European vs US Salaries: Why You Get More in The US?

Oct 13, 2021Move to Germany, Work Abroad, Work in Germany

Are you considering working abroad? The US and Europe are some of the most popular destinations for expats and foreign executives. Yet, they offer different career opportunities and income for employees. So which place is the best for you?

Salaries in the US are about twice higher than in Europe. Yet, European countries offer better social benefits, health care, and various free services for employees. Whereas in the US, people spend more money on retirement and medical care. 

Working in both the US and Europe can be advantageous depending on your preferences. Someone with a need for security might prefer Europe, and someone who is striving for a career – the US. Furthermore, salaries and cost of living range between the countries and states. Hence, you need to consider all these factors before making a decision.

Salaries in the US vs Europe

Salaries for low qualified workers

Jobs which doesn’t require a college degree are often better paid in Europe than in the US.

Salaries for highly qualified workers and specialists

Highly skilled and specialized people with good educational backgrounds will find higher wages in the US.

For example, business and information technology consultants, software engineers, logistics workers, doctors, and medical specialists will have higher incomes in the US than in most European countries.

Salaries in Europe and in the US differ significantly and depend on many factors. European Union includes 27 member states. However, there are more countries that aren’t included or only a part of the Schengen but are closely located to the EU states.

On the other hand, the US has 50 states, which provide different standards of living, cost of living, and hence, income.

Furthermore, some occupations tend to earn more in the US and some in the EU. For instance, people without particular education (workers) make more money in the developed European countries.

According to the statistics, a full-time employee’s average gross monthly salary in Germany is 3,106 EUR, Denmark is 4,217 EUR, followed by Luxembourg 3,980 EUR, the Netherlands 3,232 EUR, and the UK 3,135 EUR.

Check how much you can earn in Germany (for all professions).

Why are European salaries lower than in the US?

Employees benefits in Europe

There are some significant differences in social welfare for employees in the US and European countries.

1. Healthcare

Healthcare is always covered and is usually more accessible in the US than the “free” healthcare in Europe.

2. Vacation days

In Europe, employees get more vacation days than in the US. The average software engineer would have around 21 vacation days per year, compared to 28 days in Europe.

Moreover, European countries have more public holidays, which adds to the total number of free days.

3. Retirement benefits

Europe cares about the retirement of its residents; employers and employees pay pension taxes every month. In contrast, the US offers numerous retirement saving options, where you can deposit money independently.

On the example of Germany, you can read in-depth income comparison between the US and Europe.

Not all income is the same

However, we shouldn’t underestimate the factors that influence salaries in European countries and in the US. For instance, the cost of living in the UK and Denmark is significantly higher than in Germany and many American states.

Yet, living costs in New York will beat all European countries, with the exception for Switzerland.

Furthermore, the tax burden of residents should be considered too. Danish citizens pay significantly higher taxes than Germans, yet their social security contributions are lower.

Additionally, some European counties provide very low salaries for residents, such as:

  • Bulgaria with gross income of €306
  • Lithuania – €612
  • Hungary – with the average of €826

Some countries fall into the middle with Cyprus 2,012 EUR, Greece 1,929 EUR, and Slovenia 1,655 EUR.

Salaries in Europe also depend on the unemployment rate. The higher the rate the lower the income tends to be.

Unemployment rates in the EU in August 2021:

Plus, in all European countries, residents pay different amounts in taxes and social security contributions. In the graph below, you can see the part of the salary that is actually land on the employee’s bank account.

Dark blue color – taxes; blue – social security payments residents pay in each country.

US

Also, the US has unequal income taxes for each state, yet the difference isn’t that significant as in the EU.

US

Salaries in the US range significantly. You can earn as little as 20k and up to 300k in a top position. 

Furthermore, professionals in management earn much more in the US than in European countries or many other developed countries. If you are willing to pursue the career, American companies can provide great opportunities and a very high income.

Why are salaries in the US so high?

