It's the main reason I chose to move to Europe instead of the US, despite potentially making more money in the US. I very much appreciate the labor protections in most EU countries.
You are effectively buying those labour protections with the difference in salary.
Companies could even offer that as an option. We pay you $97k with no labour protections, or $68k but we promise to give you all the labour rights that Germany has, including nice long holidays, unions, no unpaid overtime, can't be fired without cause, etc. Your choice.
(And those figures are the median programmer salary in the USA and Germany respectively)
Short term contracts have pretty big downsides though. It's basically impossible to get a mortgage on a short term contract, or more generally any kind of loan. Even renting is difficult.
That's why many EU countries have pretty strict limitations on short term contracts, like how many you can do in a row. It results in a huge reliance on contractors.
Short term contracts are basically taking the entirety of the ‘shit’ end of the stick for someone else, and are way worse than the median tech job in the US conditions wise.
nope. you dont invest the same way in a 6 month contractor that you are not sure to renew down the road as you would for a full time employee. And this goes both ways. The contractor has not much incentive to perform well either.
> And this goes both ways. The contractor has not much incentive to perform well either.
Can you explain your thoughts here a bit further? The short term contract can be renewed or replaced with a full time contract. This should provide extra incentive to perform well compared to a full time employee (who doesn't have to worry about either), as long the as the company is a good employer.
>The short term contract can be renewed or replaced with a full time contract.
As someone in games, this is exactly the road to getting exploited. "If I work harder and really wow them with this feature, I could get full time work!" meanwhile, there were plans to not renew anyone at the end of the project and to lay off full time workers. But you get a convinient carrot to lure starry-eyed devs with
Your "as long as the company is a good employer" is doing Atlas levels of lifing here.
Burn too much good will and people will treat the contract as a contract. And not a hope to impress the boss for a ft role. Another short term exploitation that turns into long term cynicism.
I don't think that's happening in games or tech, but it's been widely observed that Gen Z is less invested in corporate than ever before (or from the boomer's POV: "nobody wants to work anymore").
Sadly, that's what happens when everything is treated as a resource in exchange for short-term gains. Employees, good will, any morals and ethics - all will be sacrificed on the altar of shareholder value.
Employment figures for Ireland or Germany aren't far from their US counterpart.
And on the other hand, the French government dramatically loosened the rules around layoffs in 2016 (you can let people go as soon as you have a decline in sales over a few month, a negative cash flow over the same period, if their are new competitors on your market, or even just if there's technological change in your sector that justifies getting rid of people). It was 8 years ago and it has had little to no impact on France's unemployment, which is still very high.
I'd rather go through a bigger hoop one time every 10 years or more than the current circus of being let go every 2-3 years and needing to re-interview. The latter just means I spend part of my free time worrying about the next job hop by studying trivia, instead of doing something I actually like to do.
> I could still buy a car, a house, raise a family, have some savings, etc.
You are an outlier. Very few SDEs in EU can afford to raise a family in their own SFH on a single salary while living in a location with any notable IT jobs market.
In Poland, it's not hard. I suspect some other EE countries are similar. Western Europe is harder, with high marginal tax rates and super-expensive real estate.
This actually used not be the case. About six years ago I was in San Francisco for work, and was surprised how inexpensive it was. Like, it wasn’t cheap, but I’d heard it talked up as basically the most expensive place in the world, and it was largely cheaper than Dublin.
Going back recently, it’s a _lot_ more expensive; home has gotten more expensive too, but not at the same rate.
(Some of this is due to the currency thing, of course; the dollar was about as weak as it ever got post-financial crisis in 2018.)
Your mistake there is comparing to Dublin - I live in an expensive Uk city (Edinburgh) and it’s just incredible how expensive going home to Dublin is.
The other bit is that you’re comparing living in Dublin to visiting SF. Rental prices in SF make Dublin seem cheap. You’re still probably financially better off living in SF as an engineer, but I’d rather the quality of life of Ireland/Europe
Oh, sure, like I’m not saying SF was ever _cheap_, but it used to be in the same range of cost as Dublin (a very expensive European city); now it’s way more expensive.
> Rental prices in SF make Dublin seem cheap
Oh, yeah, they definitely do _now_, but pre-Covid it wasn’t as clear-cut.
> You’re still probably financially better off living in SF as an engineer
I think even that probably isn’t totally clear at this stage. If you’re in Big Tech(TM), you’re probably getting on the order of 60-70% pay in Dublin that you’d get in the same role in the same company in Silicon Valley (there’s some variation, but that’s about the usual ratio). If you have to pay SF rent or mortgage (plus property tax) with that, then you may not come ahead. If you can afford to buy outright or with a small mortgage, you’re probably doing better in SF, but even most big tech workers can’t afford that.
