Ask HN: Compared to US, why are developer salaries so low in Europe?

https://news.ycombinator.com/item?id=28815762

by hidden-spyder • 5 years ago

10 17 5 years ago

news.ycombinator.com

Free college and healthcare aren't really free. You just pay later through taxes and/or lower salaries because of business taxes.

iota8• 5 years ago

It is all about demand and supply. I think US has much more demand than the Europe.

shoo• 5 years ago

also, demand for developers from businesses that provide a business context where a developer can generate a relatively large amount of value for the business.

pagutierrezn• 5 years ago

The main reason might be that the demand is higher in the US the in the EU but, in addition, both demands have different characteristics.

In my opinion most of EU demand for software developers comes from cost centers, i.e. software departments from banks, utilities, public administration, etc. A cost center has less incentives to pay high salaries, because they don't expect benefits to rise because of it.

While in the US, Google, Oracle, Facebook, Amazon, to name a few, create a different (and huge) type of demand where paying high salaries pays back.

onion2k• 5 years ago

The US is bigger than the handful of tech centres like the Bay Area, Mountain View and Redmond. If you look at the median average for the whole country it's not that much higher than Europe.

throwaway4good• 5 years ago

Plus wages, GDP pp. is lower in Europe.

i_have_an_idea• 5 years ago

As someone else said -- supply and demand. But also deeply ingrained nepotism - there's a tendency to overpay bankers, bureaucrats and mid-level executives, which reduces the amount of compensation available to other roles, e.g. engineers.

It's like all of these people got together and decided an engineer should make 40k euro. So, regardless what company or EU country you go to, you are never offered more.

As a result, all the good engineers either moved to the US or work remotely for US-based companies and that's why there isn't a European Google, Apple, Microsoft and so on.

Looks like the executives, bureaucrats and bankers don't care too much, as they continue to be able to make good money off their legacy industries. Alas, tech innovation in Europe is pretty much dead and eventually the market will punish this behavior.

speedgoose• 5 years ago

What matters is the quality of life for you, and the people you care about (kids, parents, friends, etc...).

I sometimes think about immigrating to California, being paid a lot more, buying a few fancy cars as toys and a big house.

But I already live well in Europe. The food is good, I have a good place to live in, I have more than enough toys, I get many holidays, I have everything I need, and I'm simply happy where I am.

I also enjoy the work culture. Just an example, when I became a dad, I took 7 months of paid parental leave. The mom took 5 months. Our work places congratulated us for the birth and they were truly happy for us.

Moreover, I'm not sure whether my children and future grandchildren would have a great life everywhere. They will probably not all work in IT. Once I die and my money is gone, will they afford education or healthcare? I like that most of Europe is a good place to live, even for people who are not very successful or lucky with work.

ozzythecat• 5 years ago

What you described sounds like a pretty good situation.

I think I’m highly paid, in terms of US compensation. I also have a lot of stress and feelings of existential anxiety at times. The folks applying that onto me are simply propagating on the stress they’re feeling.

My last vacation - 2 weeks - was over a year ago. But again, on paper I’m building wealth. I just don’t have any opportunity to really enjoy it.

In my opinion, it’s not sustainable. In the role I’m in, I imagine I can do this for another few years - best case maybe 5 years? Once I hit my financial goals towards financial independence, I’ll probably drop out from doing this.

quantumofalpha• 5 years ago

Money can buy you financial freedom, more holidays than you'd know what to do with, good place to live almost anywhere in the world, trust fund for your heirs and all that other stuff you mention. Good money - the kind you can reasonably fast and predictably accumulate in California today, say ~decade at FAANG, but have near 0% shot at reaching in Europe. To me being able to retire in 30s and have a lifetime to yourself, own pursuits and family is much more enticing than a lifetime of neverending 9 to 5 grind no matter how chill it is and how much parental leave they give (it can't beat ∞). But indeed generally Europe is a better place for the less successful/lucky. Not everyone is ambitious and lucky enough to make it in the US, especially outside tech. Good thing capital is mobile, you/your kids don't have to stay in the US forever once you've reached your target.

VirusNewbie• 5 years ago

when I became a dad, I took 7 months of paid parental leave. The mom took 5 months.

That is pretty nice. I get the sense that EU programmers though are living the life of a peasant, small apartments, driving old clunkers, not being able to take lavish vacations.

All the opposite is true for most senior SWEs in america, even those of us (like myself) who never worked at a FAANG or had stock options pay out. I'm talking large luxury houses, able to afford housekeepers/nannies, money to take luxury vacations. Is that really true of EU SWEs too? Or comparable?

softveda• 5 years ago

The real reason is that almost all FAANG category companies and a big number of VC backed startups are HQed in USA and most new projects/development happens there so they have to attract top talent. The next question is why US attracts almost all VC funding and the reason is that it has the most people or other companies that are willing to pay good money for B2C or B2B software.

The other question is almost all FAANGs if any start/continue in US. Many starts outside but once they grow bigger they legally move to US. I think the reason is the US First Amendment, favourable copyright, patent, tax laws etc. Facebook and other social media would have faced a tough time (probably shut down) even in many western countries even as they lack an equivalent of First Amendment.

Now it is the networking effect, US FAANGs earn so much profit that $0.5m developer salaries are a dot in their balance sheet. They are setting the benchmark and it is almost impossible for a company in rest on the world to match it in their home countries.

foobarbaz33• 5 years ago

It's all about laws and how society is run.

The US lax laws and lower fees attract ambitious people who innovate and create new markets. Where software dev is not a cost center, but a profit creator. Europe regulates and hampers incentives for business so software devs keep plodding along in old markets where tech is a cost center.

It can't change in Europe. Their society requires squeezing business to support other things.

aborsy• 5 years ago

Ultimately this!

We can refer to supply and demand. But then you can ask why there is higher demand for high skill workers in US business, and so on.

Institutions, laws and culture in Europe are structured differently.

softwaredoug• 5 years ago

Nobody has brought up how the US is such a homogenous market compared to Europe.

I can start a company in my town, target “Americans”, and have a reasonable chance of attracting users from a population of 330 million.

Much of Europe however focuses on national markets.

As a mundane example, France, UK, Germany all have their own grocery store chains. In the US, while regional chains exist, you also have many nationally well known brands like Kroger, Whole Foods, and Trader Joe’s.

comp_throw7• 5 years ago

Everyone else's explanation is "supply and demand", which is true, but less than fully explanatory. Most of the difference is in demand; the per-capita supply of software engineers (very broadly defined) seems to be pretty similar between the US, UK, and Germany (taken as two of the larger economies in Europe), and even if they weren't there's no reason to expect that the percentage of the population that'd be capable and willing if the market conditions were right would be all that different either.

So why is demand higher in the US? It's not "VC money", VC money is still downstream of the true cause - well-run tech companies in the US have _much higher_ returns on the labor of software engineers, on average, than anywhere else. In a sense, this is a virtuous cycle - as the larger tech companies grow, they develop more and more opportunities where it becomes profitable to hire additional software engineers strictly to optimize their internal processes, putting them further ahead and accelerating the increase in the return on labor.

crate_barre• 5 years ago

What about taxes and social safety net in Europe? Your 60k salary in Europe probably gets you a lot more, whereas in the US a tech hub could easily eat into savings from just rent/mortgage.

Ask HN: Compared to US, why are developer salaries so low in Europe?

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