The math here is extremely misleading.
You used the average figures from a dataset of people making an average of about $55,000 a year for the US figure. That is, the people who spend 37% of their income on housing is from people making about half of the amount you hypothesize someone making. Since you can live in the same apartment, eat the same food, and so forth (with some exceptions depending on locale), that gives you another ~$38,000 in post-tax income in the US. You also ignore benefits (and promotion opportunities) and things like expense accounts, which can be substantial.
You are also comparing unlike people: one is an average American citizen, who probably has kids and a high discount rate, the other is an individual free to travel to another country specifically searching for a high disposable income job. The fact that the average American does worse is largely irrelevant, because the hypothetical person you're advising is already not-average.
It may well be a great idea to work abroad for a few years; it does sound fun and that's a lot of disposable income for limited skill. But if you're going to make a point with numbers, at least make a cursory effort to use plausible numbers and compare relevantly similar people, or at least admit that you're failing to do so.
These costs match my own cost of living when I was working full-time in the US as a highly-paid software engineer. So you could look at both columns as Louie2006 vs Louie2010 if you want to make it an apples-to-apples comparison.
Also, it's an established fact that people spend a constant fraction of their income on housing no matter how much income they have in the US. Look at the reference for my cost data. Groups with wildly different incomes all the way from $25k/yr to $80k/yr all spend between 32-37% of their income on housing. So until I see research showing me otherwise, I stand by my use of fractional income costs of living for housing, transportation, and food budgets.
Groups with wildly different incomes all the way from $25k/yr to $80k/yr all spend between 32-37% of their income on housing.
This simply indicates that as people get richer, they demand better housing. I live in Manhattan. I could get the same apartment if I go on to be an associate at a law firm making $165k a year or a public defender making $50k. However, if I'm doing the former, I'm probably going to spring for a nicer apartment. If my primary goal were saving money, as is implied in your job comparison, I could easily live in the PD's apartment on an associate's salary.
The fact that most people who can save big on housing choose not to is not applicable in your hypothetical; to the extent that it is, more expensive housing implies higher quality of life.
The numbers you quoted are averages for each ten-year demographic between 25 and 75, plus the tails. There's no mention of variance, and I would expect someone employing rationality techniques to manage their finances to be an outlier.
Personal anecdote: My own finances as well as those of six of my friends fall well outside those bands, with housing costs around 13-23% of income. We're all highly-paid software engineers between the ages of 25 and 30, and none of us have families.
Edit: I forgot to include utilities, so my friends in NYC actually edge the housing cost range up to 23% or so.
It must be much higher than the 4% a typical American in your position has left. I'd be curious what the best case real world numbers are for people in your situation who are doing their best to optimize.
Which was on response to:
Personal anecdote: My own finances as well as those of six of my friends fall well outside those bands. (Emphasis added.)
You still seem to be missing the point. Statistical averages, even in percentage form, cannot be blindly projected across the entire income scale. Someone making $1M a year does not spend the same percentage on food as someone making $40k.
And what does it matter if he takes money out of his housing budget and directs it towards an expensive car? The point of disposable income is that you get to spend it on things you want. That includes nicer housing, restaurant meals, and fancy cars, the value of which is ignored in your calculations.
I track my finances directly in a CoffeeScript source code file and use a simple home-brewed software library to compute my net liquid assets and (when necessary) my estimated tax payments and projected tax liabilities. You've reminded me that I really should be using something like Quicken for finer-grained analysis, so I'll look into that and post my numbers later this week (edit: one second thought, it doesn't seem worth the extra friction).
My living costs followed a general upward trend that leveled off in late 2009, but my salary data is extremely messy for several reasons:
It's hard to imagine changing my past since it'd mean giving up several of my current friendships, but the decisions I made in reality were emphatically the wrong ones from a financial perspective: I worked at-cost for six years and left several hundred thousand dollars of...
Also, it's an established fact that people spend a constant fraction of their income on housing no matter how much income they have in the US.
It's an established fact that people who live in the US don't suddenly decide to spend a year in Australia. Therefore, your plan fails, it just doesn't happen.
Vladimir was being sarcastic, because Louie dismissed the possibility of optimizing one's expenditures.
Louis is contrasting his personal experience with both his personal experience and demographic averages. What Louis did is not average; and there are other outliers who are not spending 32-37% of their income on housing. In fact, when he suggests moving to the outback he is simply rephrasing a suggestion of "spend less on housing". Moving to the outback and getting a job as he describes is one way of doing that. Living under a bridge and showering at your gym every morning might be another.