Well, similar to the issue with a low income in Europe, the US offers higher pay-check for a reason. 

But not all is so bright as it seems. For example, a 21 years old couple living in California, with a $100,000 yearly gross salary (or $8,333 monthly), will pay in taxes:

  • Federal withholding taxes $1,200
  • Social Security taxes $516
  • Medicare $120
  • California taxes $586
  • CA SDI $75 
  • Monthly Net Pay $5,833.70 

Consequently, the monthly net pay ends up at $5,833. 

And following obligatory expenses:

  • Flat in San Francisco $2,000–3,000
  • Health insurance $360
  • Debt payments

This couple will most likely end up with about $2,000 at the end of the month before paying for a debt.

People need to remember that the US doesn’t have an excellent social security system as Europe does. The state won’t take care of everything. You even will need to take care of your retirement. 

Consequently, a person living in the US needs to have enough savings to provide for themselves in case of any difficult situation such as: 

  • losing the job
  • health issues

Plus, education in the US isn’t that affordable as in most European countries. Hence all parents must have enough money for their kids to go to school, university. 

Facts about salaries in the US

  1. Salaries in the US also vary by factors such as gender, education, and more.
  2. Jobs in large metropolitan cities, which have higher living costs, also tend to pay more than jobs in more rural and suburban areas.
  3. Workers with a certificate or diploma earn on average 17% more than their peers who only reached the high school level.
  4. Employees who earned a Bachelor’s Degree earn 24% more than those who only managed to attain a certificate or diploma.
  5. Professionals who attained a Master’s Degree are awarded salaries that are 29% more than those with a Bachelor’s Degree.
  6. PhD holders earn 23% more than Master’s Degree holders on average while doing the same job.

We shouldn’t forget about the tax obligations employees have in Europe and the US. Read the detailed example of taxes in Germany vs the US here.

Example of salary difference US vs Europe

Taxes play one of the most significant role in our income. The difference can be huge – from 10% to 50%, depending on the country.

Let’s compare salaries in two cities, Zurich, Switzerland, and Seattle, US:

  1. In Seattle, company Google pays an average of $148k in base salary and $68k in stocks per year, for a total compensation of $216k per year or $158k after tax.
  2. In Zurich, Google pays a base salary of CHF 146k and 30k in stock bonuses, for a total compensation of CHF 176k, for a net pay of $138k per year after tax.

Cost of living in Seattle vs Zurich:

The most considerable expense in both cities is rent, whereas food, electronics, dining, etc., take a smaller portion of the income and are comparable across all Western countries.

Housing:

  1. A 3 bedroom apartment in downtown Seattle costs around $3.9k per month or $47k per year, leaving employee $111k per year or $9,25k per month to disposal.
  2. A 3 bedroom flat in downtown Zurich will cost you $4.2k per month or $50k per year, leaving you $88k per year or $7,33k per month.

Consequently, the employee’s net income at Google or Facebook in Zurich, Switzerland, will be 25% lower than in Seattle, US.

Furthermore, Switzerland has some of the lower taxes in Europe, your net salary in other European countries will be even lower.

European companies can rarely afford to pay comparable to the US salaries to the IT personnel. The better qualified and sought after the employee is, the more significant is the difference.

A Principal Engineer in Silicon Valley can earn up to $600k/year – a sum completely unimaginable anywhere in Europe.

Average salaries in the US vs Europe

The difference in salaries also lies in the difference between average income in the US vs Europe. For example, in the US, much more people earn above average, while in Europe, most people get paid more equally. This particularly applies to states of the European Union since the economy is more regulated.

US

The average American income levels from the US Bureau of Labor Statistics (BLS), in 2020, the average US income came in at $83,886 per year gross.

The median annual income of all full-time workers in the US was $51,480 in the second quarter of 2021.

There is a large gap between salaries in the US, which isn’t common in European countries. For example, a casual worker makes $25,000 and an executive $150,000. 

