Explanation for the astonishingly large "minimum livable" wage in the United States

For quite a while now I have been astonished by what is considered a "minimum livable" wage in the United States. In other words, what is generally considered an absolutely minimum yearly income that allows you to survive, barely, on your own without having to rely on charity or governmental welfare.

One of the most common numbers cited for this is 50000 USD a year, ie. about 42000 €. That would be 4170 USD or 3500 € per month.

That number always makes my jaw drop, and that's because 42000 €/year in most European countries, even in the richest and most expensive-to-live ones, is a very good salary. It's a decent salary of an engineer in the tech industry, and way, way higher than most low-level jobs.

Even in the richest and most expensive European countries (eg. the Nordic Countries), a "minimum livable" wage would be about 1500 €/month, ie. 18000 €/year (about 21000 USD/year), although many people are able to live independently with salaries as low as 1000 €/month (about 1200 USD/month). It's not great, but it's livable if you don't need huge expenses.

And that's before taxes. On top of it, taxes are much lower in the US than in Europe (particularly the expensive countries), which means that in the US your net income is even larger in comparison to Europe.

So if we put all of that in USD for our American friends, that would be:

• Generally considered "minimum livable" income:
  • US: 50000 USD/year
  • Europe: 21000 USD/year
• "Barely survivable" extremely low income:
  • US: 30000 USD/year
  • Europe: 14000 USD/year
• Decent income for a senior tech engineer:
  • US: 150000+ USD/year
  • Europe: 70000+ USD/year

And that is, as mentioned, before taxes. After taxes the difference is even bigger (because taxes are so much lower in the United States.)

How is this even possible? Well, I did a bit of research about this, and here are a few reasons for the disparity:

* Firstly, typical rent is significantly higher in the United States. Where the monthly rent of a small apartment in a small-to-medium size city in Europe is typically somewhere around 450 USD to 600 USD, in the United States an equivalent small apartment in an equivalent city has typically a monthly rent of 1200 USD to 1500 USD, and even higher. That's like triple. With larger apartments the difference can be even bigger.

There are many economic reasons for this disparity. Also, from the perspective of a "senior tech engineer", apartment rents skyrocket in the cities that are most populated by tech companies where those engineers work. Even a very small apartment could have a monthly rent well in excess of 2500 USD. That's like five times more than the typical small apartment in Europe (even in such cities). It's all about supply and demand.

* Secondly, health insurance is almost mandatory, unless you plan to never get sick or injured. The costs of health insurance vary a lot, but on average the absolute minimum cost is somewhere in the ballpark of 8000 to 10000 USD per year (unless the employer participates in this expense as a job benefit, which some do, but many of the smallest/cheapest companies don't.)

That's the "barely survivable" European income almost on its own (especially after taxes).

In Europe, of course, there are pretty much no expenses related to health services (or even if there are, they tend to be extremely small in comparison.) 

* Thirdly, unlike in Europe, public transport services in the United States are absolutely abysmal. In the biggest cities it can be decent and in some places you can actually survive without owning a car, but in most places owning a car is pretty much mandatory in practice, else you'll have a really hard time getting anywhere (including work.)

Cars and fuel are significantly cheaper in the United States than in Europe (especially the Nordic Countries), but they nevertheless eat a good chunk of your yearly income, easily as much as the health insurance, if not even more. In most of Europe, however, if you can't afford a car in most places it's perfectly possible to survive on public transport only (public transport services tend to be extraordinary, even in small cities and towns.)