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Cake day: June 1st, 2023

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  • The developers get less, but it ends up costing more to employ people in the EU. In the US, the rule of thumb - for white collar, non-executive jobs, at least - is 1.4x the salary for TCE (and it’s often reasonable to round up to 1.5). For EU employees, it’s between 1.5 and up to 1.8. Norway is 1.7; I don’t know what Sweden is, but I’d assumed it’s around the same.

    So I get where you’re coming from, but this is really not true, and I’ll provide you with some numbers as to why it is not true.

    Let’s check out the median salaries for senior engineers in Stockholm using levels.fyi: https://www.levels.fyi/t/software-engineer/levels/senior/locations/greater-stockholm

    As levels.fyi automatically converts to local currency, this is specified as 800k SEK, or 76k USD in today’s currency exchange. We can multiply that by the factor you provided for Norway, giving us 137k USD.

    Now let’s plug in the numbers for San Francisco: https://www.levels.fyi/t/software-engineer/levels/senior/locations/san-francisco-bay-area

    3.375m SEK, or 321k USD. Using your factor for the U.S, we get 448k USD.

    The contrast is of course the largest for San Francisco which is the most high-paying area for engineers, but the thought experiment is basically replicable for any city with a tech scene in the U.S, which is most comparable to Stockholm, which is the most expensive city in Sweden and which has a tech scene.

    Essentially the TCE cannot explain the discrepancy in salaries in tech between Europe and the U.S.

    Before we inevitably go there, COL does not adequately explain it either - San Francisco is very expensive, but Stockholm is far from being a cheap place to live either. Even when adjusting for this factor, the total amount left after living expenses is quite significantly higher for someone on a U.S salary.

    It’s basically a fool’s errand to try to logically explain this discrepancy. The honest answer is that capitalism follows no strict logic, and pay becomes whatever the people with the money can get away with. They just happen to be able to get away with far less in Europe.