He is attempting to equate the micromanagement of optimal spending practices within a US city environment and culture with the big leap to go ahead and move to the Australian outback. Neither or these things tend to happen so he claims the right to say 'you too' on your 'fail by default' point.
Unfortunately this obscures or ignores the critical insight into human psychology that you allude to here with respect to setting up 'succeed by default' scenarios, particularly with respect to choosing critical culture and environmental factors.
I had a fairly similar response. I spent $900/mo. on rent when I was making $33k, and I am now spending $600/mo. while making $92k. Obviously whether or not someone spends a constant fraction of their income on housing is an individual decision, just as whether or not someone heads to Australia is.
I'm actually really shocked that you spent more than 95% of a $100k+ income. Even on a $24k student salary I managed to save around $6k/yr., and indulging in all the luxuries I care for I spend less than 35% of my current after-tax pay. I don't feel like I've ever had to "micromanage" my finances or spend more than a few extra minutes a week to do this.
Given that I'm an American currently living (and working) in the Outback, well there's some flaws in your argument.
There is a lot of employment opportunities here (Alice) because LOTS of people leave after a couple years here. They do that for a reason.
There are basically two economic drivers in this area--tourism and The Base (I'm neither a gardener nor a cleaner, I'm a sprinkler head technician). The Base mostly brings in Americans with very high clearances to do gardening and cleaning, and spends a significant amount of money in Alice for related goods and services.
Tourism is largely due to it's proximity to Uluru/Ayers Rock, and, well, being the only sizable "city" for, well, Darwin is about 1500k north of here, and Adelaide 1500k south.
Alice is a town of about 26k residents. Small town. Very small.
EVERYTHING here, except (oddly enough) pecans, is more expensive than I was paying back in St. Louis MO.
Gas is something like 1.30 a liter. A case of Strongbow is ~50 AUD. A 700ml of Makers Mark is about 40 AUD. Some of the costs are hard to map because GST is 10% and included you don't notice it, you just see it's more expensive, so you really have to keep that in mi...
I honestly think that this is a very good reality check. I don't think that most people should do it, as I think that there are many better options in the US, but I definitely think that anyone who doesn't feel that they have better options than the one Louie is describing, for instance, anyone who thinks that they are trying to make money but doesn't find that they can save $20K in a year, really should do it or ask themselves some serious questions about why they don't.
I don't expect anyone to do this, because I think people including people here have almost no tendency to actually act in ways that are theoretically more rational. I hope that rather than confabulating reasons whey they don't though, people reading this can at least acknowledge the size of the gulf between their actual motivational structure and their story about it.
I think that there are many better options in the US,
Anything that will subsidise or cover your living costs while paying you a non-paltry wage (so something like the Army, or oil-rigs, or work in a remote area - surveying?) should be on the same order of magnitude as this idea. And it may be easier to get such a job in America rather than moving to Australia.
I think people including people here have almost no tendency to actually act in ways that are theoretically more rational
Truthful over basically every non-trivial situation I can think of. Once EY's book is published this website should focus more heavily on instrumental rationality. Developing at least sequence-quality posts on that topic would be valuable.
You're not writing my book, so why not start posting on it now? (As indeed many are already doing.)
I don't think that most people should do it, as I think that there are many better options in the US...
What, for example?
Police or fire fighter in the San Francisco Bay Area is a low barrier to entry high salary high status job and not very dangerous.
I think small retail is an even better deal than that. Terribly run stores in SF stay in business and well run ones prosper ridiculously.
Many LW readers are coders who could be Google quality if they worked at it a bit, though the outback might be a good place to get practice without distractions.
PUA enthusiasts can obviously make money selling instruction in Game, and should be able to make money in sales in general.
I'd like to raise a "dark arts" objection here. This article is written with a lot of presuppositions, strawman attacks, appeals to character, and other interpersonal but non-rational attempts to convince social humans.
For example, the article leads with "You're young, smart, and hoping to have a positive impact on the world." While that may be true of the majority of less wrong readers, the article does not discuss why these qualities are relevant. In fact, the article suggests ways to have less impact on the world - working through a service position - than other careers (such as existential risk reduction). This leads me to believe that this opening line is nothing more than a compliment intended to endear the reader.