Therefore, particularly talented and educated people can achieve higher financial results in the US than in Europe.

Facts about average salary in the US in 2021

  1. The average salary in the United States is $82,412 USD per year. The most typical earning is $52,000 USD. All data are based on 20,675 salary surveys. 
  2. Salaries range from $24,000 (lowest average) to $423,000 (highest average)
  3. The best paid careers are Engineers & Technicians V with an average income of $124,524 USD and Management & Business with $110,097 USD.
  4. People with different experiences earn a different salary. Employees with 16-20 years of experience receive $98,926 USD. Professionals with 20+ years of experience receive salary of $108,877 USD.

In the following table, you can see the average salary in the US for a particular position. Overall, the numbers are higher than in Europe.

The average salary in the US in 2021 among different jobs:

Job titleGross annual salary 2021
CEO$160,662 USD
Doctor$160,527 USD
Director$150,103 USD
General Manager$126,189 USD
Other Engineer Career$125,618 USD
Engineering Manager$122,328 USD
Lawyer$117,757 USD
Finance Manager$111,042 USD
IT Manager$109,553 USD
Program Manager$107,639 USD
Software Engineer$107,389 USD
Construction Manager$106,357 USD
CPA – Certified Public Accountant$104,434 USD
IT Project Manager$101,918 USD
Manager$97,413 USD
Other Management Career$95,589 USD
University Professor$95,188 USD
Operations Manager$94,731 USD
Construction Project Manager$93,563 USD
Business Manager$93,396 USD
Other IT Career$93,228 USD
Project Manager$92,937 USD
Human Resources Manager$92,174 USD
Other Sales Career$91,462 USD
Marketing Manager$91,343 USD
Software Developer$91,332 USD
Other Finance Career$88,675 USD
Other Human Resource Career$85,935 USD
Engineer$82,546 USD
System Analyst$82,008 USD
Salesmen or Saleswomen$80,996 USD
Financial Analyst$80,729 USD
Healthcare Management$80,452 USD
Human Resource$78,658 USD
Electrical Engineer$77,767 USD
Account Manager$76,255 USD
Registered Nurse$75,210 USD
Architect$72,989 USD
Other Public Sector Career$72,746 USD
Mechanical Engineer$72,166 USD
System Administrator$71,625 USD
Manufacturing$70,253 USD
Other Manufacturing Career$67,653 USD
Other Medical Career$66,253 USD
Senior Accountant$65,369 USD
Technician$64,144 USD
Other Constr. & Labor Career$63,578 USD
IT Coordinator$63,091 USD
Office Manager$61,427 USD
Teacher$60,019 USD
Accountant$58,918 USD
Other Education Career$57,243 USD
Restaurant Manager$56,995 USD
Customer Service Manager$54,880 USD
Staff Accountant$49,870 USD
Other Service Career$47,051 USD
Call Center$37,860 USD
Administrative Assistant$36,606 USD
Source: www.averagesalarysurvey.com

According to the statistics, income in the US is more unequal than in Europe, with a difference of $124,056 in average salaries among various jobs.

In fact:

  • about 34,1% of Americans earn over $100,000
  • 15,5% of the population makes between $100,000 and $149,999
  • 8,3% of Americans makes between $150,000 and $199,999
  • 10,3% of the US population has an annual salary over $200,000 

These numbers are unheard of in most European countries.

Europe

Hourly wage

In 2020, the average hourly labor cost was €28,5 in the EU, ranging from €6,5 in Bulgaria to €45,8 in Denmark.

Average annual income

In 2020, the net annual earnings of an average working couple with two children were €51,400 in the EU, ranging from €12,800 in Bulgaria to €92,000 in Luxembourg.

Moreover, every European country has a different average salary. Numbers range significantly.

Wondering how much is the average salary for your profession? Check the Gehalt.de – the best German resource which provides information on all salaries in the country. You can add filters like location, experience, skills, size of the company, and others to see the most accurate numbers!

