Why do jobs in America pay so much more than in Britain? (2024)

FAQs

Why do jobs in America pay so much more than in Britain the Times? ›

“Workers have high bargaining power because of their skill set — and incentive-based pay is much more common,” he says. “They can expect to face a much steeper incentive pay structure than they ever would in the UK — here, that's only really true in the financial sector.”

The US's low tax, low regulation environment has maintained its lead in this domain for more than a century. The UK would need to maintain the unprecedented 3.5pc real wage growth lead over the US in the first quarter of 2024 on an annual basis for eight years to catch up.

UK salaries are low across all demographics for a few key reasons. The UK has more protections for employees than in the US, and this is paid for in the form of better social welfare. As a result, employers can offer lower wages as they can be confident their workers will be able to afford the cost of living.

Taxes and regulations. The employers have to provide more benefits and there are more protections in terms of getting fired and paternity leave. So the cost of hiring a single employee in Europe is waaaay higher than in the states. So even if taxes were the same they would still pay you less.

Higher revenues/profits allow US companies to spend more on talent. 2) Taxes in Europe are higher. European companies tend to pay higher employee taxes to fund social welfare programs. 3) The labor market is more flexible in the US.

In general, wages in the United States tend to be higher than those in Europe, particularly for skilled and high-paying jobs. Part of the reason for this is that the cost of living in the U.S. is usually higher than in Europe. This means that workers need to make more money to keep their standard of living the same.

Both nations have a cost of living that varies greatly depending on where you live. However, you can expect that there will be a higher cost of living in the US than the UK. Data shows that the cost of living is 0.49% lower in the UK than the US. This difference is even greater in cities that are expensive to live in.

If money is your principal motivation and if your employer offers a gold-plated health insurance scheme, the US is likely to be better, though there are a few jobs that pay similarly or better in the UK. If work-life balance is more important to you, I reckon that for most people the UK would be the better choice.

The US is around 30% richer than the UK – that means the average American enjoys more of most goods and services than the average Briton.

Differences between the UK and US tax systems

The tax systems in the UK and the US have significant differences. For instance, while the UK has a progressive tax system with rates ranging from 20% to 45%, the US federal tax rates vary from 10% to 37%.

Is 55k a good salary in the UK? ›

Earning a 55k salary in the UK can generally be considered a good income that allows for a comfortable lifestyle. It provides the means to cover living costs, including housing, utilities, transportation, and leisure activities. Additionally, it allows for saving towards long-term goals and financial security.

There are a number of reasons. Probably the biggest is that the UK doesn't have the number of large tech companies in one place needed to push up wages.

🎯 Higher productivity American workers are generally more productive than their British counterparts, leading to higher wages due to the value they can create in an hour of work.

The OECD gives less favorable, but still fathomable, figures: in 2021, the average household in the European Union had 61% of the gross disposable income of the average household in the United States. Germany was at 77% of the U.S. figure.

Economic explanations

Some economists say work regulations keep Europeans from working longer hours and point favorably to recent European reforms on vacation time. Others argue that greater inequality in the United States motivates workers to try harder to get ahead.

Differences between the UK and US tax systems

The tax systems in the UK and the US have significant differences. For instance, while the UK has a progressive tax system with rates ranging from 20% to 45%, the US federal tax rates vary from 10% to 37%.

The highest-paying countries in 2024 were Switzerland ($8111), Luxembourg ($6633), the United States ($6455), Iceland ($6441), Norway ($5665), Denmark ($5642), Canada ($5081), Greenland ($4665), Ireland ($4622), the Netherlands ($4581).