The following wording reads like a sales pitch and is highly suspect: "And it is possible to find easily obtained, low-stress jobs with flexible hours that allow you to save as much money as someone in the USA making $100,000/yr... if you leave the USA to look for them."
A classic promise - easy money, with a small catch. Can you rewrite this is as a description of the work you personally experienced, rather than an ambiguous promise?
You...
For example, the article leads with "You're young, smart, and hoping to have a positive impact on the world."
Writing in a conversational tone attempting to empathize, establish rapport and maintain interest. That barely even qualifies as grey arts. It is more 'not pretending to be a Vulcan so as to prevent dark arts accusation".
I'm not advocating everything in the original post - it is a good post but far from perfect. But this objection was an (ironic) abuse of the 'dark arts' label and something that I would wish to discourage.
This doesn't pattern-match to a sales-pitch at all. What does Louie stand to gain by you following his advice?
As your post stands, you make six whole paragraphs out of cherry-picked quotes and "this sounds persuasive". Most egregious of all is your conclusion:
There are many ways to optimize one's income and savings rates.
As if this is somehow a point against Louie!
I went to an ivy league college, learned an economically scarce skill (IT security), found contract positions that paid a high hourly wage with no clause to continue the work. I was otherwise frugal.
I am not conventionally attractive or charismatic. Louie is. He will find it easier to find work as a bartender without a resume or reference than I will.
we'll call the remaining portion of your income - 4.2% - your discretionary income. 4.2% of $100,000 is $4,200.
You optimized spending in the Australia option, but didn't in USA option. Instead, you used typical spending, which is misleading. I wonder how much less one can spend if that is set as a goal, and if you take into account the apparent single/no kids/lives in apartment assumptions of the Australia option.
Short explanation:
This is not me being misleading in how I present data. I'm presenting what happens by default in both options, not one optimized and one non-optimized option. What you discovered here is that, the plan to save money in the outback is robust and succeeds by default, while the plan to save money in the US is fragile and fails by default.
The longer explanation:
The Australian outback option isn't optimized. It's an off-the-shelf option that is heavily subsidized and in a bizarrely awesome economic climate... something I don't think many people here knew existed.
I think it's fair to compare a typical US job to a typical outback job because this is what you get when you don't put much effort into optimizing your budget in both cases.
The difference is that the outback is already incredible without you having to do anything.
It's actually pretty unfair to compare an outback working budget to the best-case US scenario where you spend tons of time in the US managing your money well to get the cheapest rent, best car prices, lowest food costs, and execute convoluted tax dodging strategies that most people couldn't figure out. It's a very tricky plan that requires lots of thi...
What you discovered here is that, the plan to save money in the outback is robust and succeeds by default, while the plan to save money in the US is fragile and fails by default.
But as you noted above, there is a lot of resistance by default to exercising the Australia option. So the Australia plan fails by default too.
Once you've opened the door to considering those rare Americans who might decide to uproot and move to unfamiliar lands across the globe, you might also consider those rare Americans who can manage their money and don't consistently make irrational decisions. In the context of here, I wouldn't doubt they're the same people.
But as you noted above, there is a lot of resistance by default to exercising the Australia option.
Every plan has the problem that if you don't execute it, it fails. In this respect, the two are exactly equal. (And in degree, they may not be too far apart - given all one would have to do to carry out the American plan.)
Don't burn out, Louie. This is Less Wrong, of course there's going to be some pretty intense criticism. It's only worth getting angry if you think you're right but your posts/comments are negative on net.
It seems to me more like folks are pointing out that things aren't all that nightmarish in actuality, and your analysis to show otherwise is flawed. If you would rather make fun than improve your analysis, there are other places on the Internet where that sort of thing is more welcome.
"the plan that lets you save money in the US is a life-engulfing minefield of time-consuming bargin-hunting, self-denial, and tax evasion."
I work as a software developer in the US, have never made a 'budget' for myself or tried to analyze my finaces before now, I pay taxes normally, eat out often, and have no trouble saving lots of money. I'm going to substitute my expenses and pretend I only make 100k and see how much I'd still be able to save (living in Seattle).
Rent: 16.8k instead of 23.2k Utilities: 2k instead of 7k (how can you spend 7k on utilities if you're a single person in an apartment?) Misc house expenses: 0.5k instead of 6.8k (what are these misc expenses that other people supposedly spend so much on?) Food: The estimate of 13.3k is reasonable for food, although it's easy to spend a lot less without hardship. Transportation: 4.6k instead of 16.5k (who spends 16.5k per year on transportation? Just don't buy a new BMW every 5 years and you should be set. I bought my car for $9k, 5 years ago).
