> They are, but do not forget that in Europe, our take-home wages already have healthcare, social security and pension contributions taken care of, and our housing and general cost of living (e.g. groceries) are also vastly lower than in the US.
Well, Europe is big. Cost of living differ between different places.
You can look at measures like 'disposable income' or similar metrics.
Doesn't really matter too much what specific metric you use, US incomes are higher.
Thanks for the source you linked to. To quote them:
> Changing the price deflator used to adjust wages for inflation can boost measured wage growth. But wage growth would still lag far behind growth in economywide productivity, [...]
They are either using difference inflation metrics for productivity vs wages, or their definition of 'far' is different from mine.
Since 1950, the amount of compensation going to labour has fluctuated around 59% - 65% of total GDP in the US. A fairly narrow range; and no reason to say anything like 'lag[ging] far behind'.
Because we are looking at a ratio, it doesn't matter how or even whether we adjust for inflation here.
So all productivity improvements that make it into GDP also make it proportionally into wages. You can't really ask for more, can you?
Whether wages have stagnated is then a question of whether real GDP has stagnated. And, alas, unions aren't really known for driving productivity in the US. Just the opposite.
Of course, you can argue about median vs average. And that's a very valid discussion to have.
> Having to spend half your available income for things that are automatically taken on your salary in Europe is _the_ major reason Americans are paid considerably more
Are you thinking of anything beyond healthcare? Youre correct that salaries and GDP are difficult to compare, but US disposable income pc is dramatically higher than almost anywhere in Europe, with the couple exceptions being tiny enclaves like Luxembourg or petrostates like Norway. Subtracting healthcare spending doesn't come close to closing the gap btwn the US and eg France.
And this isn't explicable by retirement either, as Actual Individual Consumption is also dramatically higher in the US.
Hell, I'm not even sure your hypothesis makes sense at first glance. If the salary difference was simply a matter of shifting govt spending into the personal ledger, wouldn't pretax incomes be as high in Europe? After all, much of the layoffs we're talking about are high-income enough that the employees would surely be net-payers in any mildly progressive tax system.
> In continental Europe, nobody expects it to work like that. ... To someone who grew up in that culture, your wild-west thinking seems a bit, well, primitive? Or uncivilized?
One should challenge that setup by asking the question: has contintental Europe's policies resulted in high wages?
France has far lower wages than the US, with 1/4 to 1/5 the wage growth rate of the US over the last two decades. Germany, Britain, Spain, Portugal, Greece, Italy, Austria, Belgium, all have considerably lower wages than the US.
Continental Europe also includes dozens of nations that are dramatically poorer than the US, both in terms of median income and median household net worth.
Wouldn't it be more primitive or uncivilized to be using the French approach, since it has resulted in dramatically lower wage growth for decades now? Wage growth in France averaged 0.5% annually the prior two decades. In the US, 2.5% wage growth is considered very slow, with 3.5% to 4% being average in the 1999-2009 time frame. If their system works so well, where's the wage growth (and we're talking about the last 20 years, not a blip of time)?
> I am honestly very bitter about Americans glorifying the European system while happily taking home 2/3rds of their 100k+ developer salaries and enjoying much lower prices of everything.
I agree, although I think the ignorance extends to Europeans as well. Europeans are often surprised to hear that American software professional salaries are ~60% higher than European salaries even after adjusting for taxes, healthcare, vacation, etc. Some will argue that the US cost of living is more expensive, but they're almost always comparing some major US metropolis with some European village or perhaps an Eastern European city. I've seen other arguments that the cost of housing in the US is comparable or more expensive, but they're typically comparing some relatively tiny European apartment with a much larger American home. Europeans seem to fixate on medical bankruptcies, as though these are commonplace for upper-middleclass Americans.
