Why are salaries in the US so much higher?

Elessar

I stumbled across the following site which charted the highest paying software engineering positions in the US and I'm honestly gobsmacked. $236k for an entry level graduate role!? I knew salaries were higher in CA especially but this is another level. Glassdoor says Irish graduate positions average €29k in comparison.

Someone with 5 years experience can command $400k. I've never even heard of that kind of money here in development.

What is the reason that developers across the pond can command so much more remuneration than here in Europe?

deconduo

Elessar wrote: »

I stumbled across the following site which charted the highest paying software engineering positions in the US and I'm honestly gobsmacked. $236k for an entry level graduate role!? I knew salaries were higher in CA especially but this is another level. Glassdoor says Irish graduate positions average €29k in comparison.

Someone with 5 years experience can command $400k. I've never even heard of that kind of money here in development.

What is the reason that developers across the pond can command so much more remuneration than here in Europe?

Because you're comparing the top 1% to the average. Comparing like to like, the US is still a decent bit ahead, but not nearly to the same extent:

https://www.daxx.com/blog/development-trends/it-salaries-software-developer-trends-2018

So in reality it's ~40k vs ~60k for grads, and ~60k vs ~90k for senior positions on average.

There's a few things I'd guess to cause the salaries to be higher. This is pure speculation on ul my part though.

- Concentration of the top tech companies, leading to increased demand for talent.
- Cost of education. Most of grads will have 100-200k worth of student loans to pay off, meaning that pure salary will be a bigger driver than other 'perks' in the job
- Hours worked. Most Americans work longer weeks and have fewer holidays and days off. While the annual salary might be higher, when you break it down by hours worked the gap is much smaller.

beauf

Its also a bigger market. So a big project over there will have a vastly bigger scope and budget, than here. (as a sweeping generalisation).

As a result you might have more jobs that earn more, but the % of the market will be similar.

You'll also have more competition for jobs as there are more people. So instead of 1000 people going for a job you might have 4,000.
Being in the top 5% of 1000 is easier than the top 5% of 4000.

Though that also mean there are more jobs overall. Its a bigger pond.

14ned

Elessar wrote: »

I stumbled across the following site which charted the highest paying software engineering positions in the US and I'm honestly gobsmacked. $236k for an entry level graduate role!? I knew salaries were higher in CA especially but this is another level. Glassdoor says Irish graduate positions average €29k in comparison.

Firstly, "T3" refers to stock option grant level, not seniority. If you're getting awarded T3 stock options, that means you're in the 0.01% of hires, let alone top 1%. I mean, I know of senior software engineers with 20 years experience who got a T3 grant. T3 stock options means that they really want you, but aren't willing to pay you actual cash to get you. Big difference from real salary.

Secondly, it is unfortunately common in the US to include stock option grants when saying how much you get paid. That is viable if, and only if, (a) you work for a big five tech multinational with very liquid shares and (b) if the tech bubble keeps inflating. If either of those two are false, then your stock options are worth nothing. If you remove stock option grants from a typical Google engineer working in SF, their apparent pay drops dramatically.

Thirdly, 200k income in SF makes you barely middle class. You'll literally scrape by with long commutes and barely any spare cash. Cost of living. You should subtract 150k from any SF salary to make it comparable to anywhere normal.

Finally, I can tell you straight out right now that 100k living in rural Ireland leaves you as much disposable income after all expenses and taxes as earning 350k in New York. I know because me and a buddy of mine ran the math, and back when I was earning that, I had a bit more free money than he did. And a vastly better quality of life.

Pay really doesn't matter as much as people think it does.

Niall

boreder

14ned wrote: »

Thirdly, 200k income in SF makes you barely middle class. You'll literally scrape by with long commutes and barely any spare cash. Cost of living. You should subtract 150k from any SF salary to make it comparable to anywhere normal.

You're crazy if you actually believe that. I've lived here for 4 years, and "subtracting" $150k, you must be living like a king to have to do that.

