It's also important to factor in the ability to move later. If I earn a small amount of money in a place with low cost of living, then I can't move to a high cost of living location later. If I earn a large amount in the US in a high cost of living area, then I can still live frugally and move to a low cost of living area later.
Cost of living is fungible. If I buy a property in an expensive city, then I have to invest a lot of my money, but I can also recoup that later if I sell the property. In boom cities the property will appreciate and create more wealth. Other costs like food and transportation provide the opportunity to be significantly frugal if you desire to be. But with the high compensation available to top workers in tech, it's possible to not be frugal and still save a large amount.
> If I earn a small amount of money in a place with low cost of living, then I can't move to a high cost of living location later.
Having done this out of school, I found myself literally borrowing money for first/last/security. Not much money, and not for long, but that's of course because I had a signed contract before I settled on an apartment. Cheap living is pleasant, but it can leave you in a serious cash crunch should you try to move - especially as a young person.
Germany has severe wage compression going on for more than a decade. Companies are making more money every year, but instead of sharing that by increasing wages or sharing equity, they invest the profits (mostly abroad).
The only reason it hasn't blown up yet is that the value of € is kept low by southern European countries that are struggling to stay afloat. Since the living costs remain relatively low, employees don't have to ask for more.
Source: recruiters trying to convince me that €60k is what senior software engineers make in Germany. If you are wondering, that leaves you with €2900/month after taxes and insurance. The wonders of progressive income tax.
60k Euro for a senior? Is that total liquid comp? That's like one fifth of what a senior makes at goofacesoftwhatever. I had no idea German salaries were so low, wow.
It's similar in Amsterdam. I remember being pretty well paid (granted this was 5 years ago) as a software engineer and my salary was around €60k. I will say that, for me, quality of life on that salary felt much better than you'd expect in absolute terms. But then rent and housing costs have gone up quite a bit in the last few years I understand.
When I look at descriptions about the living costs/housing prices in SF and its environment, I think that with, say, EUR 40k one has a better life in Germany (except the really expensive metropolitan areas in Germany as Munich, Stuttgart etc.) than with US$ 100k somewhere around SF.
Right, but if a senior at amagoowhatever is making 350k usd, and a senior in Berlin/münchen is making 70k usd, it's a very, very different conversation. I meant literally five times as much, not a figure of speech...
München is very expensive - if you don't earn a lot of money when living there it is not worth taking the job. On the other hand in Berlin it is much simpler to live cheaply (though the prices for apartments in Berlin have skyrocketed in the last years).
Germany is much worse in this metric compared to UK. I am specifically talking about London.
I get contacted by recruiters from Germany (and other EU countries) quite often and they could never match London contractor pay even remotely.
Germany also has higher taxes and health care coverage is comparable in UK and Germany (both have national healthcare).
I think that's a microcosm of US vs EU salary situation in software engineering. IT job market in London is very different from any place in Europe, I'm not sure why that is.
The living costs in London are enormous. A fellow student has a highly payed analyst job at Goldman Sachs in London, but still does room sharing in a flat somewhere in London.
I know living costs are "enormous". But if you make 3 times more money as you'd do in Berlin, it's still a much better deal.
The point I was making even in top cities in Germany (Munich for example) where living costs are also enormous, salaries are not very competitive compared to SF/NY or London (this only applies to contracting, permanent salaries are low in London).
So be fair and compare to the contractor salary in Tokyo as well. I can assure you that, despite being lower, salaries are quite close to London ones. A 3 time difference is a myth. Unless you are going to compare London engineers to Tokyo combini part time worker.
Yes I meant contractor salary is 3x more than permanent salary for a very senior software engineer in Germany for example. The idea behind this comparison is that you don't really have contractor market in Germany being so active as in London.
In London contractor market is very active and large so you can go from contract to contract basically without gaps and function basically as if you had a perm job but with much higher salary.
In Germany contracts are more sparse and I don't think it's easy to pull off a full time contracting there. The rates are also quite a bit lower (at least from emails I get from time to time about contracts in Netherlands & Germany) so there's that as well.
And of course, Tokyo is much much worse in this respect. I know some people who live in Tokyo so I know that being a programmer there is pretty bad.
> In Germany contracts are more sparse and I don't think it's easy to pull off a full time contracting there. The rates are also quite a bit lower (at least from emails I get from time to time about contracts in Netherlands & Germany) so there's that as well.
A rule of thumb in Germany: If you earn double the amount as a contractor as you would as an employee this is about the same standard of living. In other words: If you don't really earn a lot more as a contractor than as an employee, it is not worth the hazzle.
Another problem for contracting are the laws concerning Scheinselbständigkeit (fictitious self-employment) - cf. https://de.wikipedia.org/wiki/Scheinselbst%C3%A4ndigkeit - which make it really difficult for companies to contract someone for a longer time.
Yes there have been changes like that in UK as well (IR35) aimed at making it difficult for companies to keep hiring contractors for a longer time.
First problem with that was that public sector IT in the UK depends on contractors so they have shot themselves in the foot (already many public agencies started relaxing the rules and working around IR35 to be able to hire anybody).
Also most contractors usually change contract every 6-12 months so it's not a problem. You don't work at a single company for longer than that (1 year 11 months is maximum, after that you get in trouble because of IR35).
> A rule of thumb in Germany: If you earn double the amount as a contractor as you would as an employee this is about the same standard of living
Well what if it is 3 or 4 or even 5 times more. With top market contracts the rates can be really good. If a company urgently needs to hire somebody skilled to come in and do some firefighting you can negotiate a very high daily rate for 6 months contract.
Also keep in mind you pay lower taxes as contractor as most of your income is via dividends. And you can also expense a lot of things you buy if it can be justified as cost of running business.
I don't know why this is getting down voted, it was a reasonable response to the parent explaining how even when you compare it with metrics such as taxes and other benefits (health care), it's not a very competitive deal.
Taxes are much lower in the US too, even if you factor in the cost of health insurance. And if you are expecting "pensions", there's a bridge I'd like to sell.
salary - taxes - costs of living [including health insurance] + expected future revenues [in particular pensions]
Can you provide me evidence that, say, Germany, is so much worse than the USA with respect to this metric?