US vs Europe: How 2025 employment costs and net pay compare
Author
James Kelly
Last Updated
19 January 2026
Read Time
12 min
Where is it more expensive to hire, in the US or in Europe? And where do employees keep more of their pay?
This study looks at employment costs and take-home pay in 10 major cities, five in the US (Seattle, San Francisco, New York, Austin, and Atlanta) and five in Europe (Berlin, Amsterdam, Paris, Dublin, and London). We wanted to understand how different locations, salary levels, and tax systems actually affect what it costs to hire someone and how much employees end up with after taxes.
The findings come from our larger 2025 research on employment costs across 36 European countries, giving companies real data for building international teams.
Methodology: Two salary scenarios
To reveal both structural differences and market-driven realities, we compared costs in two ways:
- One standardised salary: We modelled employment costs and net pay for the same gross salary: €60,000 / $67,850*. This allows a like-for-like comparison across locations, independent of market rates.
- Local market rate for a specific role: We used actual average salaries for mid-level software developers (five years’ experience) from our partner TalentUp, then calculated employer costs and net pay based on these local rates.
* The data we collected from our original study has been converted from Euro to USD at €1 = $1.13 (May 2025).
This two-scenario approach uncovers not only what employers pay and employees receive, but why those amounts differ.
Key findings
Before diving into the details, here are some standout observations:
Observations
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At the same salary level, European employment costs are generally higher than US costs. This is typically due to more extensive employer social contributions.
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Net pay differences are even larger than total cost differences, especially when comparing high-salary US cities to lower-salary European ones.
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At local market rates, European total employment costs are 26–48% lower than in the US — because salaries are significantly lower.
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Cost of living can completely reverse perceived pay advantages — in some cases, European employees enjoy greater disposable income than higher-paid US counterparts
Total employment costs ranked
Total employment costs ranked by local market rates
City: Seattle, WA
Employment cost: $154,338
Employer costs above salary: $20,631 (+15.4%)
City: San Francisco, CA
Employment cost: $143,503
Employer costs above salary: $24,300 (+20.4%)
City: New York, NY
Employment cost: $128,630
Employer costs above salary: $18,492 (+16.8%)
City: Austin, TX
Employment cost: $125,470
Employer costs above salary: $11,820 (+10.4%)
City: Atlanta, GA
Employment cost: $125,389
Employer costs above salary: $11,285 (+9.9%)
City: Berlin, DE
Employment cost: $91,824
Employer costs above salary: $18,094 (+24.5%)
City: Amsterdam, NL
Employment cost: $91,260
Employer costs above salary: $20,244 (+28.5%)
City: Paris, FR
Employment cost: $90,690
Employer costs above salary: $33,696 (+59.1%)
City: Dublin, IE
Employment cost: $83,586
Employer costs above salary: $8,385 (+11.2%)
City: London, UK
Employment cost: $80,146
Employer costs above salary: $9,921 (+14.1%)
US vs. European employment costs
Metric
US cities
European cities
Notable comparison
Average annual salary (mid-level software developer)
$110,138 - $133,707
$56,994 - $75,201
The highest European salary is almost $35,000 below the lowest US salary.
Total employment cost
$125,389 - $154,338
$80,146 - $91,824
Hiring in London compared to Seattle is 48.1% less.
Net pay
$79,746 - $101,262
$38,365 - $54,665
Net pay in Seattle is almost double compared to London.
Cost-to-net pay ratio
1.42 - 1.73
1.47 - 2.36
European cities, on average, have a higher cost-to-net pay ratio, though London (1.47) is comparable to Austin (1.42).
Insight 1 | At equal salary levels, European employment costs are higher
When we look at identical salary levels across regions, European employment systems generally show higher costs. This is due to more extensive social contribution structures. Our data for the $67,850 (€60,000) benchmark salary clearly reveals this pattern.
European employers (on average) pay significantly more in mandatory contributions for the same base salary, and this is generally used to fund comprehensive social systems, including healthcare, education, and worker protections.
Paris illustrates this well, with total employer costs reaching 59.1% above the base salary, compared to just 10-20% in most US cities. For the same $67,850 salary, an employer in Paris pays $107,772 in costs, while an Atlanta employer pays $74,560. The difference was over $33,000 (a 44% increase).
However, not all European cities follow this pattern to the same degree. At the $67,850 salary level, several cities have practically identical employer costs:
- London: $75,362 total employment cost
- Dublin: $75,415 total employment cost
- Austin: $74,906 total employment cost
- Atlanta: $74,560 total employment cost
Insight 2 | At local market rates, European total employment costs are substantially lower
Despite higher proportional costs, European total employment costs are actually much lower than US costs when hiring at local market rates. This is because market salary levels in European cities are substantially lower than in US cities.
European salaries for mid-level software developers range from $56,994 to $75,201, while US salaries range from $110,138 to $133,707. This substantial salary gap more than offsets the higher proportional costs in European systems. As a result, total employment costs in European cities are between 26% and 48% lower than in US cities.
