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)

Healthcare costs - eg having a baby costs about £4k in excess even if you've got a really good employer insurance policy.

In most cities housing is extremely expensive too.

Where do they live?

just to give an idea of the difference between states.

$ of a gallon of milk

Where do they live? Alaska?

One lives in Colorado, the other Minnesota.

Just to clarify US property taxes are like our council tax and fund your local town or city facilities such as Parks and Recreation centres, Social services, Fire, Police and schools. You usually get what you pay for.

Grocery prices are through the roof at the moment and food retail can be dominated by one large supermarket so no competition to force prices down. Its especially tough if you are on a low income or don't have access to a car to travel to another town to a different supermarket.

I was shocked to see a Packages, sliced wholemeal loaf priced at over $5.00 when I was last there in October.

How many eggs are they buying? Everything is more expensive in Canada and even I'd have a hard time finding any that cost more than $8 a dozen.

In the scenario you describe OP I'd guess that it's mostly overspending and probably taking on a huge mortgage for an impressive/big house, which many Americans deem important. Student loans are definitely expensive but you can't just assume everyone has them - plenty of people don't. And healthcare when you have a corporate-type job costs much less than people in the UK seem to assume because you normally have an excellent company policy.

Could also be private school and the expectations that come with it (activities, extra donations etc).

Some people just spend what they have. It's unlikely to be a big cost of living difference.

$18 for eggs? Where the hell do they live?!

I live in Texas and I just found my receipt for a dozen eggs purchased on Monday and it was $4.93 and a gallon of milk was $2.39. This is very expensive for us right now. Those same eggs were $2.35 only a few months ago and the milk was under $2.00. Gas/ petrol is $2.88 a gallon.

My state does not have an income tax but the property taxes, home insurance and HOA fees are quite high. I am looking at purchasing a home. The tax rate for the house is 3.75% of the assessed value of the home, the insurance is around 1% of the home value and the HOA is $1250 per year. On a $350K house, the taxes are $13,000 a year, the insurance is $3,500 a year and $1250 for HOA or $1,480 or so a month and that doesn't include the mortgage. Mortgage rates are still around 6%. Even if I had cash for the house, that is still a lot to pay in expenses. The thing about the taxes and insurance is that it the house assessment changes every year! It's weirdly higher in a few other states.

Obviously, I don't need to tell you how pricey health insurance is for most people here.

$100K is a good income but like others have said, it is relative. In my hometown, a city in a different part of Texas, that $100K goes a very long way. It's actually why I am thinking of returning to that part of the state to live.

When I lived in the USA it cost around 50% than the U.K. for the same standard of living (not New York, Boston or California either). Obviously some things cost more, others are simpler but overall 60% more. As an example my DD's preschool ballet class was $12 we then came back to the U.K. and her class was £3.50

Canned goods especially were incredibly expensive. Our shopping bill halved moving back but electricity was cheaper there as nearly all hydro where we were (no gas due to earthquakes)

Holy crap. 13k a year in property tax on a 350k house? In Texas?? I lived in a different state and just assumed that everything was cheaper in TX but we paid under $4k annually on a 750k house, had no HOA, and insurance was less than yours as well. Just goes to show how much variance there is from state to state!

Also @elp30 just to say that the state income tax we paid, added to our property tax, was still nowhere near 13k. I guess 'no state income tax' sounds better than it really is in reality.

@Nandocushion @elp30 surely the big cities are expensive in terms of property tax, HOA fees, income tax and rural areas relatively cheap in TX ? Its such a huge state so bound to be lots of variation.

I live on the East Coast. I get paid weekly, as does my DH. My state has no Income Tax, so we get slammed with Property Tax. Almost $6000 a year for 1000 sq ft duplex on a small piece of land. Groceries have gone up lately, eggs are now about $4 for a dozen, but they use to be $1 here. If my family made 6 figures we would be living really good. I make under $30,000 and my DH gets Social Security (this he gets monthly) and has a small part time job. I wonder where your colleague lives that they struggle on that salary.

There is such a thing as tax at source. I'm sure there is, that's why some people get tax refunds. Maybe not in all jobs, but in mine, yes.

