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That plus taxes are lower in the US too compared to Europe! So we get paid more, have a lower cost of living, and pay less in taxes.
US is a great place to be a white collar worker versus the rest of the developed world. Not so much for blue collar workers.
Does Europe have government funded retirement? We get like $1000/month in US from social security…provided it isn’t bankrupt by the time we retire…so 30% of my paycheck goes toward retirement savings
Chief
The root cause of the general phenomenon (not this specific instance, but the trend) that American salaries are higher:
Philosophical and political motivations behind societies and views on capitalism / the market. European countries tend to be focused on benefiting the worst performers / the least wealthy. They tend to prioritize policies and tax systems that benefit “the little guy”— such as making it difficult to fire employees, high taxes and withholdings (on the employer and employee side), and generally focusing on the lowest levels and labor rights / benefits. This has goods and bads.
In America, we tend to focus policies on increasing the top line, with the view that it benefits everyone, and incentivizes entrepreneurship and “moving up the ladder.” Companies are much more free in America to do what they believe is best for their company— firing an underperforming worker, for example. Taxes and withholdings are lower, with the goal of incentivizing growth.
There is a general attitude of “watering all the plants, and especially the ones that are growing best” versus “watering the underperforming plants” and neglecting to nurture the tallest.
The effect is that there’s almost a forced middle class in places like germany, with taxes so high that there’s no real incentive to increases salary beyond a certain level. Why strive for 200k salary vs 100k, if the take home only goes up by 40k? The trade off is that they have more people in this middle class.
Not passing judgement on either. The result is that it’s better to be a top performer in the US, better to be a lower performer in Europe. I personally like the US system, as I studied hard, got into a target undergrad, and have been doing great financially.
The whole veil of ignorance exercise is useful.
Jesus … since when redistribution of wealth is benefiting worst performers? So your only measure of performance is capital ?
Since the 2008 crisis we have seen in Europe a large movement towards liberalizing the labor market, and yet in general salaries have remained flat. Germany is one of the most protected labor markets in Europe (together with France) and yet have the highest salaries (comparable to the US in some cases). How would you explain that?
Your example of people choosing not to make more because they are already at the higher bracket of pay is ridiculous.
Even if some of your assumptions are somewhat valid, there’s so much more that goes into play.
Mate that’s why I transferred from the london office to the dubai office. I am quite surprised I don’t see more brits here (in the dubai office)
What’s tgt? Also you’re making the golden passport sound very good…
Come on over! I liked living in Oxford, but the US just can’t be best for high quality, high paying jobs.
#1. Exit salaries from consulting in UK have always been lower than the US.
#2. Most consultant salaries in the US are the same across cities, but they have to be competitive in NYC and SF. COL is higher in NY than in London (based on personal experience).
#3. Salaries in the US have recently gone up, driven by crazy amount of money being thrown into tech and startups.
4. FX rates. A decade ago London salaries were higher than in New York because the £ was 1.4-1.5/$ (also based on personal experience)