Yes that is something that comes up on hackernews a lot, and I personally still struggle to accept it.
According to the Daily level system I should be in their band 5, so $210K, but in England I am paid less than half their entry level salary (at current exchange rates).
Americans don't have IQ scores, or any other metric to suggest being approximately 4-8 times the quality of other developed countries workers, so it's hard to just take it and accept that their compensation isn't due to their ability (on average), and that life isn't fair.
I am an American who has worked in Europe for many years at multiple companies, so I feel at least somewhat qualified to give some insight.
Europeans are just as talented technically as Americans, that has never been the issue. As a broad generalization, European business culture is consistently poor at leveraging that talent to generate value, often treating it like factory work. Because American business culture is so efficient and effective at converting engineering talent into revenue, often on the scale of $1M revenue per engineer, they can easily afford to pay the higher wages while still making a fine profit. This has the side effect of making the market for engineering talent extremely competitive.
In short, European technical talent as a resource is often being wasted by poor business practices, which means there is much less money to go around. There is no reason in principle that European engineers could not earn much more in Europe but changing business culture is slow, though some companies are trying.
Yes, I am aware that the salary for an entry level employee on the Daily system is more than the total value I bring to my employer per year. I am paid less than half because I already eat up about 60-70%* of the total income I bring to the company.
The ability to earn American style wages, without trying to emigrate, is entirely out of my hands. There isn't anything I can do short of risk homelessness for myself and my family in the attempt to create a better business (which I am incredibly unlikely to be able to do).
* depending on quarter, project, year by year, etc.
Thanks for this comment. A very interesting observation.
Do you have any thoughts regarding American companies that are established in Europe, shouldn't they be able to introduce that American culture in their European offices?
A very interesting follow-up to an insightful post. I think the answer might lie in why the american business culture is more efficient in the first place.
I believe american business is more fluid, allowing for better arbitrage opportunities that ultimately leads to better arbitrage abilities for its actors.
More law and protection has the same effect as more code: it slows things down because it increases dramatically the amount of requirements you have to contend with. A double edged sword indeed!