Apparently it's pretty easy live well in a large US city and save 33.9k per year without really paying attention to your finances. If you're a good software developer you should be able to make a lot more than 100k and therefore save much more per year.
Spending less than 37% on housing doesn't require
tons of time in the US managing your money well
It requires you make a correct decision once a year or so about renewing the lease. The reason people have little discretionary income is that they habitually commit themselves to spending plans such as five years of a car payment - but that spending plan itself is a choice.
You may have an excellent point about the costs/benefits of your perception of working in the US. I don't think you have much of a point about actually working in the US, and that's what all these comments are getting at. Even at much lower salaries, it isn't that hard to save a lot of money if you care to. (I'll throw in my own data point: my last serious job before law school gave me about 50k a year in disposable income, working 20 hours a week.)
While I'm at it, "time consuming bargain hunting, self-denial, and tax evasion" are all rather prominent parts of your own plan. You're moving across the globe to find cheap living. You're living in the middle of nowhere, with undoubtedly limited access to goods and services. And you're evading paying US taxes (or maybe you actually have to pay them on your return; I don't know). Plus, you're working in a job that has no real benefit for your future career, away from friends and family. I laud the suggestion for people to do something different and potentially lucrative, but methinks you're weighing options on less-than-accurate scales here.
I think a large contingent on LW would be more interested in what an optimal employment scenario looks like after graduating with a high-value degree. I know I am.
Most people fail at Steps 0 or 2. I think Step 1's the easiest, although in another comment my friend Luke explained an innovative way to fail at it.
Warning: the rest of this comment contains hard numbers. If you're averse to hearing/sharing financial data, stop reading now.
"High-paying" doesn't have to be zillions of dollars, although that would help. I graduated with self-taught C++, a bachelor's degree in computer science, and an accepted job offer. I'm now 27 years old and I've been working for 6.5 years. My income has increased from 74k to 112k. (I'm very lucky - this is more than my father ever made after 25 years of continuous employment.)
I achieved Steps 0 and 1 by luck (I never thought about becoming a programmer before I went to college, and until I was hired I was planning on going to grad school). Step 2, I think, requires the most rationality.
The income effect is your enemy: the more you make, the more you're likely to spend. In my amateur opinion, this has two mai...
this is my current plan, and I think the step 2 has a variety of methods to it that people fail to use.
If anyone has anything to add to this list please comment.
Upvoted. This is really interesting.
I'd very likely not do this myself, though. I've noticed there are two kinds of attitudes toward jobs (and I've seen rationalists of both stripes). Some people really want their career to be an extension of their interests and identity and perhaps their prestige: "I'm a scientist," "I'm an artist," "I'm a programmer," "I'm a doctor," "I'm a teacher," etc. They wouldn't want to make the same money in less time by a different route, they want to work in that particular field.
Some people, on the other hand, basically see their job as a source of income, which they can use to pursue their interests elsewhere. They're optimizing for money and free time, which means they look at a much wider range of money-making possibilities. (The most extreme example would be The 4-Hour Workweek, in which the money comes from a passive income stream, not a "career" at all.)
Your advice is geared more to people in the second category. I'm in the first. That doesn't mean it's not good advice -- if you want money and free time to pursue an interest, then hospitality jobs in the outback sound like a great idea, given your evidence.
I'm curious, though -- does anyone think that one attitude is better than the other? Or is it just a matter of individual preference? Job-as-income-stream, or career-as-personal-identity?
I'm glad you brought this up. I actually anticipated this question and wrote up a responses in an earlier draft of this article but it didn't end up making the final cut because it's more my intuitive opinion rather than a well-established fact.
...Most people capable of following this analysis without throwing their hands up in confusion or reacting to it emotionally are probably on life auto-pilot [see Concern 1 below] and optimizing heavily for prestige at the expense of all other goals. They want to be a Professor, Doctor, Software Engineer... something that impresses other people (and perhaps more importantly, impresses themselves). Sure, they don’t say it like that, but when you confront them with an opportunity like this to earn more real money and have a better overall job experience, in a way that doesn’t include the same kind of prestige they were aiming for, they suddenly have all these interesting objections (link false objection) about why it couldn’t work for them.
