The US or Europe? — Where do you get a better deal working at a Startup?

Communting to work in San Francisco

Silicon Valley and the US is the Tech El Dorado of the world. The level of salaries, at the abundance of prosperous tech companies, and at the venture capital ecosystem in silicon valley convince everyone that this is the place to have a career in tech.

But more and more companies are being started in other places in the world. Asia, Israel, Europe, South America, all seem to have their share of tech hubs. And yet many people from these countries still want to emigrate to the US thinking they will live a better life there.

The Kevin Roose article in the New York Times calls for you to leave San Francisco. But is seems there is nowhere in the US are you going to be better off.

How much better of a deal it is really to work in the US?

You like Europe on your trips. But you don’t really think that it’s possible to pay the bills and not starve outside of America.

Having worked and lived in both Europe and the US, I know it’s possible, so I compared what 2 engineers would get on each side.

As Europe is large and diverse, and has many different legislations, price and salary levels, I chose to compare California with a single country that would be representative of the average. France is in the middle of Europe in most usual economic and performance indices (hereunder GDP per Capita):

Job postings show you would make $37K less in France for the same job.

A great position in France as a software engineer would be advertised €54,000 per year ($67,660), whereas the same job would probably get you around $105,000 a year in Silicon Valley.

But wait, because comparing salaries this way would be like directly comparing Fahrenheits and Celsius and assume the US is as hot as hell.

To really compare compensation, we have to factor in 4 things:

1- What’s spent on you by a company on top of your salary

2- The tax rate on your salary

3- How much of your taxes goes back to you

4- How much you can buy with your disposable income

1- What’s paid on top of salary

Europeans pay a lot more taxes. But most of it, along with huge benefits, is paid by their employer on top of their salary, already making the French salary 60% greater:

Paid by French employers ON TOP, by law

€54,000 a year in France really means $108,595 is spent on you.

In California, employers also have additional charges on top of your salary, but they amount to much less:

$105,000 a year in California really means $119,662 is spent on you.

Which means the gap is only $ 11K, and not $ 37K.

2- The tax rate on your salary

Tax is never an easy thing to fully understand, but for that range of salary, in France, the tax rate is 30%:

Disposable income in France: $47K

In the US, it’s more complicated to come up with an equivalent, as health insurance has different levels of coverage, but none with the fully free (including prescription medicine) level of the French state insurance.

Disposable income in the US: $56K

The delta on the disposable income comes down to $9,000, with still a few medical expenses for you to pay if you’re living in California.

It still seems like it’s better to live in California.

3- How much of your collected money is spent on you?

Next, I grouped and summed the the lines in the previous tables in 3 categories: disposable, expenses that fully go back to you, and a part that “goes away”.

And now you start to see that you’re not getting a bad deal in France:

How the company’s total expense is distributed

68% of the expense you represent for the company is spent on you in France
Only 64% of it is spent on you in California.

The difference narrows down to only $2,740 a year in favor of California when you factor in all things!

But that’s still not it for me. Unlike in the US, European tax money doesn’t fund a juggernaut army: it goes back to the people.There are neither 20 nuclear aircraft carriers, neither 3000 nuclear weapons, nor record breaking most expensive weapon programs in history.

Instead taxes fund maintaining roads, sidewalks, street lighting, healthcare, education, public transport, and social security. So compared to the US you can pretty much see every day where each one of your tax Euros is going.

4- How much you can buy with what’s left

“We’re still getting $2.7K less! How are we really getting a better deal? “

Cost of living.

The problem with cost of living comparisons that you find in most consulting reports is that they compare things that are not comparable. Many of them compare expenses for things such as “Local cheese” or “Meat”, and conclude that prices are lower in the US than in France for instance. This completely misses the fact that cheap local french cheese tops gourmet American cheese and cheap local US cheese looks and tastes like a by-product of refining diesel.

Nonetheless, despite product quality, that can’t be factored in easily, most reports show that living in San Francisco is already 40% more expensive than living in Paris.

You would need around 3,920$ (3,149€) in Paris to maintain the same standard of life that you can have with 5,555$ in San Francisco, CA (assuming you rent in both cities).

For things that can be compared directly, the US is effectively 100–200% more expensive. The internet or phone bills will come in as 100%-300% more expensive in the US, mortgage interest rates are 100% more expensive, and rent 80–100% more expensive in LA than in Paris, 100–150% more expensive in SF than Paris.

Move to Paris tomorrow, and enjoy European lifestyle with a 40% increase on your current paycheck.

Of course, lifestyle is a question of personal preference. But for pity’s sake, if you’re planning to move to the US from elsewhere, consider all factors before you make the move.

More Perks

Is a US university name next to the bachelor degree on the resume of your kids really worth $250,000?

Education is almost free in Europe, a French equivalent of a bachelor’s degree, can be less than EUR 200 in annual fees. At a private university, you can expect to pay between EUR 3,000 and EUR 10,000 a year. Childcare and primary education is essentially free and even subsidized. There are also no mass-shootings in schools.

There is the lifestyle also. That’s totally up to what your personal preferences are, but omnipresent public transportation, high speed trains and other infrastructure are generally regarded as a plus.

I’m from Europe, is it really worthless to go and work in the US?

Go for it. Go spend 2–3 years in the US. It’s hard, competition is intense, you’ll have to work hard. When you come back, you’ll feel like you’re coming down from a higher league and feel relieved.

I speak neither French nor German, what do you want from me?

If you work in tech, it’s extremely likely that startups are also targeting the US market and that most if not all of the startups have a fully English speaking environment and are looking for people with US experience. As for daily life, it’s part of the charm. Millions of people do it, you’re at least as good as they are.

You only need a mini, mini pair of balls to move to Europe from the US. So if you’re talented, grow one and come.

What about the Visa?

Getting a permanent visa to work in Europe is many times easier than it is to work in the US. Depending on where you’re from, it can be as easy as having a bachelor degree and a job offer. Compare this to the many years of wait, tuition for a US degree and lawyer fees to simply get a chance at the H1B lottery to have the right to stay in the US.

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