$150k = $100k after taxes. Even with the (exaggerated greatly) high cost of living here, that is a fine salary, presuming its not a single income family. You could get a better than average 1 bed apartment for that in or around the city and still have ~$64k to live on. Besides property, nothing else is really THAT more expensive than Ireland. Cars are significantly cheaper, fuel is significantly cheaper, food is similar (outside of Whole Foods), night out... maybe a little more expensive in built up areas, but given he receipts I've seen for Temple Bar recently, not a million miles away. Clothes, footwear, electronics, books are all markedly cheaper.

Further, if you didn't want to live like a king, and shared a place with someone, it'd be a mine for savings. You could easily live comfortably and have $30-35k savings at the end of the year.

Tar.Aldarion

People vastly overestimate living costs there, there are people I know there with a few years experience saving more a year than I earn gross.

You also have Zurich with similar salaries and quite low tax. Saving 5k+ a month there as a grad is insane.

14ned

boreder wrote: »

$150k = $100k after taxes. Even with the (exaggerated greatly) high cost of living here, that is a fine salary, presuming its not a single income family. You could get a better than average 1 bed apartment for that in or around the city and still have ~$64k to live on. Besides property, nothing else is really THAT more expensive than Ireland. Cars are significantly cheaper, fuel is significantly cheaper, food is similar (outside of Whole Foods), night out... maybe a little more expensive in built up areas, but given he receipts I've seen for Temple Bar recently, not a million miles away. Clothes, footwear, electronics, books are all markedly cheaper.

Funnily enough I type this now from San Mateo, just outside San Francisco. Literally here on vacation. And I just came out from a twelve month onsite contract in Dublin, so I can compare directly.

Here is definitely more expensive than Dublin. Roughly +20% for grocery costs. Yes, booze and petrol are cheaper, but I was fairly aghast coming out of a local supermarket, we were in Yosemite last week and it was much cheaper, and Yosemite has a hefty tourist markup. Restaurants have also been consistently pricey, and we're eating here in San Mateo a suburb, not downtown, and at chain rather than fine restaurants.

I will agree it's not a million miles away cost wise from central Dublin. We're not talking Swiss levels of cost where a cheeseburger is thirty euro. I can't speak for rent, but I know a number of Google engineers paying four grand a month for a one bedroom flat. Dublin isn't quite that pricey, yet at least.

Further, if you didn't want to live like a king, and shared a place with someone, it'd be a mine for savings. You could easily live comfortably and have $30-35k savings at the end of the year.

I don't doubt for a second that a single young person living in shared accommodation can bank a ton load of money in a short time here. A friend of mine from Quebec invested four years here, and banked enough cash to deposit a house in Quebec, get married and start a family.

But if you have kids, here is highly uncompetitive. I've dropped over five hundred euro already in three days on children's activities. Here is expensive if you have children relative to elsewhere. World class children's activities, definitely, you wouldn't find that Academy of Sciences we visited today anywhere in Europe. But it was over a hundred dollars to get in, and that's fairly average here. I've filled a day with kid's activities in Indiana for thirty dollars, including ice cream.

Obviously all this depends on what you personally fill your leisure time with. If you're very ascetic and single, Silicon Valley can work out great for you relative to other places. But most people aren't like that, or can't be that. I also know of FAANG developers who lived out of RVs in parking lots due to be unable to find affordable accommodation nearby. I know of developers who dropped three million to buy a one bedroom house. Silicon Valley is approaching peak bubble, with all the crazy nonsense peak bubble comes with, like graduate hires being paid $200k, which sorry, is just daft, they can't and don't add that kind of value. Very soon now there will be a collapse, and this place will empty out within weeks, just as it did the last two or three times. It'll be that great game of musical chairs, whoever survives prospers, but they're the very lucky ones.

The total number of developers worldwide has roughly doubled every five years for thirty years now. I expect that to continue. But it means this next bubble pop will be especially bloody in terms of absolute numbers of displaced workers unable to find any job in software development.