This was all a surprise to me, an American, who has tried earnestly to live in Western Europe for a few years, but found that I can either live in Europe or I can travel in Europe but trying to do both would likely be economically infeasible (even if I can find gainful work as a software professional, it would specifically be difficult for my wife who isn't in a hot field). Fortunately, now that remote work is catching on, it seems likely that my wife and I will be able to do more frequent 1-3 month stints in Europe while remaining employed by our American companies.
To be clear, I think the United States healthcare system should be reformed, because it doesn't serve the poorest Americans very well. However, the US healthcare system works pretty well for the upper middle class (if not the whole of the middle class) and above, contrary to perceptions I frequently hear from some Americans and Europeans.
> My salary is low for American standards but I can rely on public hospitals, public schools, and public transportation systems. I do not need to save for retirement either. Or for my kids tuition.
I think about this quite a bit, while the median middle class salary is higher in the US, the burden to fund everything out of pocket here is enormous. If salaries are 10-20% higher in the US, much of that goes out the window to fund things like health care, retirement, higher education, daycare/pre-K education, high rents, etc. Things that most Europeans take for granted. All of a sudden that 10-20% gap seems much smaller.
Also keep in mind that not everyone working in tech in the US is making SV level salaries.
> Maybe, but the cost of living in Europe is already considerably higher than in the US (barring of course the popular but disingenuous comparisons between SF/NYC and rural Europe).
Living costs in Europe are incredibly uneven, like they are in the states. Denmark is much more expensive than next door Netherlands, for example, which is actually quite reasonable (and perhaps Americans might even find it cheap outside of Amsterdam).
> I don't think we are content with lower wages. It's just that you cannot really compare EU-US just like that. You need to compare cost of living, entirely. Paid leave. Public holiday. College fees. Working time.
None of this justifies the lower pay compared to US tech where it's very common to have a good medical coverage and much higher standards of living. It's not like France or Germany are cheap for the average french or german. All things considered, french and germans end up taking home less than their american counterparts. Maybe this worked well in the last 50 years in Europe, but it most certainly won't in the next 30 when you see fewer younger people entering the workforce and the pension and medical system won't be sustained in Europe.
Europe is about bringing everyone to the average. It is not a land of extremes like the US. Your $150k example salary is super super high for Europe so it's going to get pushed way down to be closer to the average.
If you take your example but change the salary to any number in the lower / middle class range, you are going to be far better off.
That is just the nature of the EU vs the US. If you're rich, the US is great. If you're not rich, you're probably better off in Europe.
> Europe is catching up on the US average income too ... It means that recent US policy is not working in favour of the average citizen.
Western Europe isn't seeing faster wage growth than the US. Economically the US is pulling away from Germany, Britain, Italy and France. US income and GDP growth rates have been far higher the last 10 and 20 years than most of its peers.
Economically speaking, Germany's GDP hasn't net expanded since 2007, when it was $3.44 trillion (it was $3.46 trillion for 2016). France and Britain are similar. French GDP was $2.66 trillion in 2007, it was $2.46 trillion in 2016.
In that time, 2007 to 2016, the US added GDP larger than the entire German economy (about $4.5 trillion).
It's practically impossible to generate broad wage gains if you don't grow the whole economic pie. That's why French wages have been so stagnant for so long, despite all the supposedly labor friendly approaches there.
The US middle class has contracted because more people have moved up and out of the middle class and into the upper classes, than have moved down and out (that's true over 10, 20, 30 years of time):
The formerly extremely poor 1/2 of Europe in the East has seen dramatic improvement since the end of the USSR. You can see that dramatic improvement in several countries like Czech, Slovakia, Romania (more recently), etc. Many are still doing very poorly at growing their economies, including Bulgaria, Moldova, Hungary, Belarus, Macedonia, Albania, Ukraine, Croatia, Bosnia.
The median incomes of Latvia and Lithuania are still around 1/4 that of the US, Estonia is closer to 1/3 that of the US.
It is in the U.S. too, we just struggle to acknowledge it because then we would also have to start asking hard questions about how Europeans have that average salary but also universal health care, public transportation, and a social safety net.