[Concern 1] Some people are probably thinking, “But why not combine the thing you do for money with your intellectual pursuits??” What can I say. The economy is dumb. If the value you’re creating doesn’t exis
The straightforward answer: you can do a lot more with an interest, and use social reinforcement to your advantage, if you're plugged into an institution. Trying to go it alone is a serious challenge: you're isolated, you'll have motivation problems, you'll have a higher probability of getting yourself into eccentric dead ends if you don't have guidance.
Also, a lot of people really care what others think of them. We seem to disapprove of that on LessWrong, but I don't see why it's any more selfish or venal to want approval than to want money.
If you self identified as a mathematician, why couldn't you earn more money being a bartender in Australia while spending your free time doing math and participating in the mathematical community?
I do self-identify as a mathematician. I've worked abroad as well, and the amount of math I was able to do while working full-time abroad was a very small fraction of what I've been able to do while employed as a graduate student. Maybe I didn't have enough discipline, but I was usually exhausted at the end of a day and needed the weekends to recharge.
Unless you already have credentials (by which time you're probably past 30 or getting there, and not eligible for the OP's advice) participating in the mathematical community is more difficult, because the world is full of crackpots cold e-mailing their proofs of the Riemann Hypothesis.
As annoying as the lost income from being a graduate student in the United States is, I wouldn't give it up for my proximity to the second or third-tier mathematicians of our generation.
I do self-identify as a mathematician. I've worked abroad as well, and the amount of math I was able to do while working full-time abroad was a very small fraction of what I've been able to do while employed as a graduate student. Maybe I didn't have enough discipline, but I was usually exhausted at the end of a day and needed the weekends to recharge.
I think this applies more generally to any intellectual output. There are people who can be intellectually productive even when they have a near full time day job. I'm not one of those people. Academia or a research position it is for me.
I suspect most people don't have the self-discipline for it; being "forced" to do something almost every day is a good way for most people to ensure they work on something that has high barriers to productivity (most difficult pursuits), even if they really enjoy it.
Possibly even more importantly, individuals almost never have access to the infrastructure and support systems they need to do really interesting things[1]. How should one go about advancing genetics without a lab? Even a small university didn't really have the resources I felt I needed to do some of my research, but at my lab they're not even costly (to me or the lab) to procure. Access to petabyte data sets? Petaflop computers? The marginal cost of granting an additional person access is minimal, but I don't know of any institutions that grant such access to local bartenders.
[1] Art can mostly be excluded, but not entirely, since some great art is still really expensive to produce.
One thing Americans considering foreign employment may want to understand is that Americans overseas still have to pay US taxes.
Also, there is some misleading accounting here, as others have pointed out. For example, Louie assumes someone making $100,000 will pay 7% of their income ($7000) on utilities alone. Also, I imagine relatively few people pay more than $1900/month for rent. For example, a furnished luxury two-bedroom apartment in Greater Philadelphia (a relatively expensive market) can be had for less than $1900/month.
And of course, America has low-cost areas as well. My sister (she is a single day care worker) recently moved into a 3 bedroom town-home in a nice area of suburban Toledo, Ohio. She pays $600/month. She previously lived in a decent 1 bedroom for $350/month.
One thing Americans considering foreign employment may want to understand is that Americans overseas still have to pay US taxes.
The ~80k exemption means that I don't think this is a big issue for the described job categories, which I suspect mostly fall in the 30-60k range.
I disagree and agree with some of the points above. But that's life right.
So my story is that I grew up in Sydney and now for the past 2 years have been working in the Bay Area (SF) as a Software Engineer. In a nutshell for a working professional USA is the place to be. Lifestyle, I will stick with Sydney.
Here's a quick snippet of what I found:
a. As a Software Engineer I make more $$$ here then in Sydney. Also the "fun" working conditions here rock and the talent you get to bump heads with is super.
b. Tax is lower by 2% for me and gets better when I claim jointly. If I have kids it gets better.
c. Living here is CHEAPER.
d. Food is cheaper. I buy fresh organic produce at farmers markets for the same price I would have in Woolies processed foods in Sydney. Thus I am more healthier and feel better. Plus so much more choice.
e. Petrol (Gas) is cheaper. Cheaper by 30% then in Sydney.
g. Cars also cheaper by 50%. You can get an E350 Merc for $60K vs. same one in Sydney for $125K.
f. Housing (rent) in Mountain View (heart of Silicon Valley) is identical to North Sydney (within 7km of city). Utilities are also cheaper by average of 50%.
g. Internet cheaper by 20-50% + unlimited data. Say what, unlimited. To an Aussie true unlimited is unheard of.
