Why are London salaries low compared to US salaries?
Why is London comp so much lower than pay in the US, even within the same company. Cost of living seems to be about the same as probably NY/SF
Jan 24, 2023Jan 24, 2023
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Comments (29)
This has been discussed countless times on WSO and reddit. the search function is helpful.
just a few points
1) Salaries are not always just a function of FX and the same in all countries. It is a complex calculation for most employers.
2) CoL is not the same, I live in both locations.
3) Cultural aspects that go beyond just compensation. I.e. in the US, families would have to save early to pay back their own student loans or save for their kids' tuition that will come later on. tuition in Europe is non-existent or much lower. Education is significantly more expensive in the US.
Educated/qualifying staff move around less in Europe.
A lot of public services in Europe are subsidized, from health care, child care, further education, (..) - the employees simply don't have to rely on private services as much and don't "need" as much in comp. Whether this will remain the same in the future (current NHS debate) remains to be seen.
Europe is a great location, for the right type of person and the right level of income. Minimum wage earners or a good chunk of the middle class fare better in Europe. They still get most of the benefits without the time/capital investment of education or long-term debt. The US is more capital intense but the rewards can be infinitely higher than the top level rewards in Europe.
The US is better for top earners, highly educated staff, people who come from money or simply have very high aspirations. The American Dream is still something people work hard for, and I believe is still something that is achievable despite higher CoL and real estate valuations.
Also - why would (many) care about this? the vast majority of people will never have the chance to live and work on both sides of the pond.
It's a little more complicated than that. You really have to talk about net taxes for comparison purposes.
If you pay 35% in the U.S. but don't get free services, you might be a lot closer than you think to someone paying 45% in the UK but getting free healthcare, education, etc. After netting out services received, European taxpayers and U.S. payers don't look all that dissimilar. So I don't think that really explains it but I do agree with a lot of your other comments.
yes, I agree that my post was a generalized view.
But all the aspects of the European construct are "for life". You don't have to work in order to gain those benefits. It's a generational contract you are entering where the following generation is paying for everything the elderly need. (limited by a few things i.e. you can't be rich and ask for benefits, etc).
This is fundamental and very different from the US.
- If a family in the UK (or another EU country) has no means to send their children to an educational institution where everyone else is going - the state/country will make sure they can do so. This simply won't work for the majority of cases in the US.
- You can be on minimum wage in Stockholm and your child can still attend university, if they are otherwise eligible and qualified.
- If you are homeless in London, there are various places and government services that will take you and everyone else in. Last time I was in Los Angeles, I was surprised that the problem grew bigger and not smaller.
- If you are a recent immigrant or displaced due to war/famine/.. , your family would have very similar opportunities as anyone else in most EU nations.
(I am not judging or saying this is right or wrong in the US, but you simply won't need "very high salaries" in order to survive in most of Europe. some will like this, some will feel this is limiting)
Also, my gf and I are not married and we don't have any children yet. So, we don't actually need any services provided. This may change going forward, but I don't know if the public services are any good or not.
There is a lot of truth in this statement - having seen friends and family on both sides, Europeans are often defending this lifestyle, they act anti-capitalist. My own friends in Europe "like" paying taxes and believe it serves the greater good.. wtf
PPP is 1.45 between GBP / USD
Af that level esp when you look at total comp there is not much in it
When the pounds was at 1.8, everyone felt the opposite
Lived in both places and no question COL is cheaper in London. And this whole idea Europeans want to be poor doesn't apply to bankers. Never seen a more aggressive lot than my reports across the pond.
I'll answer this question, worked in both NYC and London, and Now work in Sydney and consult in Los Angeles.
People in the UK don't make worse than. Firstly most Americans in finance lie about their salary, if you haven't worked this out yet, you are a clown, secondly, salaries are low in the UK but most people don't work as salaried staff, they work as day rate contractors. For example, my baby momma who works in London is a date rate contractor for amazon. Her job pays about 90k sterling a year as salary staff, but she doesn't make that, she makes around 600 quid per day, so overall she makes about 150k the same applies to people in finance. Most people move to UK from US on visas are on visas, and are not allowed legally to be an umbrella at-will day rate contractor, so that's why it appears low. Be honest bro, plenty of people can afford the London lifestyle and make big coin, hence why its expensive like New York.
You can work as a contractor in US and do quite well, but health insurance is not included, whilst everywhere else this is not a problem. People in UK aren't paying off large student loans as well.
Everyone in US lies about their salary, New York ex-pats even have a term for it "60/40 Rule" see if you can work out that means. All us English, Australians and South Africans have a good laugh about it.
The big bucks are in Sydney and Singapore in 2023, but you clowns wouldn't know that.
If you had live in the UK from USA and worked in IB or some fund you would have met Americans who are doing very well for themselves in the UK. But most of you are plebs from Ohio, so you'll never know.
Best,
Bruh what even is this response. Emotional roller-coaster with the random insults but then signs off with "best".....
this is stupid. for someone with such claimed experience, you would know most people in london are full time employees. i've not seen many (if any) 'contractors' on FO roles. sure back office or shit like risk but salaries aren't relevant at that level here because they don't fall into the high earner bracket, which is what we ultimately debate
Also I should point out that USA is the most communist country i've ever lived in.
On purchasing power basis, salaries are very similar. Can order same number of Big Macs in London as in US (worked in both locations). Nominal FX doesn't play a role.
I'll weigh in among others, Norwegian born and raised, worked in London for a while and been in the US for 6yrs now.