My US dad often refers to my salary as "peanuts" (about £42k). I didn't realise how peanuts until I heard my cousin, 21yo, on a welding course, should make $80k in a few years after he qualifies.

As a welder. No "student debt" either. I only feel a bit sick about it.

ps: we bought eggs in California 8 weeks ago for ... maybe $7 for a dozen? That was the 'not member' price.

California median income is still around $40k per person, I believe, $111k median per household. $100k/person is a good income even in an expensive state.

How do poor people afford having a baby then?

the same way they do in other places I imagine.

If you are asking how do they pay….then if someone is poor they will be eligible for Medicaid, which will pay for their doctor and hospital stay. Or if not eligible for Medicaid they will pay a heavily discounted cash price, with a lot of that written off by the hospital. I will also note that they will get the same private or semi-private room in the hospital that anyone else would get. Shared wards are not the norm here.

A sample size of one is not a great indicator for how most people in a country of 330 million get by, I think your colleague may just be bad with money! Many people would not struggle on a salary of $160k.
Groceries are expensive, Healthcare is often very affordable if you have a good job.

I don't think $4k is standard per birth, my US relatives/friends didn't pay that out of pocket, some far less (Army members). Kaiser put the cost < $3k in 2022 and that was based mostly on California, an expensive state, and it's a middle ground figure.

Thinking of "ordinary" jobs friends/family have, how they manage:
Works for UPS: UPS have good benefits, including moderate copay.
Worked for Army now working for civilian airfields: ditto
Works for local govt as translator: ditto
Works for a counselling service, ditto
Has Uni degree but Works as receptionist for vet surgery: gets benefits.
Eyelash technician: this cousin makes so much money, she only has a dog to worry about.
Almost Paralegal role for county DA: good benefits
Research Statistican for a Uni: good benefits
Musician: dependent on statistician dad, benefits come with being student enrolled at music college

18yo Works for Amazon as a picker... walks 15 miles a shift. Not so good benefits. Assessing life options!!

According to Forbes the average out of pocket cost for giving birth is $2400-$3200. Again depending on your insurance plan that will vary.

And because I am clearly a nerd this should give you a good idea about monthly income vs. expenditures. Think of this a Joe and Jane Average.

www.firstrepublic.com/insights-education/a-look-at-the-average-americans-monthly-expenses

We just moved back from
Southern California to south east England. Some things are cheaper, some more expensive - honestly I’m finding it kind of levels out in the end to be roughly the same outgoings for us. But the student loans company haven’t realised I’m back yet, that’s going to make a massive dent in my earnings!

Roughly 30% of every paycheck goes to taxes, social security and health insurance premiums. Then I make an additional contribution to my retirement fund because I don’t trust that social security will be enough or even still be there. I have to live off the net of what I actually bring home.

the prescription drug costs for my family are about $300 a month. They would be higher, but I am enrolled in a needs-blind assistance program for my most expensive medication. We have office visits for chronic health conditions that are just a twist of fate and in no way anyone’s fault, that probably run another $100 on average if everyone is doing well and not having any problems . Costs go up dramatically if anyone actually gets sick.

When my teenager was a toddler, the going rate for nursery was $2000 a month.

oh and dd is starting to look at university. She won’t qualify for financial aid. The cheapest schools are $25-$35k a year for 4 years, but realistically, we are going to need to find $300-$400,000. We put money into savings every month for that.

I've been watching old episodes of super nanny for the first time

what gets me is the size of the houses, usually with a SAHM. what salaries are needed to buy these massive homes and gardens?

American houses just are bigger though. Especially in vast flat states (eg Utah). Homes aren't subject to the space restrictions we have in the (tiny) UK. Additionally, USA has different building regs/codes eg bedrooms must have built in closets etc.

Many homes outside of major cities are wooden, so cheaper to construct. Mortgages in the US work differently - mortgage payments are tax deductible, so it makes sense to have a massive mortgage as you then get the perk of declaring the payments to reduce taxes due etc.

It doesn't all work exactly the same in every state, but the whole set up there is so different to the UK that you just cannot do a simple like for like comparison.

@OnTheBoardwalk it really depends on where you’re buying. It’s like the difference between London prices and rural.