Ashton, an American woman from Illinois with a PhD in human geography, urban planning and architecture, who moved to Freiburg in Germany 5 years ago, decided to compare how much money someone would earn in the US vs Germany was a similar job and life situation once all the taxes, social security contributions, and other expenses have been taken into account. The comparison is not as straightforward as it would appear as Germans like most other Europeans have a lot of social contributions automatically deducted from their salary for things like pensions health care, long-term care (e.g. in case of prolonged illness or disability), child care, and university education (for themselves and their children).
She provided two scenarios:
1) A young single worker (in this hypothetical case an engineer with two years of experience)
2) A married couple in their 30s with two small children (age two and four)
Tho video is 45 minutes long but the explanation is very comprehensive.
The bottom line is that the young single worker still earns more in the US (about 35% more than in Germany), but for a family the final income after all deductions was slightly higher in Germany at the current exchange rate with a strong US dollar. A few years ago when the euro was much higher, the income of the family in Germany would have been also considerably higher.
The salaries, taxes, social contributions and overall system (universal health care, free education, etc.) are relatively similar in other West European countries like Austria, northern Italy, France Belgium, the Netherlands or Britain. Some countries have considerably higher salaries like Switzerland, Luxembourg, Ireland, Norway or even Denmark, while still having the same social benefits.
It's interesting to hear real life experiences most people who have worked both in the US and Europe. Here are some of the comments from YouTube.
"I'm an American engineer living in Austria, I make half the salary I did in the States yet have saved twice the amount of money without changes to lifestyle. That's been my experience living here for 7 years."
"I did the comparison with a German colleague. With California state tax, our tax burdens actually ended up being almost the same. Except I had higher property taxes, when I was renting my rent increases were higher, my retirement is a 401k casino and as we saw with Lehman brothers it can be wiped out and I had to pay back 25k in student loans. And I had 4k in medical bills from the dentist and doctor. By the time we factored all that in, he had more disposable income. In summary: socialism is just a buzzword that rich American elites use to trick middle class Americans into voting in the interest of rich people. Hence the media wealth of the American middle class being ranked 19th globally while the French and Germans are ranked at the top."
Even at equal salaries, Europeans work less hours and have more holidays than Americans, so the pay per hour is actually higher. German people are actually those who work the least hours per year in the world, with 1354 hours annually, against 1765 hours in the United States. That's 311 hours less per year, which is the equivalent of working 6 to 8 weeks less.
"American expat here. I moved to Germany in 2012, and since arriving I have had 4 operations, amounting to several weeks of in-hospital care. My total cost, practically 0€. I have never even seen a bill for this care. I am on German public health insurance, and AOK is my provider. The peace of mind that comes with this is amazing. Overall, my life in Germany is immeasurably better than it was in the US. I live in southern Bavaria, in the foothills of the Alps. Crime and drugs practically do not exist here. The air is clean , the water pure. I can go outside without thinking about my safety. Yes, my take home pay is quiet a bit less than if I had stayed in the US, but my job is secure, I work no overtime, my employer never bothers me after hours or on weekends, and I can work 100% remote. I get 30 paid days of vacation per year, plus up to 15 paid holidays per year (depending upon the year and if the holiday falls on a weekend that year). I have up to 6 weeks of paid sick leave with 100% pay, and then it decrease to I believe 60% of your pay. I am a software engineer with 15+ years of experience."
Even if salaries were a bit higher in the US, the European system provides a piece of mind that is worth a lot of money.
"I live in the Netherlands and our system is pretty much the same. Personally, my preference is for the Dutch/German system which offers safety and security especially in the moments when something goes wrong. In April 2022 I was hit as a cyclist by a car that ignored a red light. I had to undergo several surgeries and spent 2 months in the hospital. In November 2022, I returned to work. The fact that all this time my salary was paid 100% and all hospital bills, etc. were paid, consciously and unconsciously ensured that I didn't have to worry about anything but my recovery. That to me is worth paying more taxes and social contributions."
Apparently Ashton's estimates for the cost of healthcare, childcare and education in the US are rather conservative. For example she didn't factor in that many Americans with a good job prefer to send their kids to private schools (elementary to high school) as public schools tend not to be very good in the US.
"I paid about $2500/child/month in Boston for daycare. Our monthly insurance costs around $700-$800, but for a family to be fully covered it need to reach $12K within a year, which is simple to do since one night in the hospital in Boston will run between $10K-$18K. My son got sick and needed to be in the ICU for two weeks, and the total bill was over $200K. If we didn't have insurance then God knows what we would've done. Also being higher on the income bracket our combined taxes is close to 30% anyways...adding 8-10% to 401K easily tip us closer to the 40% amount but we had to be mindful of any hospital bills and other nasty surprises.