FX plays somewhat of a role, many funds pay their staff in USD and can fall victim to the FX rates they end up seeing on their accounts. CoL in the UK is horrific, for comparison, those who want to rent an apartment in London now have to bid on their monthly rent. So much so that now it's just accepted you'll pay around 500GBP a month extra just so you can get the apartment you want -not including bills (which are doubly as bad atm) and taxes (getting even higher now). NYC and SF are expensive there's no denying that but the CoL otherwise pales in comparison to the UK
In my opinion and having spoken with friends who are still in the UK along with my own experience - I struggle to see why people continue to put up with what the UK offers. The comp is better than most if not all industries in the UK this is true, however there is far better in mainland Europe and frankly anywhere else.
The NHS is a great metaphor for the UK as a whole -it's like having the old family dog, it's ancient and is only alive from being pumped full of steroids and limps slowly about the house with cataracts in both eyes not knowing where it is and frequently shits in and around the house. In other words, the UK is so full of its traditions that it refuses to drop that the rest of the world has passed it by but it hasn't noticed this yet.
I would 100% agree with the principal of the American dream still being very much alive. I self sponsored my visa and set up my own advisory in the US, I've had to grind it out to make it happen but I don't think there's another country that rewards entrepreneurs as much as the US does. The level of opportunity that the US presents to workers is above and beyond the UK especially the comp that comes with it. If I set up my business in the UK the level of taxation I would have faced would turn me off from doing it entirely
Having caught up with some friends while I was over last week, they have all started to explore moving overseas for work.
Bruv you are a Real Estate agent, in an industry that is about to fall off a cliff and self-sponsored EB-5 meaning you have loads of money from daddy. Good for you though bro but don't compare yourself to other people.
If you knew anything about Finance, which you don't you would know that Tax, in New York is about the same as in London, unless you laundering through Real Estate schemes which you might be doing here.
There is a variety of visa that would work, doesn't have to be EB5. E1/2 would also work or maybe even L.
Nice, appreciate the response bud.
Not a realtor, but work in REPE. We're well positioned and have taken into account multiple outcomes over the coming year or so, but there's always a lot of armageddon speak from folks like yourself regarding the future. We'll see a dip sure, but like I touched on before we're well positioned -appreciate you thinking of me though. I did weigh in with others and it is my opinion, you're not obliged to take it as gospel though.
I'm more than a few yrs into my career in finance, but I wouldn't call myself a wizard by any stretch, even so the numbers in CRE are pretty simple! That said I am aware of the tax landscape and how it works in regards to me and my work; I'm not NY based but do know that NY is comparable to London etc.
I'm not inclined to touch the laundering side you mentioned, a little too much work to jump through hoops, best to keep it simple and do what works and do it well.
Hope you went for that job at that bank and are enjoying it too bud.
I agree with your post, but would like to add a few things
- If someone spends years in the UK, buying a property would normally be the right way forward. Not renting. Now, I understand not every London borough is a target destination due to cost. But I have seen so many expats from Australia, NZ or other nations buy a property and sell it at a significant profit 6-9 years down the road. Expats are normally highly educated professionals who command better salaries who easily qualify for the mortgage. This won't work for shorter stays in the UK, but they wouldn't care as much about the cost of rent then.
I am guessing you are on the E2 visa as Norway qualifies in the treaty. Congrats on setting up and running a business in the US, but that isn't something the regular employee would be willing or able to do. You are an entrepreneur with a different appetite for risk. A "normal" employee would take the investment funds and buy a house or start a family or something. I am not saying what you did is not a good idea, it just isn't for everyone. It would also take some time for the average employee to figure how to do this. Running a business in a foreign country is not the same as being PAYE in London.
(back of the envelope calc for E visa would realistically be 100K-150K investment or more, 5-8K legal, 3-5K flights/travel, significant time and effort and the visa is non-immigrant. USCIS numbers clearly state that only a few thousand Europeans are willing to take this risk annually to start their business in the US with a complete loss of income otherwise) <- I am just thinking out loud here, no saying this is all exact.
While the NHS is in bad shape, most people in finance should have private health insurance anyway. In fact, most professionals in London will have private pension, health, dental, vision, etc schemes.
Most EU expats moved to London or England because they find opportunities they simply wouldn't have in their home nations. If someone wants to work in a meaningful capacity in banking, London has a lot to offer.
Would definitely agree, in the right environment it's a good place to purchase property, but we've seen pricing increase at a speedy rate there and rents have quickly adjusted with interest rates and the living costs of landlords trickled down to tenants. You're on the money with there being some success stories from some AUS/NZ expats purchasing property
Yes, I took an E2 visa to get into the US. Thank you, it was a big leap and definitely wasn't easy to get things lined up and ready to go, and you are right that it's not going to be to everyone's taste and won't align with most risk appetites really. That said though, an employee transferring to another international office or getting a job internationally can still reap the same rewards to a certain degree -income tax is definitely one such benefit that comes to mind as well as the level of exposure to one's industry sector. It's relatively easy to work hard and become identified as a leader in your chosen space.
I counted myself as one with private health coverage. The NHS is a fantastic principle, though it stumbles at the issue that its run the same way it was when it was founded and hasn't adapted.
The E2 visa is a bit of a grey area when it comes to the actual "investment" cost as there's no fixed value. I found that mine was below the 100k mark, having spoken with my lawyer during the process he emphasized that it's more about the value add your business will bring over time rather than the initial impact of a cash injection (bringing in capital from investors to US markets/employing US staff/even making sure you buy office stationary from US companies which made me laugh).
cost of living in london > nyc? lost everyone there
Because the UK is a poorer country than the US. UK GDP per capita is $46k vs. USA is $70k.
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