As one certain B. Franklin said, “Certainty? In this world nothing is certain but death and taxes.” Today was tax day for many of us Americans including those of us who are expats and subject to the rules of foreign living. Slate covered this issue as though we expats were all living a cushy life abroad; after paying British tax all year, the fact that I manage a zero balance in the US is only due to the fact that I am a scientist (and thus not a banker earning real money) and so my US tax return falls under the level of the not-quite-poverty-stricken. Of course, it took 30 pages (prepared at a cost in pounds that I don’t want to admit, due to my lack of understanding of legal- and tax-speak) to demonstrate my lack of taxable US income this year, as opposed to 23 last year, and I’m mystified by this in light of the fact that the fall in the pound against the dollar means that I’m earning about 1/2 of what my compatriots in the US are earning for my same job (when the pound was worth something my salary was not embarrassing in dollars). What can I say, it’s the hard-knock life for us American expats in the UK. Perhaps I’m lucky to still be under the US tax limit and not starving to death in England.
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Not From Around Here 
Point taken and good post.
You don’t really understand economics, do you NFAH?
Howard, if you have an ACTUAL point, make it. If your only point is to be insulting for no clear reason (as usual, my tongue in cheek commentary seems to have missed you if you think it reflects my knowledge of world economics) then why not stop before hitting the “submit” button on the comment.
My point is certainly *not* to be insulting, but to echo what you yourself tend to say about your understanding economics. For example, on the 24th January 09 you said:
“But in the grand scheme of things, this sort of change in the exchange rate really does make a person wonder about the fundamental meaning of money. *I don’t understand how it works, and the dramatic change in exchange rate in such a short time just confuses me*.” [My emphasis]
As it happens, my own knowledge of economics is also weak, woefully so, but I’d like to make the following two points:
(1) It seems to me that an exchange rate is not relevant when discussing salary except in certain cases, for instance where someone living in currency region “A” is being paid in the currency of region “B”. I believe that this is not the case with you.
(2) To make a simple but I think reasonably fair comparison between your salary here and that of your colleagues in the States, you would have to do a calculation like: “I have to work for ‘X’ units of time in order to purchase a model ‘market basket’ of goods and services. To purchase the equivalent normalized ‘basket’, my colleagues in the US would have to work ‘Y’ units of time.” If ‘X’ is greater than ‘Y’, then yes, your colleagues in the US do earn more than you do (we’ll take it as read that your US colleagues are doing work which to all intents and purposes can be taken to be identical to your own). The exchange rate does not figure in this method.
May I hit the submit button now? 🙂
Hi NFAH,
I am completely with you on the tax thing and the pain that it can be as an expat, one more thing that makes life in the UK a bit harder as a foreigner. I have just hired an American accountant and its oh so much easier and so much less stressful… well worth the money.
Howard, I have debt in dollars and I earn in pounds. And it’s true, I do not have an innate understanding of why the exchange rate changed so dramatcially, so quickly. I can, however, spout off economic explanations–it’s not that I don’t *know* it but that I don’t *get* it in my gut–not that I don’t get that it can change, but that I don’t get how it changed so quickly–go back and read the quote. But that’s different than not understanding the concept of an exchange rate.
Given that cost of living is higher here than where I last lived in the states, it does rankle me that my real salary compared with cost of living here is much lower than the equivalent metric in the US. But I disagree with you that it doesn’t matter that it’s dramatically less than my compatriates in the states are making when you take the exchange rate into account. (I’m also making about the same now as when I was as a post-doc, which is also irritating) –it implies that somehow my efforts in Britain are valued less than the equivalent efforts are valued in the US! And as I said, at the moment there’s about even purchasing power parity (according to the Big Mac Index) but higher cost of living here in the UK.
G’day from Melbourne. In answer to your question, yes, that was central Dandenong. The Town Hall is on the stretch of Dandenong Road that is known as Lonsdale Street.
> Given that cost of living is higher here than where I last lived in the states, it does rankle me that my real salary compared with cost of living here is much lower than the equivalent metric in the US.
You will have to do a calculation like the one I suggested above to see if what you assert here is true. If you do so, please do let me (and all of us!) know your data and your method of calculation. You may well be right that you have the ability to earn fewer things per hour in this country than in the States, but I would like to see the calculation which supports this.
> I have debt in dollars and I earn in pounds.
This is a good case where exchange rate is an important factor. However it has nothing to do with comparative salaries.