(I think the pay gap probably is bigger outside big tech, tho)
> I heard that wges are less than 50% but you end up saving more
Curios regarding how you came up with that conclusion. After paying rent, taxes and buying some groceries from EU senior engineer's ~80k you will generally have enough to maybe buy a new smartphone at the end of the year, not any meaningful amount of savings.
Honestly, true. But possibly not in the way people imagine
People see the difference in wages, but what they miss is a) the amount of fees and extra expenses they have to pay that escape cost of living calculations, b) the "natural" lifestyle inflation that comes with living in the US (maybe summed up by the word consumerism), c) some size/low density related inefficiencies and d) things like educational costs
Now, yes Europe makes it hard on itself a lot by being dumb (see HS2 costs soaring off or the failed German energy policy - not against renewable but their fee structure is stupid)
> Europe is CHEAP compared to America, it's fascinating.
Yup. Cost of living is insanely low compared to the US, even when just comparing hotbeds like Silicon Valley vs London/Berlin/Munich, with the largest factor being housing. Additionally, healthcare costs are far lower as well - there is no such thing as co-pays, surprise bills and whatnot here (although I do admit some things like dental and vision care aren't covered by insurance, but generally still affordable).
Interesting, but as someone who visits the USA sometimes for short work/tourist trips, food and drinks are much cheaper pretty much anywhere except maybe California. And because that's most of what you spend on during short trips, not counting hotels (which are about the same price as Europe) to me the USA is a paradise of cheap drinks and large meals :D (but yeah, Europe wins on quality).
> You are effectively buying those labour protections with the difference in salary.
FWIW, this is not as simple as labour protections being effectively equivalent to $29k. By being a legal requirement and not a choice, that $29k doesn't register to the market as using disposable income, so competitive pressure doesn't inflate prices of everything to compensate. It's strictly better than having a choice between $97k and $68k + labor protections.
Also you are not taxed on that notional 29k, of course (this is one reason that companies often offer in excess of the statutory minimum paid leave etc; it’s essentially an un-taxable benefit). Given the choice between an extra week paid leave at your 100k a year job (notional value is ~2k) or a 2k raise, you’re probably better off taking the leave.
> By being a legal requirement and not a choice, that $29k doesn't register to the market as using disposable income, so competitive pressure doesn't inflate prices of everything to compensate.
In competitive markets prices approach the cost of production rather than absorbing all of the disposable income of the customer. If you have uncompetitive markets, that is a separate problem with its own solutions.
And then you have the other problem. The job pays $29k less because it costs the company that much to avoid those costs, i.e. they're willing to pay that much more to someone in the US to do the same job. That doesn't mean you're getting $29k in value. Some of the money is going to compliance and administration rather than you.
And in general money is worth more than stuff, because if you want the stuff you can buy it with money, but if you don't want that specific stuff then turning it back into money or other stuff at best incurs transaction costs and at worst isn't even achievable.
The notion that you're not taxed on the stuff is also an illusion; the rules apply to everyone in the jurisdiction and the government needs however much money from people to provide the services it provides so if you're not paying it there you're either paying it somewhere else or getting fewer government services.
> In competitive markets prices approach the cost of production rather than absorbing all of the disposable income of the customer. If you have uncompetitive markets, that is a separate problem with its own solutions.
All markets are a bit uncompetitive — if they were not, if they were perfectly elastic and frictionless cows in a vacuum, then not only would anyone making a profit be undercut by someone willing to make less profit, a cycle which would repeat until profits became zero, but so too would wages be undercut by anyone else willing to provide the labour for less, with the same cycle driving income to subsistence + internet in our present case (or pennies per kloc when LLMs get better).
Oh sure, but there's a vast difference between "people make $1000 more and landlords take $0.05 on the dollar" and "people make $1000 more and landlords take $0.95 on the dollar".
Profit margins are also not inherently determined by wages in some other sector. If a bag clip costs $1 and $0.25 of that is profit and $0.75 is cost of labor, the profit margin clearly isn't zero. If nurses then get a pay raise that came out of reduced overhead rather than higher prices, the unrelated $1 item can profitably be produced for the same price it always was.
In can, indeed, go the other way. Some item is $1.00, $0.75 of that is labor, you eliminate some regulatory overhead which reduces the company's labor costs (e.g. need fewer HR/lawyers) and now the labor costs fall to $0.60. But this also reduces barriers to entry to the market, so competition increases, the profit component drops to $0.20 and now the item costs $0.80 instead of $1.00.
