I'm a software engineer in Europe, and my firm is about to offer me a position in the US to bring up a team (In San Francisco or New York, it's still not decided yet)…
Looking at the job market in the US, salaries do not match at all European ones: they look way higher than in Western Europe. It somehow looks like a €50-55k salary in Western Europe equals a $100-120k there. I know there are many things (like retirement, healthcare…) that are included in European salaries that are not in US ones.
So is there any way, any rule of thumb, that could help me match US salaries with Western European ones?
NB: as a western European, I'm mostly talking about France, UK, Germany, Belgium, for which the difference between net and gross salary is about 75% on average. And I'm comparing salaries in the IT market in metropolitan areas, of course.
After a mail I got from a user asking if I found a way, I found that there's still no good calculation in the answers. Let's consider the calculation from the answer I originally accepted as an example. Let's consider the wage for an engineering job in Paris with a gross income of €50,000 a year. And let's consider moving to SF, NY and Denver:
First let's make that income net of all taxes:
- 50,000*0.77 = 38,500 gross/net difference in France: 0.77
- 38,500-3600 = 34,500 net after income tax in France: 0.09
Then convert it to US dollars, at today's rate €1 = $1.22:
- €34,500 * 1.22 = $42,021
Now, let's take the cost of living ratios (from expatistan.com):
- Paris: 231
- SF: 261
- NY: 263
- Denver: 180
So the adapted wages from Paris to target city are:
- SF: $47,063 x1.12
- NY: $47,483 x1.13
- Denver: $32,356 x0.77
Then add income tax and gross/net ratio:
- SF: $50,828.04 1.08, gross: $65,314.03 1.285
- NY: $50,331.98 1.06, gross: $64,424.93 1.280
- Denver: $34,297.36 1.06, gross: $43,214.67 1.26
Which looks quite wrong to me!
In France, the engineering job market ranges from €30k to €60k (rarely more).
When I look at job offers in SF or NY (I didn't look very thoroughly in other places), I found out the range of the offers were from $80k to $120k (rarely more). Usually, those almost always include medical care and retirement.
So I ended up considering a non-scientific approach: take the European value in euro, double it, and you've got the matching wage in dollar:
- €30k/€40k → $75k-$80k
- €50k → $100k
- €60k → $120k
Though that "method" won't adapt well when the Euro/dollar exchange rate will change (which is very likely to be in 2015 with the recent fall of oil prices). It looks closer to reality than the former calculation. So either engineers are better paid in the US than in Europe, or I'm missing a quite important cost in the former calculation!