As an American, I am perpetually shocked at how low UK salaries sound when I hear them, especially given that I know consumer goods are more expensive on your side of the pond. Is it made up for by comparatively lower cost of housing or other essential items or what? Or is there a huge transatlantic income gap that I never really hear about (mostly it's cost of living differences that seem to draw attention)?
I don't know for sure but I suspect that people in the UK paid more attention to total personal wealth including property asset values, which were rising at a pretty ridiculous rate.
To put this into perspective with an anecdote, I know a family who bought a house about 10 years ago to rent out in an up and coming area for £60k. Two years later they bought the house next door for 220k. Now each house is worth around £400-500k. This isn't even in London/the South where the rises were even greater.
So property assets perhaps made up for relatively low income, and I feel that the government at the time played up to this. I also know a lot of people who took debts against their homes to increase their cash flow and buy cars, kitchens, etc with it.
EDIT: Of course, now the situation is different, with the property market being flat. Who knows what will happen from now on, but our new government has made noises about making sure the property market less important to the economy.
Well it's definitely not cost of housing, which is very expensive here. For the most part you can expect to pay a lot more for a much smaller house in the UK compared to the US.
I'm not sure where it is that we make up the difference in costs, or if indeed we do.
As a guess: Healthcare. My understanding is that it is largely covered by the government in the UK but consumes somewhere in the neighborhood of 20% of US incomes (figure remembered off the top of my head -- I really want to say about 22% but that implies more accuracy than I feel confident implying). So that one item alone should make a quite large impact on actual outcomes.
But, assuming we've been talking about before tax incomes, the mechanism by which you pay for your health care doesn't matter for the purposes of this discussion, does it? I.e. the U.K. has higher individual tax rates in part to cover the NHS's expenses.
That said, the U.K. spends a lot less as a percentage of GDP on health care, but then they have a substantially lower per capita GDP.
ADDED: off the top of my head, U.K. health care spending is 6-7% of GDP, US is 17%.
Note that UK healthcare costs are lower than US healthcare expenditure in part because there's no parasitic insurance industry. (Or rather, there is, but it's tiny: private healthcare accounts for <10% of UK healthcare expenditure). Instead, there's a single payer that funds everything and doesn't bother with assessing individual eligibility for treatment except in edge cases (foreign visitors, or rare and horrendously expensive cancer cases, mostly).
Are you asserting that the US system spends more effort "assessing individual eligibility for treatment" than the U.K.'s?
Well, I suppose so, the UK's NICE (http://en.wikipedia.org/wiki/National_Institute_for_Health_a...), much like our CMS (http://en.wikipedia.org/wiki/Centers_for_Medicare_and_Medica...), establishes the impersonal guidelines, but in the US only those over 64 or on Medicaid are impersonally bound by them. In practice when our "parasitic insurance industry" addresses this it's about providing coverage beyond the CMS guidelines, since the latter are a floor which our legal system won't let the "parasitic insurance industry" go below.
That legal system and most especially its lack of the English "loser pays" Rule is probably a greater influence on costs, especially since the NHS has got to have some level of sovereign immunity.
the NHS has got to have some level of sovereign immunity.
Does it? (I don't know of anyone suing NICE, but they've certainly brought lawsuits against GP practices and hospital trusts, and won substantial damages for malpractice and/or judgements requiring the provision of treatment that was at first denied on various grounds.)
Meanwhile, the NHS bodies that deliver healthcare -- be they PCTs or fundholding GP practices -- don't have a profit incentive for excluding people with pre-existing medical conditions from receiving treatment. (They may have a cost control incentive to for denying anomalously expensive treatments, but that kicks in at the opposite end of the supply-and-demand chain: and it's defended by reference to metrics like quality-adjusted life-years per unit expenditure rather than the requirement to show a profit.)
Finally, the "loser pays" rule has been greatly undermined by the widespread adoption of conditional-fee lawsuits for civil damages in the UK over the past decade.
That said, the U.K. spends a lot less as a percentage of GDP on health care, but then they have a substantially lower per capita GDP.
As someone who has a life-threatening medical condition (and also spends a lot of time talking to others with serious conditions), I will note that being unhealthy has a great many costs involved that go far beyond whatever is spent on doctors and drugs. The very high healthcare costs in the US are not merely a financial cost. They are an indicator of general poor health in the US: High levels of obesity, high blood pressure, heart disease, diabetes and on and on. People who are ill have less energy and mental focus for the tasks of day-to-day living and often spend more money on lower quality products, like eating microwave meals and fast food instead of cooking from scratch.
In fact, the degree to which my local grocery store is an utter madhouse right before American holidays that revolve around a big meal where extended family is typically invited suggests to me and others that I have spoken with that most Americans just don't much cook. I was a homemaker for 2 decades and the degree to which I shopped daily for fresh meats and produce and cooked for dinner what I had bought fresh earlier that afternoon drew frequent remarks from people who worked at the grocery store and who wished their wife would cook like I did. I have gotten myself a great deal healthier than doctors think is possible for my condition and dietary changes are a big part of how I accomplished that. It is well known that Europe has a food culture in a way that is unknown here in the US. I strongly suspect that the emphasis on eating well in Europe is linked both to having a high quality of life without a very high salary and to lower overall healthcare costs.
If you are chronically ill, you are going to have "costs" beyond whatever such studies measure as 'healthcare costs'. I was unemployable for year and years until I finally got a proper diagnosis and began getting my condition under control. The single biggest cost savings I have experienced with getting well is that my food budget has shrunk dramatically. My ex was career military. I had very few out-of-pocket "medical" expenses (co-pays for doctor's visits or for prescription drugs). My health problems did enormous damage to our budget anyway. Anyone spending in the neighborhood of 20% of their income on medical care is not healthy. Please see my other reply if you really want to read more of my rant on the topic.
I know in some European countries (I'm thinking specifically of Germany) it's much more common for employees to be issued a company car than it is in the US. Is that true in the UK as well? Or are there other things commonly provided as in-kind employment benefits that would otherwise cost a lot of money?
What is that percentile wise?
As an American, I am perpetually shocked at how low UK salaries sound when I hear them, especially given that I know consumer goods are more expensive on your side of the pond. Is it made up for by comparatively lower cost of housing or other essential items or what? Or is there a huge transatlantic income gap that I never really hear about (mostly it's cost of living differences that seem to draw attention)?