London ($80,146) costs 48.1% less than Seattle ($154,338), Berlin ($91,824) costs 27% less than Atlanta ($125,389), and even Paris, with its high contribution rate, still offers total costs ($90,690) that are 28% lower than Atlanta’s ($125,389).
These findings demonstrate that market salary levels have a greater impact on total employment costs than the contribution structures themselves.
Insight 3 | Net pay tells a different story than employment costs
When hiring at local market rates, the range of net pay across cities is striking. In fact, the net pay gap is even wider than the employment cost gap.
For example, a software developer in Seattle ($101,262) takes home nearly 2.6 times what their counterpart in Paris receives ($38,365). But it’s when using our $67,850 benchmark salary that provides an even clearer picture of how tax systems impact net pay when gross salaries are identical:
- In the US, an Austin-based employee takes home $56,118 (82.7% of gross salary)
- In Europe, a Paris-based employee receives just $44,669 (65.8% of gross salary)
The difference in take-home pay is $11,449, or 25.6%, despite identical gross salaries.
Companies building international teams need to understand these variations to create compensation packages that make sense in local markets while still attracting the quality of talent they need.
Insight 4 | Cost of living creates hidden talent advantages
To dig deeper into the employee experience, we need to look beyond net pay to what their salary can actually purchase in each location. When we factor in the cost of living, some of the salary advantages of US cities diminish substantially, while European locations reveal surprising strengths.
A few examples reveal how dramatically this reshuffles our understanding of compensation:
- New York versus London: Despite New York’s 46% higher net pay, London software developers have more than twice the disposable income after living expenses ($25,080 vs. $11,894).
- San Francisco versus Berlin: San Francisco’s net pay is 73% higher than Berlin’s, yet after living expenses, the disposable income difference is just $3,044 ($25,567 vs. $22,523).
New York ranks last in disposable income among all ten cities, despite having the fifth-highest net pay. The city’s extreme cost of living ($67,852) essentially erases the salary advantage it has over European cities.
These findings reveal that there is more to the compensation puzzle than salary numbers alone. The actual purchasing power and lifestyle a location offers can tell a completely different story than what gross or even net pay figures suggest.
City-by-city cost analysis for hiring a mid-level software developer
US cities
Atlanta, GA
- Average annual salary (mid-level software developer): $114,104
- Total employment cost: $125,389
- Net pay: $83,155
- Cost-to-net pay ratio: 1.51
- Average cost of living: $37,501
Atlanta stands out as the lowest-cost US hiring location in our study, with employer contributions running just 9.9% above base salary. Employees also benefit from the lowest cost of living. After taxes, developers keep nearly 73% of their gross salary, leaving them with about $45,654 in disposable income after living expenses.
Austin, TX
- Average annual salary (mid-level software developer): $113,650
- Total employment cost: $125,470
- Net pay: $88,339
- Cost-to-net pay ratio: 1.42
- Average cost of living: $39,773
Austin delivers the most efficient compensation structure across our study. For every dollar that reaches a developer’s bank account, employers spend just $1.42. Thanks to minimal employer contributions and Texas’s tax-friendly environment, developers also fare well, keeping nearly 78% of their salary after taxes. Combine this with reasonable living costs, and employees end up with roughly $48,566 in disposable income.
New York, NY
- Average annual salary (mid-level software developer): $110,138
- Total employment cost: $128,630
- Net pay: $79,746
- Cost-to-net pay ratio: 1.61
- Average cost of living: $67,852
New York shows a significant financial contrast between salary figures and economic reality for employees. While employment costs fall in the middle range for US cities, the metropolitan area’s exceptionally high cost of living transforms the value equation. After covering basic expenses that are 80% higher than in Atlanta, developers retain approximately $11,894 in disposable income. This is just 14.9% of take-home pay.
San Francisco, CA
- Average annual salary (mid-level software developer): $119,203
- Total employment cost: $143,503
- Net pay: $82,973
- Cost-to-net pay ratio: 1.73
- Average cost of living: $57,406
The Bay Area continues to command premium rates as the traditional heart of the tech industry. Employers here spend about $1.73 for every dollar that reaches a developer’s bank account, the least efficient arrangement among US cities in our study. California’s tax structure and high cost of living mean that, despite high salaries, developers keep around $25,567 in disposable income. This is a figure that’s surprisingly lower than what their counterparts enjoy in several European cities with much lower gross salaries.
Seattle, WA
- Average annual salary (mid-level software developer): $133,707
- Total employment cost: $154,338
- Net pay: $101,262
- Cost-to-net pay ratio: 1.52
- Average cost of living: $45,790
Seattle tops our chart for total employment costs, but this is driven primarily by having the highest base salaries rather than unusually high employer contributions. The absence of state income tax also contributes towards employees receiving the highest net pay among all ten cities. With comparatively reasonable living costs for a major tech hub, Seattle developers enjoy around $55,472 in disposable income, the highest found in our study.
European cities
Amsterdam, Netherlands
- Average annual salary (mid-level software developer): $71,016
- Total employment cost: $91,260
- Net pay: $50,950
- Cost-to-net pay ratio: 1.79
- Average cost of living: $32,331
Despite it being one of Europe’s costlier destinations, Amsterdam’s total employment costs run significantly lower than even the most affordable US city in our study. Employers here pay 28.5% above the base salary in mandatory contributions (for the software developer salary), which puts Amsterdam in the higher range for European locations.