Average wages are highest in:

  • Switzerland €72,000
  • Norway €61,000
  • Denmark €56,000

Average in:

  • UK
  • Belgium
  • Sweden
  • Finland
  • Austria
  • Germany – all around €41,000

And lowest in:

  • Estonia at €13,000
  • Portugal €15,500
  • Greece €18,500

Below you can see average salaries and income tax for each European country in 2021.

CountryAverage net salary in €Average income tax
Albania33016.88%
Armenia25130.08%
Austria2,05319.65%
Azerbaijan23213.75%
Belarus31413.02%
Belgium2,09135.88%
Bosnia and Herzegovina42935.59%
Bulgaria41321.93%
Croatia79725.58%
Cyprus1,6586.80%
Czech Republic81323.66%
Denmark3,10040.67%
Estonia95816.91%
Finland2,50925.77%
France2,15724.95%
Georgia29320.16%
Germany2,27038.70%
Greece91716.03%
Hungary68333.50%
Iceland3,43527.30%
Ireland2,47920.87%
Italy1,76231.17%
Kosovo3308.33%
Latvia64826.86%
Lithuania64521.15%
Luxembourg3,00928.56%
Macedonia36831.85%
Malta2,26123.38%
Moldova20020.63%
Montenegro51233.42%
Netherlands2,26326.36%
Norway3,36527.40%
Poland73628.82%
Portugal84626.94%
Romania52228.10%
Russian Federation51913.07%
Serbia39127.32%
Slovakia69023.08%
Slovenia1,03834.76%
Spain1,71821.48%
Sweden3,06224.91%
Switzerland4,70017.90%
Ukraine18519.57%
United Kingdom1,96020.16%
Source:

Ranking for average annual salary in Europe in 2021:

European cities with highest average net salary:

City in EuropeAverage monthly salary after tax, USD
Zug, Switzerland8,967
Zurich, Switzerland7,468
Lausanne, Switzerland6,444
Geneva, Switzerland6,416
Basel, Switzerland5,927
Lugano, Switzerland5,570
Bern, Switzerland5,511
Luxembourg, Luxembourg4,510
London, United Kingdom4,154
Saint Helier, Jersey3,896
Oslo, Norway3,892
Munich, Germany3,862
Copenhagen, Denmark3,807
Tromso, Norway3,781
Frankfurt, Germany3,780
Erlangen, Germany3,768
Bergen, Norway3,742
Amsterdam, Netherlands3,715
Stavanger, Norway3,613
Aalborg, Denmark3,567
Oxford, United Kingdom3,546
Stockholm, Sweden3,522
Trondheim, Norway3,508
Dublin, Ireland3,462
Arhus, Denmark3,458
Lund, Sweden3,449
Derby, United Kingdom3,432
Limerick, Ireland3,393
Gothenburg, Sweden3,383
Berlin, Germany3,356
Paris, France3,330
Stuttgart, Germany3,317
Nuremberg, Germany3,311
Hamburg, Germany3,301
Reykjavik, Iceland3,278
Reading, United Kingdom3,230
Espoo, Finland3,195
Rotterdam, Netherlands3,187
Dusseldorf, Germany3,167
Source: numbeo.com

Standard of living

In each European country, the standard of living is different. Some are known for the highest standards, like Switzerland, and some for the lowest, like Balkan countries or Portugal (EU). Moreover, the standard of living influences the average salary significantly.

• Standard of living is highest in: Switzerland, Denmark, and Germany. It can be comparable to the US. However, the cost of living can be relatively high in these countries, average salaries and purchasing power are also relatively high.

Standard of living is lowest in: Estonia, Greece, and Portugal. Although the cost of living is relatively low in these countries, average wages and purchasing power are the lowest in the European Union.

Best balance between salary and cost of living

The UK is one of the best countries to work in Europe, earn a good salary while still enjoy the average cost of living. In fact, in the UK, the average city-based worker can afford to buy over 30% more than their equivalent in New York City.

