that companies genuinely value employee colocation and were willing to pay a premium for that, and the obvious choice to colocate was the US since the largest absolute number of top tier SW devs are in the US.
Another possibility is that the demand/clients are largely located in the US so there's a benefit to hiring people living in the US who would better understand the market. I don't think much of this explanation though, both because it's not true that the US is that much bigger a market (and for most companies RoW is bigger than the US) and also because of the prevalence of US culture most people (especially in the SW dev industry) are probably well aware of US cultural peculiarities.