[thebackup]

It’s interesting to see these salary levels. A senior developer (10+ years of experience) here in Sweden is paid less than their entry level salary. The difference in pay between Europe and the US seems huge. I wonder why.

[throwaway2037]

I am disappointed this comment does not receive more comments! I feel the same. From far away, it seems like Berlin is bursting with great technical talent, as well as Copenhagen, Stockholm, and Helsinki, yet the salaries are terribly low. (I see you Oslo, but not the same reputation!) Oh hey, please include France. They have such great, underrated technical universities... do amazing comp-sci research... but their commercial software industry is so small!

Some theories:

* High taxes actually means lower gross pay? (I am someone who strongly supports the "social safety net" -- do not read that question as some kind of weirdo libertarian / low-tax promoter.) As a counterpoint, usually high taxes means higher quality of life.

* Or: Labour mobility is higher in US than many high-tax, strong-labour countries in Europe/Japan/Korea/Taiwan. In short: It's easier to hire and and fire in US. As a result, I see massive income inequality in US, but much less in wealthy European countries -- and Japan/Korean/Taiwan.

Another way to think about it: If software engineers are paid 50% of Silicon Valley in Helsinki, then Starbucks baristas are paid 100% higher in Helsinki. (I have no hard references to offer... but my point: Lower skill jobs pay living wages in Northern Europe/Japan/Korea/Taiwan, but less in US.)

Personal question: Would you prefer to live in Sweden with your current wages, or a place with "up 100% wages for you", but much higher income inequality? When you answer, please assume much higher personal crime rates and visible poverty (or working poor).

I live in a place with simply appalling incoming inequality. The visible poverty and working poor are so depressing. I would easily take a 25% pay cut to build more social housing and help the elderly who collect cardboard to retire immediately and play with their grandchildren all day long!

[jandrewrogers]

The income inequality in the US is not that visible in day-to-day life. A large fraction of the income inequality is a side effect of the scale of US geography. The States with the highest and lowest median incomes are separated by 2x income and 1500 kilometers. It is also worth pointing out that even the poorest US State (Mississippi) still has a median income that is the same as Germany, so "poor" is relative.

Different States have different economies due to geographic locale, history, and specialization. Consequently, the US has States that specialize in agriculture, manufacturing, services, technology, natural resources, etc which have very different economics and compensation structures which is reflected in local incomes.

The median income is much higher in Washington than Mississippi, for example, but that doesn't imply anything about the distribution of income within those States. It would be like comparing incomes between the Netherlands and Romania.

[throwaway2037]

North East San Francisco vs West Oakland

Closer: San Francisco: Montgomery Street business district vs Tenderloin district

Even closer: Mission District -- Mission and 16th Street. Walk east one block and you reliable find used needles on the street. Walk west two blocks is quickly wealthy.

New York City: Manhattan vs Bronx

Closer: Upper East Side vs East Harlem (125th Street and above)

All of these pair are close and would surprise many by the huge gap in quality of life between both of them.

This one should be like catnip for HN: Palo Alto vs East Palo Alto

Are these close enough for you?

[thebackup]

It's hard to answer your question without actually experiencing the differences first hand. It's not like we don't have visible poverty in Sweden. Almost every day I see people digging through the public trash bins for bottles and cans that pays a little for recycling and there are beggars in front of the stores and approaching you on the street asking for a money.

There is however a base pension that each senior citizen is entitled to. About 15% of the elderly only gets the minimal amount which in many cases doesn't cover basic expenses, like rent and food, so they need to be on social welfare as well.

But would I accept a 100% salary increase if it meant that social welfare had to be removed and people couldn't afford a place to live and to put food on the table? Of course not. Would I like if people that study hard and get well educated also get well paid jobs? Yes!

[throwaway2037]

Different idea: If you get the chance, take a very high paying job in the United States for a few years. You don't need to stay forever, but you will see with your own eyes... and make a bunch of money. You'll be "richer" in more than one way -- savings account and experience.

[closeparen]

I pay some of the highest taxes in the country in exchange for some of the worst highly-visible poverty and most dysfunctional public services. Either would be a huge improvement.

[flibblercorn]

Yes that is something that comes up on hackernews a lot, and I personally still struggle to accept it.

According to the Daily level system I should be in their band 5, so $210K, but in England I am paid less than half their entry level salary (at current exchange rates).

Americans don't have IQ scores, or any other metric to suggest being approximately 4-8 times the quality of other developed countries workers, so it's hard to just take it and accept that their compensation isn't due to their ability (on average), and that life isn't fair.

[jandrewrogers]

I am an American who has worked in Europe for many years at multiple companies, so I feel at least somewhat qualified to give some insight.

Europeans are just as talented technically as Americans, that has never been the issue. As a broad generalization, European business culture is consistently poor at leveraging that talent to generate value, often treating it like factory work. Because American business culture is so efficient and effective at converting engineering talent into revenue, often on the scale of $1M revenue per engineer, they can easily afford to pay the higher wages while still making a fine profit. This has the side effect of making the market for engineering talent extremely competitive.

In short, European technical talent as a resource is often being wasted by poor business practices, which means there is much less money to go around. There is no reason in principle that European engineers could not earn much more in Europe but changing business culture is slow, though some companies are trying.

[flibblercorn]

Yes, I am aware that the salary for an entry level employee on the Daily system is more than the total value I bring to my employer per year. I am paid less than half because I already eat up about 60-70%* of the total income I bring to the company.

The ability to earn American style wages, without trying to emigrate, is entirely out of my hands. There isn't anything I can do short of risk homelessness for myself and my family in the attempt to create a better business (which I am incredibly unlikely to be able to do).

* depending on quarter, project, year by year, etc.

[thebackup]

Thanks for this comment. A very interesting observation. Do you have any thoughts regarding American companies that are established in Europe, shouldn't they be able to introduce that American culture in their European offices?

[mqnfred]

A very interesting follow-up to an insightful post. I think the answer might lie in why the american business culture is more efficient in the first place.

I believe american business is more fluid, allowing for better arbitrage opportunities that ultimately leads to better arbitrage abilities for its actors.

More law and protection has the same effect as more code: it slows things down because it increases dramatically the amount of requirements you have to contend with. A double edged sword indeed!