I think you underestimate the cost of college and tuition funds. There is no way you can get away with only $5K/year for a child, you would need closer to $10K/year per child at this point since annual college Tuition costs around $60K in private schools not including room and board. With room and board you are estimated to pay around $80K/year...four years will $300K worth of higher education. With inflation going the way it is now, by the time my youngest (in 18 years) the higher education cost should double that, closer to $500-$600K for four years."
She provided two scenarios:
1) A young single worker (in this hypothetical case an engineer with two years of experience)
2) A married couple in their 30s with two small children (age two and four)
Tho video is 45 minutes long but the explanation is very comprehensive.
The bottom line is that the young single worker still earns more in the US (about 35% more than in Germany), but for a family the final income after all deductions was slightly higher in Germany at the current exchange rate with a strong US dollar. A few years ago when the euro was much higher, the income of the family in Germany would have been also considerably higher.
The salaries, taxes, social contributions and overall system (universal health care, free education, etc.) are relatively similar in other West European countries like Austria, northern Italy, France Belgium, the Netherlands or Britain. Some countries have considerably higher salaries like Switzerland, Luxembourg, Ireland, Norway or even Denmark, while still having the same social benefits.
It's interesting to hear real life experiences most people who have worked both in the US and Europe. Here are some of the comments from YouTube.
"I'm an American engineer living in Austria, I make half the salary I did in the States yet have saved twice the amount of money without changes to lifestyle. That's been my experience living here for 7 years."
"I did the comparison with a German colleague. With California state tax, our tax burdens actually ended up being almost the same. Except I had higher property taxes, when I was renting my rent increases were higher, my retirement is a 401k casino and as we saw with Lehman brothers it can be wiped out and I had to pay back 25k in student loans. And I had 4k in medical bills from the dentist and doctor. By the time we factored all that in, he had more disposable income. In summary: socialism is just a buzzword that rich American elites use to trick middle class Americans into voting in the interest of rich people. Hence the media wealth of the American middle class being ranked 19th globally while the French and Germans are ranked at the top."
Even at equal salaries, Europeans work less hours and have more holidays than Americans, so the pay per hour is actually higher. German people are actually those who work the least hours per year in the world, with 1354 hours annually, against 1765 hours in the United States. That's 311 hours less per year, which is the equivalent of working 6 to 8 weeks less.
"American expat here. I moved to Germany in 2012, and since arriving I have had 4 operations, amounting to several weeks of in-hospital care. My total cost, practically 0€. I have never even seen a bill for this care. I am on German public health insurance, and AOK is my provider. The peace of mind that comes with this is amazing. Overall, my life in Germany is immeasurably better than it was in the US. I live in southern Bavaria, in the foothills of the Alps. Crime and drugs practically do not exist here. The air is clean , the water pure. I can go outside without thinking about my safety. Yes, my take home pay is quiet a bit less than if I had stayed in the US, but my job is secure, I work no overtime, my employer never bothers me after hours or on weekends, and I can work 100% remote. I get 30 paid days of vacation per year, plus up to 15 paid holidays per year (depending upon the year and if the holiday falls on a weekend that year). I have up to 6 weeks of paid sick leave with 100% pay, and then it decrease to I believe 60% of your pay. I am a software engineer with 15+ years of experience."
Even if salaries were a bit higher in the US, the European system provides a piece of mind that is worth a lot of money.
"I live in the Netherlands and our system is pretty much the same. Personally, my preference is for the Dutch/German system which offers safety and security especially in the moments when something goes wrong. In April 2022 I was hit as a cyclist by a car that ignored a red light. I had to undergo several surgeries and spent 2 months in the hospital. In November 2022, I returned to work. The fact that all this time my salary was paid 100% and all hospital bills, etc. were paid, consciously and unconsciously ensured that I didn't have to worry about anything but my recovery. That to me is worth paying more taxes and social contributions."
Apparently Ashton's estimates for the cost of healthcare, childcare and education in the US are rather conservative. For example she didn't factor in that many Americans with a good job prefer to send their kids to private schools (elementary to high school) as public schools tend not to be very good in the US.
"I paid about $2500/child/month in Boston for daycare. Our monthly insurance costs around $700-$800, but for a family to be fully covered it need to reach $12K within a year, which is simple to do since one night in the hospital in Boston will run between $10K-$18K. My son got sick and needed to be in the ICU for two weeks, and the total bill was over $200K. If we didn't have insurance then God knows what we would've done. Also being higher on the income bracket our combined taxes is close to 30% anyways...adding 8-10% to 401K easily tip us closer to the 40% amount but we had to be mindful of any hospital bills and other nasty surprises.
I think you underestimate the cost of college and tuition funds. There is no way you can get away with only $5K/year for a child, you would need closer to $10K/year per child at this point since annual college Tuition costs around $60K in private schools not including room and board. With room and board you are estimated to pay around $80K/year...four years will $300K worth of higher education. With inflation going the way it is now, by the time my youngest (in 18 years) the higher education cost should double that, closer to $500-$600K for four years."
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