Why Are UK Salaries So Low Compared To The US? - Up the Gains (2024)

If you have ever wondered what the salary for your profession is in the US, and have done an internet search to find out, then you were probably alarmed about the difference in salary.

The UK pays significantly less money in salaries than the US, and this might have you contemplating if you are living in the wrong country.

There are lots of different reasons for this salary disparity between the US and the UK.

In this guide, we’ll be taking a look at what the average salary is in the UK vs the US, and why are UK salaries so low.

For example a salary of £30k in the UK for the same role could earn up to 15-20% more in the US.

Keep on reading to find out more!

When it comes to comparing salaries, there are two averages that you need to take a look at: the mean and the median.

The mean average will give you an overall average that takes into account all the different salaries in the UK, whereas the median will look at the middle point across these salaries.

In the UK, the median average salary is £27,756 for the entire nation according to the ONS. It’s more for full-time workers and those working in London.

This takes into account the salary of all UK residents who are actively working in the UK, both part time and full time.

The median average salary in the UK for people in full-time employment full time is £31,285.The mean average salary for all workers (including full-time and part-time employees) is £31,447.

In contrast, the mean average salary for all full time workers is £38,131.

An annual salary of this figure would mean that the individual is earning around £3,170 a month before tax.

Generally speaking, an annual salary of around this figure is considered a “decent” salary in the UK.

Any person who earns between £3,000 and £4,000 a month would be considered a good earner. Unfortunately you have to factor in tax here, which of course varies depending on how much you earn.

Realistically on an average salary without a student loan repayment you will be taking home £2460 give or take.

Now that we have taken a look at the average salaries in the UK, let’s take a look at the average salaries in the US.

As we mentioned earlier, salaries in the US tend to be significantly higher than salaries in the UK. This is clear when you look at the averages.

In the US, the median average salary for women in 2023 was $53,229, and the median average salary for men was $58,342 in the same year.

These figures have taken both full time and part time workers into consideration. This converts to around £42,721 for women, and £49,433 for men.

As you can see, the latter figure is significantly higher than the median average for the UK.

In addition, the mean average is also significantly higher too. In 2020, the mean annual wage per employee was $78,392 and $6,352 a month before tax.

This converts to around £62,361 which, again, is significantly higher than the mean average salary for the UK.

Now that we have taken a look at the average salary for both countries, let’s take a look at why UK salaries are so low compared to the US.

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The UK and the US are both Western countries and because of this there are a lot of similarities between the two.

However, in terms of finances, there are a number of differences between:

Holiday Benefits

One of the biggest influences on the difference between UK and US salaries is holiday benefits.

In the US, the number of holidays per annum is significantly lower than the UK, because of this, employees have fewer days off a year.

In the UK, holidays are plentiful with most employees being allowed a minimum of 20 holiday days per year which can even stretch up to 28 days!

This often includes the numerous bank holidays which the UK has but equally sometimes it doesn’t. In contrast, employees in the USA will only have 10-15 holiday days a year on average.

So, salaries in the UK are lower. But employees who work in the UK have more days off a year than those working in the US.

Healthcare

One of the biggest disparities between the UK and US is healthcare.

Healthcare is covered in both countries, but in the UK we have the National Health Service (NHS) which allows us free access to healthcare.

In most cases, we do not have to pay for our healthcare, and this is reflected in UK salaries.

In contrast, healthcare in the US is very expensive. So, in the US a fairly large chunk of an employee’s salary will be dedicated to healthcare.

As healthcare is paid for in the USA, it does tend to be more accessible, with fewer waiting lists and quicker access. However, it is expensive especially when you factor in a larger family or ongoing illness.

So, salaries in the US are higher. But healthcare is paid for by the employee in the US, whereas healthcare is free to those in the UK on the NHS.

Pension Benefits

Pensions exist in both the UK and the US. However the way in which they exist differs.

In the UK, pensions are a mandatory benefit that is protected through legislation.

Due to this legislation, employers are expected to contribute a minimum of 3% of the recommended 8% minimum contribution level.

In the US, there are many more options when it comes to pensions.Employees have much more control over their pension plan and how they want to contribute.There is a lot more freedom over managing your own finances in the US, and as a result there are fewer pension benefits.

The US use what’s called a Roth IRA but the UK equivalent to a Roth IRA is normally an ISA (individual savings account or

There are a number of other benefits that those in the UK have access to which those in the US do not.This includes sick pay, income protection, and employee perks.

The social welfare environment in the UK is highly subsidised and this is reflected in the salary difference between the US and UK.

Cost Of Living

One thing that needs to be considered is the difference in size between the US and the UK.The US is massive compared to the UK and as a result, cost of living tends to differ across the country.

In contrast, cost of living in the UK tends to be the same across the majority of the country, however the cost of living in London is a lot higher.

When you look at cost of living statistics for these two countries, the cost of living in the UK is significantly higher than the US in most cases.Fuel tends to be significantly more expensive in the UK, taxes tend to be higher, and so does the cost of accommodation.

Of course, it is important to remember that taxes are higher because those in the UK do not pay for things such as healthcare.

In contrast, the cost of living in the USA is significantly lower in every State except New York.Yet employees in the USA tend to get paid more than those in the UK doing the exact same job.

In the early stages of 2023 pay has fallen by 3.0% according to the office of national statistics. This is said to be some of the largest drop in wages since 2001.

When you also factor in inflation and the rising costs of living this makes for poor reading for those who haven’t seen a pay rise in a long time.

With the national average salary sitting around £31,000 at the moment in the UK a low salary is generally considered anything below this.

However, as some may be just below I think it’s safe to say anything below £22,000 is considered a low salary when comparing it to the rest of the nation.

In short, UK salaries tend to be lower than the UK due to a number of factors.

These include pension benefits, holiday benefits, and, most significantly, healthcare and social welfare.

In the UK, we pay higher taxes because a number of things in the UK are subsidised or free, such as healthcare.Whereas in the US, individuals will have to pay for access to these things themselves.

Now you know why are UK salaries so low compared to the US but hopefully you see the benefits of the UK system over the US.

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