Niall

awec

Bear in mind there is pretty much no job security in the US and redundancy is nothing like over here, and you should factor this in when comparing salaries. In the US there is a much higher expectation for individuals to look after themselves if it goes tits up.

That guy earning 400k a year in the US could be just told not to come in the next day cause they don’t want him any more, and get nothing for it.

If you compare salaries there with salaries here plus the value of added protection and other benefits (paid holidays, paid sick etc) it’s not that different really. They still earn more, but not hugely.

14ned

awec wrote: »

Bear in mind there is pretty much no job security in the US and redundancy is nothing like over here, and you should factor this in when comparing salaries. In the US there is a much higher expectation for individuals to look after themselves if it goes tits up.

That guy earning 400k a year in the US could be just told not to come in the next day cause they don’t want him any more, and get nothing for it.

If you compare salaries there with salaries here plus the value of added protection and other benefits (paid holidays, paid sick etc) it’s not that different really. They still earn more, but not hugely.

Job protections are a good bit stronger on a state by state basis though. California is better than most, but not as good as Massachusetts which is about the same as Europe. In California, like in Europe, your job cannot assert IP rights over everything you produce outside of work, for example. They also cannot dictate whether you can participate in open source. In most US states, you need to get permission first, and it's usually denied.

On paid holidays, there is an amazing variation per contract even within the same firm, because it's seen as something you negotiate at signing. Some on this forum may remember I am in the process of leaving contracting, going full time permanent remote. I have a four-way bidding war currently going to hire me, and the vacation time on offer varies between public holidays only, three weeks including public holidays, and two weeks plus no more than seven public holidays. I'm currently counter offering with six weeks total, which is very slightly better than the Irish statutory minimum.

And even that (a ~6% bump in pay effectively) is being slow played a bit. But I've a very strong hand in having four suitors. I will prevail!

Niall

smacl

14ned wrote: »

And even that (a ~6% bump in pay effectively) is being slow played a bit. But I've a very strong hand in having four suitors. I will prevail!

Very best of luck with it. Do you find that there is an expectation to get a reduced salary for working remote based on location?

trellheim

In addition comparable healthcare costs are ridiculously high ; you absolutely need to figure these costs in .

As a couple of posters above have also mentioned , holiday days are far less. What we take for granted 20-25 at start of employment is viewed as huge by most private sector USA workers.

EdgeCase

You also have to factor in that you're looking at the R&D HQs of some of the world's biggest IT companies. A lot of the major IT outfits in Ireland are just branch offices covering Europe and are not generally about fundamental R&D.

You have to pay big bucks to get the creme-de-la-creme of the global IT workforce and that's is definitely concentrated in California. There's huge competition to get some of those people.

I don't think the salaries that you're comparing there are really for the same job descriptions as Engineer covers everything from cutting edge development and R&D to much more general stuff.

Always Tired

A lot of the above is correct, and for that 6 figure role, you're probably talking about a whiz kid who is top of his class at Stanford.

Also, US grads are commanding higher salaries now because the cost of college and debt incurred is ridiculous, especially for the top schools, and being able to pay that back asap is a priority for those grads.

Here, no one even cares if you have a degree as it's not as rare as the US (not that it's rare over there, but it's basically a given here because its so affordable), and they don't consider you having a 6 fig debt to pay back

mloc123

Tar.Aldarion wrote: »

People vastly overestimate living costs there, there are people I know there with a few years experience saving more a year than I earn gross.

You also have Zurich with similar salaries and quite low tax. Saving 5k+ a month there as a grad is insane.

Unless you have kids... My colleagues pay $3k/month for childcare in the Palo Alto region and will pay ~60k/year per child in school fees (primary/secondary levels).

Compared to here where I pay €1000/month and nothing for school fees... As free schools here don't have security on the door and metal detectors.