The city has strong fintech and creative technology sectors, drawing talent from technical universities throughout the Netherlands and neighbouring countries. Amsterdam’s business environment features widespread English proficiency, making it accessible for international companies.
Berlin, Germany
- Average annual salary (mid-level software developer): $73,730
- Total employment cost: $91,824
- Net pay: $48,032
- Cost-to-net pay ratio: 1.91
- Average cost of living: $25,509
Berlin has the highest total employment costs among European cities in our study (yet it remains 27% below the lowest US city). With a cost-to-net pay ratio of 1.91, nearly half of employer spending goes to mandatory contributions rather than employee take-home pay.
An interesting note is that Berlin offers the second-lowest cost of living among major European tech hubs. The city has developed particular strengths in blockchain, AI, and fintech development, with English commonly used in professional environments.
Dublin, Ireland
- Average annual salary (mid-level software developer): $75,201
- Total employment cost: $83,586
- Net pay: $52,951
- Cost-to-net pay ratio: 1.58
- Average cost of living: $35,659
Dublin tops our European cities for developer salaries while keeping total employment costs far below those in the US. Employers here pay relatively modest contributions at just 11.2% above base salary. This makes Dublin’s employment structure one of the more straightforward in Europe. Interestingly, when looking at our $67,850 benchmark, Dublin actually costs less than some US cities paying the same salary.
The city’s “Silicon Docks” area houses numerous multinational tech companies (Google, Amazon, Meta) that benefit from Ireland’s English-speaking workforce and EU membership.
London, UK
- Average annual salary (mid-level software developer): $70,225
- Total employment cost: $80,146
- Net pay: $54,665
- Cost-to-net pay ratio: 1.47
- Average cost of living: $29,585
London offers the lowest total employment costs in our European sample, 48% below Seattle. At the same time, developers also receive the highest take-home pay among European cities despite not having the highest gross salary, thanks to relatively low employee deductions (income tax and social security).
London hosts one of Europe’s largest tech ecosystems with particular strengths in fintech, AI, and data science. Its talent pool draws from both world-class local universities and a highly international workforce.
Paris, France
- Average annual salary (mid-level software developer): $56,994
- Total employment cost: $90,690
- Net pay: $38,365
- Cost-to-net pay ratio: 2.36
- Average cost of living: $23,324
Paris stands out with the most distinctive cost structure in our study. Employers here pay an extremely high 59.1% above base salary in mandatory contributions, by far the highest percentage we observed. This creates a cost-to-net pay ratio of 2.36, meaning for every dollar that reaches an employee’s bank account, the employer spends 2.36 dollars.
This becomes particularly apparent at our $67,850 benchmark, where costs reach a remarkable $107,772. That’s just over $20,000 more than any other city at the same salary level. Nevertheless, Paris’s actual market-rate employment costs still run 28% below the lowest US city for our software developer benchmark.
Hiring internationally through an EOR
Hiring in multiple countries isn’t just a matter of comparing salaries. As this study shows, costs vary widely depending on location, market rates, and tax structures, but so do the rules, processes, and risks involved in employing someone overseas.
That’s where an Employer of Record (EOR) comes in. With Boundless as your EOR partner, you can:
- Hire quickly and compliantly in any of the countries we operate in, without setting up a local legal entity.
- Stay compliant with local laws, from employment contracts to payroll reporting and benefits, without having to become an expert in each country’s regulations.
- Simplify payroll and contributions across multiple currencies and tax systems, with all payments handled on time and in line with local requirements.
- Offer competitive, locally compliant benefits that meet employee expectations in each market.
- Avoid permanent establishment risks by structuring employment correctly from the start.
- Protect your team and your business with proper worker classification, so you don’t face fines or legal disputes later.
Want the whole picture in Europe?
This comparison covers ten major cities, but our complete 2025 study analyses salaries, employment costs, and net pay across 36 European countries. See how every location stacks up, identify the most cost-effective hiring markets, and benchmark your pay strategies with real data.
Download the full 36-country European employment cost study.
FAQs
At equal salary levels, it’s more expensive to hire in Europe because employers pay higher social contributions. But when you look at real market rates, total employment costs in Europe are up to 48% lower than in the US. That’s because salaries in cities like London or Berlin are significantly lower than in places like Seattle or San Francisco.
Employees in the US generally take home a larger share of their gross salary, as taxes and social contributions are lower. In Europe, net pay is smaller but balanced by greater public benefits like healthcare and parental leave. For example, a software developer in Austin keeps about 83% of their salary, compared with 66% in Paris.
European employers contribute more toward national insurance, pensions, and social welfare programs. These mandatory payments increase total costs, but they also fund services that reduce employee expenses, such as healthcare and education.
Yes. When living costs are factored in, European employees often end up with more disposable income than their higher-paid US peers. For instance, London developers have twice as much left after expenses as those in New York, despite earning less.
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