Consequently, if someone moves from the UK to New York City, they would have to earn 30% more than the average New Yorker in order to sustain a similar lifestyle they have had in the UK.

Which European countries have highest salaries?

Generally, Switzerland, UK, Iceland, Denmark, Norway, and Germany are recognized as countries with the highest salaries in Europe.

Use this free tool to check salaries in Germany. You can add filters like location, experience, skills, size of the company, and others to see the most accurate numbers!

Top 10 highest paying countries in Europe in 2020 (non including Switzerland):

RankCountryAverage gross monthly salary
1Denmark€5,179.00
2Luxembourg€5,143.00
3Germany€4,035.00
4Ireland€3,867.00
5Austria€3,811.00
6Belgium€3,401.00
7Finland€3,380.00
8Sweden€3,194.00
9United Kingdom€3,161.00
10France€3,097.00

Which country in the EU is the best for international workers?

When moving to work to another country, one should look at more factors than just salary. For example, a high percentage of English speaking population is essential if you don’t speak the local language.

Here are some of the best countries to relocate to in the EU. UK and Switzerland are some of the best destinations for expats, but they aren’t in the EU.

COUNTRYAVERAGE NETT WAGEENGLISH SPEAKING POPULATIONUNEMPLOYMENT RATE
The Netherlands€2,46490%3,9%
Ireland€2,46498%5,1%
Germany€2,27056%3,4%
Sweden€2,57086%6,2%
Belgium€2,09160%6%
France€2,15739%9,2%

Cost of living in the US vs Europe

When talking about salaries, we shouldn’t forget about the cost of living in each country. In fact, you might earn a lot but will spend it all by the end of the month. 

For example, this is pretty much the case with the US cities like New York and San Francisco. For example, New York is almost twice more expensive than most European cities.

Facts about the cost of living in Europe:

  1. Overall, Europe has a lower cost of living than the US due to lower healthcare expenses, and low inflation.
  2. However, taxes are higher in most European countries, often wages are lower than in the US, hence, you will have fewer disposal income.

Yet, where exactly a person lives in the United States and Europe makes a significant difference to the cost of living. For example, San Francisco, New York City, and Washington, DC, have the highest rental prices in the US.

At the same time, Zurich, Copenhagen, London, Paris, Hamburg, and Barcelona have the highest cost of living in Europe.

In fact, Geneva and Zurich are even more expensive than New York City.

Europe’s other cities are cheaper than New York City, with some cities (notably Tartu, Porto, Thessaloniki, Tallinn, Athens, and Lisbon) markedly so. 

The most expensive cities in Europe are:

  • Geneva
  • Zurich
  • London

The least expensive cities in Europe are:

  • Tartu
  • Porto
  • Thessaloniki
  • Tallinn
  • Athens
  • Lisbon

These cities are 60%-70% cheaper than NYC.

Yet, people spend a significant amount of money on health care in the US, while it’s “free” in most European countries. Your insurance premiums are deducted with other taxes, and you can use all medical services for free.

US

The cost of living can look drastically different depending on where you live in the US. A single person needs about $29,118 a year ($2,426 monthly) to live in Brownsville, Texas, but in San Francisco, California, they will need more than double $69,072 ($5,756 monthly) to keep up with the same lifestyle. 

Cost of living for a single person in different US cities:

  • Austin, Texas $3,197
  • Los Angeles $3,569
  • New York $4,277

Mississippi is one of the cheapest states to live in, and Hawaii is the most expensive.

Taxes Europe vs US

Well, taxes are indeed higher in Europe than in the US. Only sales tax (VAT) can be up to 25%.

Income taxes range from country to country. On the picture below you can see income tax rates across the European countries in 2020.

Read full comparison between American and European taxes on the example of Germany.

Income tax rates across European countries in 2020

And how taxes in the US differ to the European tax burden.

Taxes in the US vs Europe

Check how much you can earn in Germany (for all professions).

Recommended products and services in Germany:

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