The way I usually phrase the problem here is that the market strives to push average disposable income to zero. Average here means that there will be people with various degree of spending money surplus (the rich) and those not able to afford even the essentials (the poor). This is a stable(ish) state, even as people move up and down the wealth ladder. However, when suddenly a large chunk of population gets extra disposable income - say a hypothetical UBI experiment (or not so hypothetical universal or near-universal social handouts), or as two-income household model gains popularity in a country, or (indirectly) some innovation creates a new, widely-applicable efficiency - then the market absolutely swoops in and eats all the average surplus.
You mention some regulatory overhead being eliminated, but more often than not, a surplus of disposable income enables passing further regulatory requirements that improve (or at least purport to) safety or quality of products and services, and that were hitherto too costly to implement. Then, most sectors aren't nearly competitive enough to keep the margins to zero, and some degree of price fixing is a natural thing that happens without any actual collusion, so things get more expensive (per unit) (or don't get cheaper). Then, like with new regulations, you also get new products and services that had no market yesterday, become popular today, and a de-facto requirement of living tomorrow. Etc.
> Oh sure, but there's a vast difference between "people make $1000 more and landlords take $0.05 on the dollar" and "people make $1000 more and landlords take $0.95 on the dollar".
If I parse this correctly, then the latter is definitely the case. Real estate is the prime force that eats all surplus disposable income. Houses and apartments get smaller, get built from worse and worse materials, using inferior techniques, and designed for ever shorter life span, all while getting more and more expensive. Any sudden bump in disposable income across the population is, first and foremost, likely to be eaten by rent.
> However, when suddenly a large chunk of population gets extra disposable income - say a hypothetical UBI experiment (or not so hypothetical universal or near-universal social handouts), or as two-income household model gains popularity in a country, or (indirectly) some innovation creates a new, widely-applicable efficiency - then the market absolutely swoops in and eats all the average surplus.
My argument is that this is not a feature of markets but rather government action.
The rise of two-income households is a great example. Historically only the husband worked for money and the wife would do domestic work like washing clothes etc. Now the washing machine washes the clothes, which takes 15 minutes of human labor instead of four hours, and the labor is then spent working a job that does something else. Meanwhile the family has more money, which allows them to buy those same additional products and service now being provided.
And yet this hasn't happened. The surplus went somewhere else. You already know where:
> You mention some regulatory overhead being eliminated, but more often than not, a surplus of disposable income enables passing further regulatory requirements that improve (or at least purport to) safety or quality of products and services
It "enables" that to happen, but we as a populace are not actually required to do that. And when we do, the overhead eats the surplus. So maybe we shouldn't?
> If I parse this correctly, then the latter is definitely the case. Real estate is the prime force that eats all surplus disposable income.
Oh, absolutely. This is why uncompetitive markets are a problem.
Real estate is an unusual case, because the really isn't anyone with a monopoly on real estate. The supply constraint comes directly from the government through zoning rules. We effectively have a cartel whose board of directors is the zoning board.
In a free market, if wages go up, people who had been living with their parents will want to get their own place, so they would use the extra money they're making to do that, and the extra money would pay construction companies to build more housing. But if that's prohibited by law then the extra money only goes to bid up the price of existing housing, people don't get housing who didn't have it before because new housing is not created, and the money just goes to landlords.
That is an independent problem that we badly need to solve, because it isn't just a problem when people make more money. If you get more benefits, the same thing happens. If companies all start providing free daycare, people save the money they'd been using to pay for daycare, they want to use the money to get their own place, rents go up. If prices go down, the same thing happens. Computers get cheaper, you can get a suitable one for $400 instead of $2000, landlords take most of the difference. This needs to be fixed or it eats any surplus that would otherwise go to the middle class. It's a huge problem, but it's a solvable problem. Build more housing.
And either way it doesn't affect whether you should prefer cash or "benefits" as compensation, because when a market with an artificial supply constraint is eating the bulk of any surplus, it would just as well eat the surplus created by benefits too. At which point we're back to "money is better than arbitrary stuff" because turning money into stuff you want has lower deadweight friction losses than turning stuff you want less into stuff you want more.
> Real estate is an unusual case, because the really isn't anyone with a monopoly on real estate. The supply constraint comes directly from the government through zoning rules. We effectively have a cartel whose board of directors is the zoning board.
It happens basically everywhere, even when the rules are different. If I understand correctly, the primary limit in the UK is there's not enough builders, which is not to say the government isn't in the way as that's despite it also having constant planning issues with regard to the "green belt"; likewise in modern Germany, my understanding is not enough builders (and again yes the government could be better because bureaucracy is very slow, but they're not the limiting factor); likewise DDR (not even trying to be a free market) where the government was organising the construction work and trying to do it cheap and fast but there still wasn't enough.