There are of course good free schools in that area, but you need 4-5 million to buy a house in the catchment area for them.

EdgeCase

They’re largely commanding higher salaries because they’re in demand. The scale of student loans may mean they’ve a bit more of a push to go seeking the maximum salary, but unless you’re in demand you’re not going to get that.

Certain aspects of California’s economy are very unusual and really Dublin or anywhere in Ireland at present is not comparable to the largest IT R&D hub on the planet.

Most of these Californian companies aren’t just recruiting from California or even the US. They’re capable of attracting talent from all over the world both because of what they do and also because of the attraction and perception of a Silicon Valley or Californian lifestyle.

It’s really in a league of its own, including by rest of America standards.

You're not going to walk out or a typical degree programme anywhere and into a job in a world leading IT company at 200k + unless you're really exceptional.

The average salary in California is US$51,910 / €45,811 and the average salary in Ireland is €45,611 / US$51,682

So, if you're looking beyond an elite in an IT bubble the salary levels aren't very far apart.

Also cost of living in Dublin is significantly less than the areas where that IT bubble exists in CA and in CA itself, away from those areas the costs are lower, especially for housing.

Tar.Aldarion

They're not all just whizkids getting in there, you can read about it on reddit, and their GPA. A guy from my class went there and he didn't get a first. All it is is studying leetcode and having done an internship. You just need to be able to do is solve medium level problems on that site and that is just study.

mloc123 wrote: »

Unless you have kids... My colleagues pay $3k/month for childcare in the Palo Alto region and will pay ~60k/year per child in school fees (primary/secondary levels).

Compared to here where I pay €1000/month and nothing for school fees... As free schools here don't have security on the door and metal detectors.

There are of course good free schools in that area, but you need 4-5 million to buy a house in the catchment area for them.

Ah yeah certainly it will depend on the individual circumstances, mainly children like you point out. I'd be more likely to not want to work there with kids but look towards other US cites, London, Zurich etc.

14ned

smacl wrote: »

Very best of luck with it. Do you find that there is an expectation to get a reduced salary for working remote based on location?

There are several categories of remote worker.

For remote-only or remote-mostly companies, the going pay rate is about $120k for a senior dev. This is a gross figure not including share options before employer payroll taxes etc, so lop off 15-40% depending on jurisdiction to get what the full time onsite employee would think they earn for some country.

This income seems to not vary much anywhere in the world. Everybody pays the same and earns the same. Great for those living in a cheap country, bad for those centre of Silicon Valley.

For companies hiring a remote worker as a special case because of a rare skillset, the pay will be up to a third below what they'd get onsite for the inconvenience of remote, and differences in working time between the US and any other country. But a third less of lots is still lots, a remote role might pay 250k instead of 330k onsite, but I'd say most here would gladly take that in Ireland.

Finally then there is the case of the internationally famous engineer. They get to demand any conditions they like and have multiple companies bid against each other. If they want remote they get remote. Pay might be discounted I guess, but these guys are in the seven figures range anyway. At the very top there is huge variation between pay offers, no consistency. One place may offer three million, another 500k. Usually people up there choose based on how interesting the work will be, and are independently wealthy anyway from previous employments. Nice place to be.

So I guess the answer is yes, usually there is a discount, except for remote only employers, who only hire senior devs and the pay is remarkably consistent worldwide.

Niall

14ned

Tar.Aldarion wrote: »

I'd be more likely to not want to work there with kids but look towards other US cites, London, Zurich etc.

London has become very uncompetitive in recent years as well. I remember a 120k sterling offer a few years back that would have left us considerably poorer than 35k euro in Mallow, Cork. Two children, single income household.

Seattle was competitive though, as was Austin Texas and Toronto. Amsterdam was also surprisingly competitive after tax rebates for children. Germany I remember was the best of anywhere, because they pay stay at home mothers. However my wife intends to return to work soon, which the German tax system discourages. So we stayed in Ireland.

Niall