Why are salaries for software engineers so much higher in the United States than the rest of the world (even after accounting for differences in cost of living)?

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It’s not just software engineers, and it has nothing to do with “education”. USA has higher base salaries in most professional industries, in exchange for non existent benefits, higher cost of universities, child care and health care.

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Better education and skills. Also there are advantages to being on-site in Silicon Valley, though with remote work that advantage is changing.

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Well remember everything is generally more expensive in the US too. Healthcare, education, etc. Some of us are still paying off student loans a decade after school.

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European countries provide healthcare and good social security. In the US, you have to take care of yourself. To compensate for this, salaries tend to be higher.

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It's purely supply / demand for skilled SWEs. Nothing more. Free market dynamics.

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I am currently a highly paid tech architect $225k+ living in a very lcol US city. I can remember the late 1990’s and the high demand for certain tech skills and the high salaries then. Yet when the bubble popped those salaries went away very quickly. I, through some luck, lots of learning, and hard work, have put myself in a position to be “in demand”. I also participate in hiring and can tell you that demand is high and supply is low.

Also keep in mind that the outsourcing of the early 2000s destroyed the tech careers of many who would be senior leaders in the field now...

When you are building software you want those that not only understand the tech, but also the business and culture of the people using it. They also must be able to think through the entire solution end to end - it seems that this mindset is more common in the US.

I do think that outsourcing to latin america will be the next trend as they are: in our time zones, are closer to the US culturally, and better able to travel here if needed.

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A1 what's your technical skillset?

My SO is SWE at FAANG and I was one early on in my career. Hopefully I can provide a point of view based primarily on my experience in India and the US.

1) More Competition. Top tech companies pay top dollars as they are competing with other tech companies, IBs, consulting firms etc. for talent. If there was limited competition, salaries would adjust accordingly.

2) Limited Supply. Limited supply of truly good engineers. There are only few geographies in the world that provide top talent at scale- US, China, India. Salaries have really grown in China and India and are at par with US (adjusting for PPP)

3) High Demand. Most of the work in top tech companies still gets done in US, so significantly higher demand. However, things are changing e.g Uber laid off 25% of their SWE workforce in US and Amsterdam but only laid off ~5% of Indian SWE. Reason was pretty evident, to change the mix of talent towards lower cost country.

4) Capitalist Culture. As someone pointed out, US leans towards higher pay but lower safety net (compared to EU). Higher risk, more upside.

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Why did you move away from SWE and what are you doing now / transition into?

Richer software companies.

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Seems like no one knows for sure.

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Cuz NASDAQ is where all the capital is accumulating right now (rightly or wrongly), meaning companies listed there are stock option- rich and can give them to employees, and most companies listed on NASDAQ are American

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I’ve given this a lot of thought but can’t find any concrete reasoning.

Not sure it’s just software engineers...

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