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)

Was in the US twice last year in 3 different places. I came to Realise that food and most things like hotel bills or museum entry was costing double what yogd pay in the UK. It wasnt unusual to pay $25 for a sandwich in a restaurant or those food markets.

Absolutely eye watering.

I just moved back to the UK from the US and for a vaguely comparable job I’m earning just over half what I was earning in the US. I can’t find a job in my field that pays the same for the same type of work at the same level here.

I was in a zero income tax state, but property taxes are huge (if you own your home—mine was 3.05% of the assessed value), groceries are very expensive, and so are things like internet and mobile phones. Petrol is a lot cheaper.

My healthcare was mostly covered by my employer, I just had a $1,500 deductible.

I really miss bi-weekly pay!

There are a lot of high earners who are simply brilliant at convincing themselves they are living in the breadline, regardless of the country.

Spot on, with one minor correction. Only the interest portion of the mortgage payment is tax deductible. Early in the loan, that will be most of it, then it declines over time as the mortgage amortized and you are paying more in principle. It is a huge incentive to buy a house regardless. And I agree that a like for like comparison is not possible.

New Yorker here. I could believe $20 for a sandwich in a sit-down restaurant with chips on the side, but not at a food market. A huge wedge/hero sandwich at my local deli is $12 tops and easily serves two people.

Were you in tourist areas? If you were in NYC or comparable well that’s a different world when it comes to prices. I think typical would be between $10-$15 for a sit down restaurant sandwich/burger meal.

For comparison for brunch today… 6 drinks, pastry, and two main dishes came to ~$80 before tip so ~£65 and yes this restaurant is known for huge portions so will get several meals out of that one.

One of the things you are missing OP is that UK salaries are shit.

The exchange rate has changed a lot. When I lived in the US about 15 years ago I got almost $2 to the pound, so everything was very cheap for me. Now, not so much.

Here's a good analysis of the two different tax systems. TLDR; taxes are marginally higher in the UK, but there are more services.

www.expattaxonline.com/taxes-in-the-uk-vs-taxes-in-the-u-s/

No. We do an annual tax return but you do pay federal income taxes out of your paycheck.

I was about to post the same thing.

I live in the US and have done so for about 15 years. I earn six figures in corporate governance. I am not working as an attorney here but I am a chartered company secretary in the UK. Funnily enough I was looking at job listings in London not long ago. It was shocking. Doing my current job (or a broad equivalent) I'd have to take about a 40-50% pay cut - to work in London! I am in the Midwest, so not having the advantage of the coast pay scales. It's one of the reasons I'll likely not move home until I'm retired.

My parents often comment on the price of food when they come out here, but I can't say I find it particularly high.

I pay health insurance for four people and it costs about $400 but it's taken out of pre-tax dollars. And before anyone comes out with the "but they work 80 hours a week and only get 6 seconds of vacation time", that's not true either. I work 35-40 hours a week, do not "take work home" unless I choose to, and I get 10 public holidays and 5 weeks PTO. Not quite the European utopia but I'm very happy with it.

The regional differences are vast, too. Even within a metropolitan area they can be. We live in a wealthy small city (technically a first-ring suburb). Our house is worth around $700k and our property taxes are about $7K. Twenty minutes away our friends have a larger house that they paid about $400k for and their taxes are lower than hours. But they live a 25 minute drive to the big city and we live a 5 minute walk away, so the urban/suburban split is huge.

*ours, not hours!

Because they’re paying $11 for an iceberg lettuce!

Also no.

Sadly, the cost of the limited State-funded healthcare in the US, costs the Govt more per head of population than the NHS costs (or at least that was the case when I was studying this for one of my degrees, and from what I’ve read recently it still seems to be the case). So the lack of NHS equivalent actually doesn’t reduce taxes at all.

The US colleague is really bad at budgeting or is eating five star restsurant meals daily, or has bought a home that he couldn't afford. There is absolutely no way normal people earning that much would be blowing so much in a month.

To the PP who commented on taxes - you do get all the deductions taken out of your paycheck if you're salaried or working hourly. Only self employed people calculate taxes and social security payments and do them themselves.

One of the things you are missing OP is that UK salaries are shit.

yep

@Bigbadmama

Your $5 loaf of bread was probably a premium/ sprouted style loaf. There is far cheaper bread out there.

No, big cities are not always the most expensive in terms of property taxes. The highest property taxes are levied in well off suburbs where they pay for excellent local services - parks, park district recreation programmes for all ages, pools, tennis courts, playing fields, libraries, police, municipal ambulance and fire services, animal control, forestry department to take care of the old trees lining the leafy streets, municipal building code inspection and enforcement, elder services like meals on wheels, streets and san including snow removal, superb schools including amazing special ed services.

Incorrect. You set your own withholdings. It’s not possible to pay zero tax as an employee. Even if you set your withholdings at the lowest level you’ll still pay some tax. I deliberately set mine high so as not to have a tax bill in February. I usually get a nice refund.

Yes, absolutely agree with this.

Sigh, we are not paid gross. True, we don’t have a full PAYE system here but being paid gross is just not true. Medicare and social security are deducted at source too.

Wages are higher here because cost of living is higher. So it’s all relative. I also find that length of service with a company counts for a lot more here than in the UK, having worked in the same industry in both countries.

Without a shadow of a doubt I’m better off here than in the UK and we have a very comfortable lifestyle. More so than people doing the same job in the UK have. But it sounds like these people are young and don’t have much real life experience of budgeting. I get paid every two weeks. It’s easy enough to get used to.

We also pay social security tax and Medicare tax in the US, which is deducted from your paycheck.

No. We do get taxed every pay period, the annual tax return is to ensure you have not over our underpaid. Only those working under the table don't get taxed. We also pay social security and other mandatory items. Takes about 30% off the to pay least for me.