I'm still trying to wrap my head around why European developers earn significantly less than virtually all their American counterparts, even in high cost of living areas (like Scandinavia)
I do understand you specified you work for a startup, but even at one of the many established regional consultancies dev salaries tend to cap out at around $90K IME.
Is it the lack of lucrative VC funding, the prevailing sense of egalitarianism at all costs, the abundance of (comparatively) well paid middle managers, all of the above or something else entirely?
edit : changed wording
US tech companies can scale into a ~$21 trillion economy between the US + Canada, with barely any adjustments for culture & language. From there they can then use their considerable footing to push into any number of other foreign markets and press the scale further.
Most software businesses benefit immensely from such scaling.
If you're a Scandinavian tech company, doing something like that is far, far more difficult. It caps the upside for most companies. That's not unique to Scandinavia of course, it's true about almost all other countries / areas, other than China. US & British cousin cultures have a slightly easier time as well in general, as they can often immediately tap right into the US as an early market. That's why eg Shopify was able to so quickly scale itself, despite the smaller size of Canada's economy, they're doing a monster business in the US. Tech companies that have pulled that off coming out of Scandinavia are still semi-rare, such as Mojang or Spotify (Mojang famously was able to use the global scaling to immensely reward its employees).
- $60k/year is a lot of money for most people. Median household income is £24k - and people are generally more worried about whether they're better or worse off than the people they know than in absolute terms. In the UK most good careers cap out at £50-60k - maybe £10k more in London. Growing up, I always considered 6 figure salaries to be out of reach. - It's not necessarily about being _content_ with earning that much. Unless you're willing to move to the US (most people aren't), you have to find someone who'll pay you more than that, whether for programming or for something else. If you're unable to get more money then it's better to be content with what you're getting! - A lot of people I know put a lot of value in work life balance. I have a friend who's under 25 but has already cut their hours to about 75% because they would prefer free time to extra salary. From limited experience this seems a bit at odds with US work culture. - Yes, I think in large part it's down to less VC funding pushing ludicrous amounts of money into the ecosystem. - The recent performance of the £ vs the $ has made a significant difference when comparing to the US.
I think this was poor wording on my part, as it implicitly assigns blame on the employee. I've edited my comment to reflect that I'm more curious as to why the market as a whole compensates devs less.
* The job market is a lot more scattered than in the US, there are fewer hubs concentrating software jobs. This dilutes competition.
* The job market is typically less fluid. This translates into more job security, but also a certain complacency.
* Europe hasn't seen the birth of many very-high margins software companies, generating millions per developer (off the top of my head I can think of SAP maybe, but that's B2B).
* Consequently, there's also less recognition for software developers, and their perceived value is lower than that of mechanical engineers for instance.
* Also, outdated management style is still fairly prevalent as you noted.
* VCs have no reason to push for salaries higher than necessary. European startups pitch cheap engineering as an advantage compared to being based in the Bay area.
I don't think egalitarianism has anything to do with our salaries. We might see the value in higher taxes, stronger labor rights, and a narrower income inequality. But I've never met a software developer who thinks they should inherently be less paid than say, a lawyer.
> Basic supply and demand. As long as you manage to hire developers, why pay more?
I know of several companies (Norway) that are almost desperate for more talent - to the extent that they are turning down lucrative projects. Nonetheless, I am also not aware of any of them making significant changes to their compensation. I can only theorize as to why this is, but my sense is that it has to do both with a fairly static billing structure that doesn't scale with experience, and concern for parity within the organization.
That sounds a bit silly. If you're doing so well you need to turn down contracts, why not look further out for new talent, attract people with generous relocation/signing bonus, and then give everyone a raise once your marginal revenue is increasing?
It's what the market pays. If I say I want $120k, I won't get a job.
I do actually know devs who make this much with ~5 years of experience, but they made the conscious decision to forego the large consultancies for smaller shops with less overhead.
One observation I made in Scandinavia is that the billable rate for tech professionals (including designers) appears to be more or less static. Customers pay roughly the same hourly rate regardless of whether a dev / designer has 2 or 20 years experience, so the most consistent path to higher compensation is to drop layers of support / management (with freelance being the highest).
The tax rates are much higher there too.
That's fair, and I'm aware there are always outliers. For added reference, starting tech salaries in Oslo, Norway are around $50k (cost of living comparable to Seattle or DC). Perhaps more importantly, there's much less upward potential - senior devs rarely earn 6 figures USD unless they're freelancing.