Of course you'd want to put those terms in the employment contract, not just a verbal promise. Surely you wouldn't get exactly the same protection as in another country with a completely different legal system, but at least you could get part of it.
And yeah, they could terminate the contract, but they would still be bound by its terms that say how they can do that, with how much notice, for what reasons, and how much they will owe you.
Contract law is strong. If a company deliberately gave the employee lots of rights in an employment contract (in return for less pay), a court would hold the company to that later whilst it was solvent, even if company management later changes it's approach.
No, you are not buying that in your salary. The cost of living is shared more evenly in most European countries. You may consider it an insurance, and most insurance policies don't work if there is only one buyer.
You are effectively buying those labour protections with the difference in salary.
There may be some truth to this, but it's not as stark as some think.
The average cost of a "moderate" house in.. say, Palo Alto is around $3M USD. Those are typically older houses, smaller lots, less desirable neighbourhoods.
Everything is more expensive in such an area. Property tax on that $3M USD house is likely going to be about $20k USD per year, one may as well say an additional $2000/month. That property tax alone is more than most people pay for mortgages in any other place in the US.
I once compared my Ottawa, ON, Canada salary to at typical, comparable one in SV. After looking at the cost of housing, and living, I determined that even though I was making 1/3 the salary? I was taking home more.
Now of course, there is one key difference here. If you don't rent, and do buy, some of that missing "take home" goes into property which does have value. But if you're a renter? If your primary cost (housing) isn't coming back to you in some way?
That SV salary is actually a lot less than you think.
I'd take $100kUSD in Ottawa, over $200kUSD, maybe even $300kUSD in SV, if I wasn't able to buy. EG, forced to rent. And I'd have more money in my pocket in Ottawa, at end of day.
Oh, and that massive property tax certainly isn't recoverable. You're paying some of that whether you rent (because the landlord does), or if you buy.
I reached a similar conclusion back when I was planning what to do if the Brexit referendum went the wrong way (it did).
Even ignoring the labour rights issues (because I didn't really consider them at the time), rent and other costs were high enough that I was seriously considering a private pilot's license and a small aircraft for commuting, because that would allow a nice easy fast commute from somewhere that wasn't priced absurdly. That wouldn't actually have worked either, but I decided against the USA well before pursuing that to more than a superficial calculation — if I had, then it wouldn't have taken until Scott Manley's videos showing me the flight considerations[0] in the area, to learn why this wasn't going to happen.
[0] "I know, I'll commute by light aircraft to somewhere in the middle of a city that has a huge international airport and is 'one of the busiest airspace in the world'", yeah, no https://johmathe.github.io/flying_bay_tour.html
A big section of this is the petrodollar creating an perversly stong USD.
As that dies off and the USD rebalances to a post American empire equilibrium, housing priced in USD will be far more similar everywhere, exactly the same way it did post British and French empires. (back when 1gbp would buy you 10usd)
I don't get the reasoning here. Costs in SV are a direct result of the economic powerhouse it is, and the size of the local population. A lot of people cite all sorts of other reasons, but those reasons exist in every other US state to a degree, and yet many of those states do not have high property costs.
It's all about population density compared with economic might.
If the USD was to crash tomorrow, people in SV would still draw their salaries, housing would still be the same price relative to them. You're not going to erase costs due to population density and economic drive, because a dollar drops a bit.
Not to mention, the UK has a GDP basically half the US per capita. That has nothing to do with a petro dollar or not. I really see the "petro dollar" thing is a talking point, without the validity to back it up.
generally speaking USD is going to lose about 50% of its value as the petrodollar and yen carry trade unwind over the next couple of decades.
So to understand what is actually being earnt and spent in the US in a global context, just divide USD prices by 2, then you can see e.g. the US and UK gdp per capita are basically the same.
Its obviously far more complex than this, but that basic rule of thumb still holds even when you add in all the complexity.
The US is not Silicon Valley. You have a much better take home salary if you want to buy a house elsewhere in the US.
You can also choose to live in California for a few years as a renter if you are young, save money and go live elsewhere with the savings. Ask me how I know you can do that...
Yeh this person's argument makes no sense in the context of today's Ontario, but did about 5+ years ago. Housing price inflation here has made the lower SWE salaries here very uncompetitive.
And it's not just the house itself, goods and services associated with real estate have blown up with it. Home renovations and maintenance work on your home (if you can even find a contractor) are just stupid. So even if you bought in years ago (like I did), the carrying costs are very high.
