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Currently here in France, employee cost is one of the highest ever in the world
You take your raw salary and you add up 40% minimum on social taxes only for the company.
Which means if your raw salary base is 100k euros, employee cost for the company will equal to ~140-150k which is just a lot.
And for your net income, you can remove around 40% again including social and income taxes.
And therefore, it creates an immense gap between cost of life and salary ranges.
About me for example, I live in Paris.
My previous company, who was a leader in its industry (3k+ employees totally) only paid me 41k euros raw salary as junior graduated. I stayed 3 years and half, only got 3% increase overall.
For 41k euros, my net income equaled to 2500 euros / months around
A studio in paris, let’s say 25 square meters, is between 800 to 1000 (even 1200 if you wanna live in fancy places) euros / month.
Since, I changed to a London based company and almost multiplied by 2 my salary base. Which is just impossible to find at same level position in France (except some few little rich startups and maybe Google Facebook…)
Also, money is kind of hidden subject here. It starts to be more open minded by the time but it is still secret and bothers people. Hence, when it comes to talk about salary increase, between mates it can lead to jealousy
Bc Europe is more collective in their approach. More socialist.
Privat sector is much larger than the public sector in Europe..
General cost of living is significantly less. Food, rent/real estate (in most cases), transportation, child care, the list goes on. Healthcare is just one factor of European society that is less expensive and socialized. It is also comparatively very difficult to fire an employee in most European countries as our at-will employment contracts aren’t how things operate in the EU.
The other historical piece is that consumers and the ECB are significantly more inflation-adverse than the Fed (thanks to hyperinflation after WWII), which makes the public generally more supportive of regulations that control prices.
Europe is not a monolith. There are plenty of parts in Europe with that cost more than the average place in the U.S.
That said, my purchasing power in Europe would definitely be much less than in the U.S. with my wage adjusted down, even if COL were 30-40% less. Probably make more than 2x, if not 3x more than what I could make in most European countries
Coach
Because most things in USA are overvalued. Just look at VC investments in speculative start ups. Tell me again how some of those pre-revenue companies are worth a few million dollars?
It's the American way!
Coach
Why would you get paid the same if you're not working in the same area where the company's office is located? Are you not aware that if you worked remotely from another state in the US, some companies actually adjust your compensation to match where you're living?
There are also various other reasons as to why so I would Google it if I were you.
Coach
Well then you should stay exactly where you are, don’t change a thing. You are crushing it in the US and never need to worry or leave a 30 mile radius from your utopian ideal. Nothing to “get” you are in no FOMO situation, just go about your business and enjoy your bubble, you earned it!
Take a look at this channel… https://youtu.be/oHlpmxLTxpw
Kind of shows why even with lower wages, quality of life can be radically better than in the US.
You are right. The difference is massive. I try to think of the difference as the “Europe tax”. Which basically you pay for the privilege of living in Europe. And what do you get in return?
It depends on who you ask. But for me it’s 1) Job security- at least 100 times more difficult to fire someone here. In the Netherlands you need to basically file a petition with the government and ask for permission to make someone redundant. 2) As a remote worker in Europe you can practically just be anywhere in the continent while working - if you’re a travel buff then this point really counts. 3) (In the Netherlands) The ability to deduct your mortgage interest from your income- that’s essentially cash in your pocket. 4) (In the Netherlands again,) Ability to borrow 100% mortgage guaranteed by the government so you actually pay low interest and no additional mortgage insurance.
Ultimately, it’s about what you are really after in life.
Each country in Europe has different rules related to taxation and benefits. In Germany most companies only allow working from with in the country and some accept from with in continent for few weeks and some strict about not working from outside Germany. For housing the tax can't be deducted on interest and if you are purchasing energy efficient homes then KFW provides cheap loans with coverage of maximum 120000 Euros. Apart from that hourly rates for maintenance works for houses is more costly and US is better in this respect as there would be lot of people willing to work with in a price and quickly. Europe may attract already qualified IT workers but getting a license to practice for construction workers and medical workers is time consuming. This may be the reason for Europe's issues.
Because a lot of other fees don't really apply, public schools and universities for your kids, healthcare taken care of, Parental leave taken care of, 6 weeks paid leave annually... Your mortgage intrest rates are relatively stable... You are paid less but there are fewer fees to think about. I am speaking from a Western Europe perspective (France, Sweden, Germany)
Generally we get a lot more stuff for our taxes than just a bloated military and prison industrial complex though. We get healthcare, decent roads, sanitation, reasonable cost of living most of the time. In the US you have to pay for pretty much anything & you don't even have walkable neighbourhoods with food shops you can get to without driving, in most of the country.
And not all countries pay less then in the US. Example: Switzerland, high income, low tax, 25 days pto.
I’m from Spain. It is very easy to understand. It is because economical polítics. Europeas countries (most of them), have a lot of taxes on the salaries for public matters such as: free health attention, free transport, free public programs for those in need and a long etc.
So That’s the mistery behind the difference between European and American Salaries.
Also, things are not free when you PAY high taxes - you simply pay collectively which makes things more equal
I’m just curious where you work to get 31 days of PTO 👀
Sweden I got 5 weeks with the law protecting your right to 3 consecutive weeks in summer. France 4 weeks, you basically get 2.5 days off for every month worked is how it is usually calculated. It's really nice but takes some getting used to. I generally travel 3 weeks a year and use the rest to make 4 day work weeks a few times a year... It almost feels like I am bragging but these are rights for everyone. Algeria and a lot of ex-french colonies also offer 4/5 weeks if you look beyond Europe.
Have you tried to purchase a house in the MCOL/HCOL cities?
Not any more (at least not that much). House prices in Berlin around €10k/sqm these days
Businesses are more profitable in the US because they pay lower taxes and benefits sow they can increase salaries.
As a trade off there are many projects of social interest that can’t be funded. Like high quality public education, psychiatric hospitals, low income social housing. The list goes on and on.
Total guess but I wonder if it's because your government or employer generally provides or subsidizes) lots of stuff that ours doesn't (ex: childcare, college, maternity leave, long vacations, etc. Higher taxes = better safety net = less required income). Again, I'm just shooting in the dark, but it seems reasonable.
Also the US is huge. Not everyone is getting paid NYC/LA/SF wages.
Life in Europe (most of the countries) is cheaper. You usually get a higher standard for less and a lot of things are for free/public (still).
But I cannot speak for the US in general, as I have only been around LA, San Diego, San Jose, Miami, Las Vegas.