Where are you getting that from? Average American wages are $63,000 per worker. Higher than any country besides Switzerland, Iceland and Luxembourg[1]. To compare to this five largest EU members: Americans are paid 28% higher than Germans, 41% higher than Frenchmen, 59% higher than Brits, and 64% higher than Italians and Spaniards.
...by American standards. Ask anyone in Northern Europe if they are happy with their salary and they will almost say yes. It's America that is distorting everything with their ridiculous salaries.
> the living standard in Europe are considerably lower than in the US.
Citation needed, unless you're being sarcastic throughout your post (can't tell, Poe's law?).
If I get the 'rona, I might die but at least I won't go bankrupt.
Anyway, GDP per capita in Europe is not the best measure, because there's still a massive economic disparity within Europe; the east is still feeling the effects of the Soviet Union (and Russia's influence), the south has been struggling financially for a long while now (Greece had to be bailed out). The West and North are doing all right for themselves; Germany has a GDP per capita of $46K, 10K higher than the number you cited. Netherlands is even higher at $52K, Switzerland does $82K, Ireland, the base of operations for a lot of US companies has $89K and Luxembourg, a tiny country, trounces the whole world at $114K per capita.
> But Europe has far lower professional salaries than the US.
We don't have to pay ludicrous amounts for healthcare though, and rents are also way way WAY lower here than in the US - even London, Berlin and Munich are nowhere near US levels.
> That can definitely be true, because in Europe the size of the salary matters much less than in the US[1].
I don't believe in that. Yes, the housing prices might scale with the income. However if I want to buy a car, it's about the same price here and there. Just that my income is lower, and I have to save a lot longer for that. The same is true for all electronics devices, going to vacation, etc.
> People don't realise how high incomes in the US are relative to the rest of the world.
Gross definitely, but net (after taxes, healthcare, housing and other fixed costs)... not so sure. High CoL - seriously even as someone who lives in Munich, US housing prices are utterly incomprehensible, just how the fuck do y'all even manage to survive?! -, high costs for transportation, the utter madness that is US healthcare, hundreds of dollars for cable TV, having to save for your pension or student loans.
I'd wager that even after accounting for taxes, most Europeans have more money in their pocket than Americans working in the same field.
(And obviously, all of us have it vastly better than 99% of people in Africa)
> Salaries are dramatically lower in Europe and taxes higher — so even when all of these benefits are tallied, Americans still have more disposable income along with lower unemployment and a far more robust economy.
I wonder what you mean by "Americans", I really don't see how a minimum wage American part time worker has "more disposable income" than someone in Europe with any measure of health insurance?
Minimizing America may be fashionable, but the awful situation of a lot of working people in America is not at all made up, and, no, the money doesn't compensate it. It just compensates it (maybe) for software engineers.
Well, Europe is big. Cost of living differ between different places.
You can look at measures like 'disposable income' or similar metrics.
Doesn't really matter too much what specific metric you use, US incomes are higher.
Thanks for the source you linked to. To quote them:
> Changing the price deflator used to adjust wages for inflation can boost measured wage growth. But wage growth would still lag far behind growth in economywide productivity, [...]
They are either using difference inflation metrics for productivity vs wages, or their definition of 'far' is different from mine.
Have a look at the labour share of gdp. Eg at https://fred.stlouisfed.org/series/LABSHPUSA156NRUG or https://taxfoundation.org/labor-share-net-income-within-hist...
Since 1950, the amount of compensation going to labour has fluctuated around 59% - 65% of total GDP in the US. A fairly narrow range; and no reason to say anything like 'lag[ging] far behind'.
Because we are looking at a ratio, it doesn't matter how or even whether we adjust for inflation here.
So all productivity improvements that make it into GDP also make it proportionally into wages. You can't really ask for more, can you?
Whether wages have stagnated is then a question of whether real GDP has stagnated. And, alas, unions aren't really known for driving productivity in the US. Just the opposite.
Of course, you can argue about median vs average. And that's a very valid discussion to have.
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