You need to compare like for like. If you're talking about homes in Kanata, then you need to look at homes the same distance in the East Bay where you can buy for under $1M as well.
A $3M home in Palo Alto is comparable to a Ottawa home in the core of the city. And not a townhome, a detached single family home.
If you're going to compare in this way, wouldn't 'most expensive in the metro area' be San Fransisco compared to 'most expensive in the metro area' downtown Ottawa?
Palo Alto is like Kanata, price wise. Ottawa core is like San Fran.
The higher wages in the US are not related to labour protections. They are related to vastly higher wages in tech because of big corps pushing up those wages to have the best of the best working for them.
Proof is simple: Since a lot of low paying jobs in the US have no labour protections.
Or look at what Tesla does in Texas, with the "unprotected" third party companies that don't have labour protections. They are vastly worse off than those that work for Tesla ( since the country required minimum protections and Tesla didn't apply that to contractors)
> Proof is simple: Since a lot of low paying jobs in the US have no labour protections.
That doesn't follow. The low paying jobs exist because the value to the employer of hiring someone exceeds the low pay. For those jobs, if the employer is required to provide paid vacation etc. then it can push the cost of hiring someone over the cost of offshoring the job or automating it, so the alternative then isn't high pay vs. low pay, it's have a job vs. no job.
Also, many of the costs are in proportion to the pay, e.g. the cost of a vacation day is the cost of paying someone else to cover, so the difference will often be a percentage rather than a fixed amount. Then it's no surprise that skilled professionals get paid more than unskilled labor, but that doesn't mean the unskilled laborers can't still be making more than they would be in the alternative where the company had higher costs to hire them.
> Or look at what Tesla does in Texas, with the "unprotected" third party companies that don't have labour protections. They are vastly worse off than those that work for Tesla ( since the country required minimum protections and Tesla didn't apply that to contractors)
They have fewer employee benefits, but in return contractors generally get higher hourly wages. One way or another they have to convince the worker to work for them instead of somebody else.
You're totally missing the point. Tesla set their factory and the poorest area in Texas. They wanted worker protections because they were scared to be exploited by a big corporation.
> ‘I’m going to die in this factory’: Tesla Texas gigafactory construction workers are suing over wage theft and dangerous conditions
But sure...
> They have fewer employee benefits, but in return contractors generally get higher hourly wages. One way or another they have to convince the worker to work for them instead of somebody else.
"generally"
> Other whistleblowers will complain that they were either not paid at all for their work, or were not given proper overtime compensation. Some who sacrificed their time to work over Thanksgiving say that they were never paid the promised double wage, according to the case referral.
Next time. Please come with sources. Because I couldn't find any credible sources for your claims...
Whether software engineers making $750k/year is a bubble has nothing to do with my argument at all. The average annual wages in the US are ~$77,000, compared to ~$55,000 for France or the UK.
For software engineers, it absolutely matters. For the same reason it’s going to be a pretty weird discussion about Actor/Actress pay if you just ignore Hollywood.
The bubble means you currently get more in San Francisco, sure, but take the bubble away and you'd still expect the US average to be higher than the EU average as it is in other industries where there isn't a bubble.
The problem is that this additional salary in turns inflates the housing market or tuition fees, and at the end of the day you're not earning that much in exchange for the protection you gave up.
And in countries such as Germany you are legally required to be an employee if you only work for one company. The government will sue the company or if not reachable, they will sue the employee.
Belgian healthcare started like that. First, workers personally kept apart a part of their wages. Then people in 1 factory pooled their money together. Then clusters of factories united into 'verbonden', a union-like construct . These where, like a lot of things at the time, grouped by world view:. Christian, socialist, ...
After a while, the governement wanted in, joined the verbonden to landsbonden (Country level insurers grouped by world view) and put themselves in the money stream.
The end result is Belgium having a weird construction half way between private health insurance and country-level health insurance.
Co-op is the word you’re looking for. These co-ops went far beyond just healthcare after all. They owned bakeries, pharmacies, entertainment facilities for the workers, …
There isn't really a good translation, the concept doesn't really exist in other countries. They have aspects of unions, co-ops, governemental and political organisations. In the past, they had their own legal status. Today, the EU forced them to become real corporations, and e.g. had them split of the travel aspects from the health insurance aspects.
Remember folks: a company's interests are directly opposite to yours. If it makes enough money to not hold their promise, they will.
I don't want promises from an actor that is structurally infinitely more powerful than I ever will be. This is why not only must this be on contract and enforceable at any time, but individualistic mindset is always against our interests, because it's easy to promise to one who will be able to defend themselves and plunder another one who can't.
