Am I missing something about US salaries here?

[Krayvon2]

I work in the UK, colleague works in the US for the same company.

We do a very similar job - Colleague earns around $158k per year. My salary is in £ and still a very good one but considerably less if you look at the exchange rate (probably half of US salary). However, this is a common trend with US vs UK employees in our company due to job market differences, experience etc (the sector we work in commands more of a premium over there).

With my UK salary I still manage to save a decent amount each month and pay all bills and mortgage etc.

Talking to US colleague about how in the UK we get paid on one set day every month (over there salary is paid in two installments each month) and they asked me how on earth I managed to make the money last all month.

They seemed to find it hard to believe it was possible to make a salary last 30 days and implied they struggled to make what they earn last over a couple of weeks! They've also made comments in the past about struggling with a surprise bill or having to put off a purchase.

I know lifestyles are more expensive over there but they spoke as if they earned peanuts so I'm wondering if I'm wrong to think that's a good salary? They get health cover through the company too so that's not an issue. Is there some other tax or something that I'm missing here? They are East Coast but not in most expensive area (not New York or Boston)

They don't get taxes deducted before being paid. They earn their money then do an annual tax return and work out how much to pay over to the government.

They’re probably paying back student loans? That’s financially crippling for a lot of people.

That number is not always the monetary value though - that number can be total comp of other benefits and insurance. So that $158K could be a whole lot less in take home salary terms.

With regards to monthly or fortnightly, I guess it just what you’re used to budgeting. It’s still the same amount of money - it’s just halved every two weeks.

It’s the fact they get paid gross and are not taxed at source. Plus they get very little annual leave

apart from the bi-monthly pay I would not want to swap. Hardly any employment right either. Next to no mat leave, little protection from being fired etc

This explains it

www.linkedin.com/pulse/what-average-salary-uk-vs-us-get-ahead-by-linkedin-news/

Student loans are expensive.
Even with healthcare paid by employer you can have large excess on the policy and plenty of exclusions and add ons that's you'd need to pay separately for.
Supermarkets are significantly more expensive (although I'm basing that assertion on a heavy tourist area supermarket pricing so perhaps not representative of all areas).
If you have kids you have to shell out a fortune on holiday care/camps as you don't get vacation allowances anywhere near ours and often US workplaces do not encourage the taking of holiday.

dh and i were accustomed our whole working lives to paydays every second friday. adjusting to monthly was a bit scary (could we restrain and pace our spending accordingly) but we figured it out. i thought it would take 6 months to fully adjust to the new pay structure but within 3 months we were fine.

There's still a cost to them for any healthcare, even with Company health insurance.

Student loans

Taxes on houses tend to be higher in the US (ie there's no one off stamp duty, instead it's a yearly tax)

Depending what State they're in, taxes are really high.

There's a reason their wages are higher. My husband was getting a bit of pressure from his job to move to the USA (west coast) for 3 years, his wage would have been over double what it is here (in Ireland) but when we worked out all the outgoings we'd have we realised that we were better off staying where we were.

Their outgoings will be higher

But I know my US colleagues get paid a lot more more than I do to do the same job. But the market salary is higher in the US

They quite often have eye watering mortgages, huge student loans and just generally lots of debt is the norm.

It's not as simple as an exchange rate calculation.

In my company we have the exact same roles on these salaries, UK to US (East/west coast)

£35k = $70-75k
£30k = $55-60k
£65k = $120
£100k = $180-200

Student loans are expensive.

Property taxes are a lot more and if you live in a cheap area you will have terrible schools.

Utilities are twice what I was paying in the UK.

Groceries are a lot more expensive.

Even with insurance healthcare is often expensive.

After school activities are much more expensive in our area of the USA compared where we lived in the UK.

You have less paid holiday time or sick leave and fewer employment rights so need to budget for all that.

Groceries also seem really expensive in the US...I like watching US homesteaders on Instagram and they often mentions eggs in a store cost around $18.00

You often do get a better salary and lifestyle working for the same company in the US compared to the UK. I know that’s the case for the tech firms, anyway. I’d still rather live here, though.

@BernadetteRostankowskiWolowitz you are mistaken. Employees have taxes withheld before being paid just every 2 weeks rather than monthly. This is based on an estimate of annual earnings/deductibles.
They are required to file a tax return to true-up the taxes, prove their deductibles and pay or claim the difference. I worked there for a long time.

In addition to what has already been mentioned:

My son pays nearly $8000 a year in property tax, for a very ordinary little 3-bedroom house. Plus just under $200 a month for city services (garbage collection and water). Utilities also seem much more expensive (partly due to the need for AC).

He has just started a new job and won't get any paid vacation in the first year. If and when his wife gets pregnant, she will get minimal, unpaid maternity leave (3 months I think).

Plus you live in fear of losing health insurance if you were to lose your job.

@BernadetteRostankowskiWolowitz not true, you pay tax as you go but it may or may not be the right amount (ex, I thought we underpaid by $7k this year, but turns out we’re getting a huge refund). Our tax system is stupid but you do pay as you go.

op, some people are just crap with money 🤷‍♀️. Lots of reasons why someone might have really high expenses not related to the country, ie, single earning family, made a poor decision with mortgage, paying alimony/child support, supporting parents and just straight up living outside their means.

That is a decent salary over here (although not great if you’re a software dev) but if that was your household income where I live (expensive west coast city), you’d be ok but definitely not rolling in it.

It’s unusual to get paid monthly in the US, it’s typically biweekly (26 x per year), So people here generally haven’t had to budget for a month until retirement when SS is paid monthly. So it is hard to imagine 1 check to cover a month. Add into that it’s very possible that a husband and wife will be paid on opposite weeks so there is always money coming in. Most would be able to budget with a monthly paycheck, it just seems hard and alien since they’ve never had to.

The thing about taxes is false, we have taxes deducted out of each paycheck (typically) and the true up at the end of the year. So if you pay more in taxes than what is owed you get a refund, if you pay less then you get a bill.

Some things are going to be more expensive than the UK and some things a little cheaper.

$18 for eggs is currently what some are seeing (thanks Joe) but typically they are $1/dozen.

As someone who lives on the west coast of North America (not the US) we are earning the most we ever have but the cost of living is significantly higher.
A lot of our costs from internet to food to fuel can be as much as double what they are in the UK.
It won’t be true for the whole country but it is true for many people who live and work in North America.

Thanks all for your responses. I mistakenly assumed 6 figure salaries were big money (as they often are in UK) but I guess its all relative. I also assumed taxes were less/ lower over there as there's no state healthcare etc but seem to be wrong on that too. I'm quite surprised at how much more expensive thjngs can be too - think I always thought they were cheaper in US. Basically all my ideas about US living seem to be wildly off or out of date!

Also costs massively varies depending on where you live in the US. I have a 2K sq/ft 3 bed/2bath house on just over a 1/4 of an acre. I paid $175K for it in an upper Midwest city. On either of the coasts the same would cost 5-10X , everything is cheaper where I live and less taxes. We’ll except property tax for some unknown reason my state is in the top 3 for property taxes so I pay between $6-8K per year just in property taxes.

Not correct. The employer is legally required to withhold taxes in the US. The penalty for not doing so is draconian.

I watch several US YouTubers and am often taken aback by the prices they mention for groceries. It seems a LOT more.

6 figures is a good salary. But again, it’s relative.