The rest of this Aussie's journey in the heart of Silicon Valley is documented here: http://www.theroadtosiliconvalley.com/
~ Ernest
As an Australian living in Melbourne, I too would like to point out the job-ease here. I earn ~21 dollars an hour working at KFC. That said, now seriously considering a working holiday in central or western Australia.
Questions:
1) What do you recommend in the scenario where one lands in Australia without a job lined up, and then (for whatever reason) cannot find an acceptable one? (This may be very unlikely, but having backup plans for emotionally salient crises is an important component of committing to major plans for certain types of decision makers.)
2) The website you linked for hospitality jobs is not working. Can you list some more examples of job types besides bartending and receptionist work? (In particular, I would find this possibility more appealing if there were jobs listed that didn't involve spending a lot of time on my lousy feet or using telephones.)
3) Is there any hidden pitfall associated with leaving partway through, either temporarily (home for Christmas) or permanently (don't like it there after and wanna go back)?
4) If you really, really like it there, is there a good way to stay?
5) Regarding subsidized room and board, I strongly value being able to cook for myself, which means I need to have, equip, stock, and find time to use a decent kitchen. Would this value collide with the perks you mention?
Q: Won’t working in Australia prevent me from gaining experience in my narrow professional sub-field, thus reducing my total lifetime earning power?
A: This is almost certainly not the case for anyone under 30. Companies pay professionals more based on their abilities and their age as opposed to their actual years of experience. And, they pay more for older professionals than young ones just starting out cause they know these people really do have higher expenses and are less likely to quit. So taking a year off in your 20s to work abroad is only exchanging a year in which you would have earned the lowest salary you’ll ever have during your career for a year of higher earning power in Australia. You can always come back to your career in a year and pick up where you left off. Besides; who follows a straight-up-the-ladder career path anymore? Almost nobody.
Although I think that in the case of taking off only a year these sorts of concerns are probably pretty minimal, this doesn’t seem like an accurate view of the hiring process as I know it. First, many (although not all) companies have no methodology in place for evaluating abilities other than through experience. Indeed, many ...
Doesn't the US tax income American citizens make abroad? And then financially abuse you if the IRS judges that you gave up your citizenship to lower your taxes?
I think there is a widespread emotional aversion to moving abroad, which means there must be great money to be made on arbitrage.
I think a lot of the aversion is fear of inferiority and/or ostracism. These are counter-intuitively misplaced.
The theory is this: You're worried that the people over there have their own way of doing things, they know the lay of the land, and they're competing hard at a game they've been playing together since they were born. Whereas you barely speak the language, don't know the social conventions, and have no connections. What chance could you possibly have of making money or making friends?
In practice, it's the opposite: Against a wildcard like you, they don't stand a chance!
If you're somewhat smart, you'll find that you have cultural superpowers in a foreign country: Your background gives you a different, unusual look on things which makes you interesting and exotic. At home, you'd be nothing special. And since your accent is cute, you'll be forgiven your blunders (at least by strangers and superficial acquaintances).
The same asymmetry applies to your education, your working style, etc. They are suddenly unique and refreshing. That can be parlayed into advantage, if used judiciously.
Playing 100% by the rules only guarantees that your playing field will be too crowded for you to get any breaks.
Where the market is irrationally risk-averse, take risks, young ones!
How does this fit into a larger career plan? Is it possible, for instance, to get letters of recommendation from supervisors at such jobs, and will American employers take such letters seriously?
I'm in my 50s, so I won't be upping and moving to work as a bartender in Alice Springs. But even at 20 a drawback that occurs to me is that I like big cities. I would find living in the sticks worse than putting up with a city commute. There is the internet, but still. How do you find it? What do you, or did you, do with the time?
The EMH applies to financial markets, which revolve around ownership of easily tradeable things. Often those things are bought just so they can be sold later on. A person convinced by your argument would have a difficult time "leveraging up" to arbitrage an inefficient labor market. Though I think the economic consensus might be that labor markets generally are not very efficient, hence the existence of persistent high unemployment (though that may not be an issue in Australia compared to the U.S these days).
As an American currently living in Australia on a Work and Holiday (462) Visa, I have a small but significant correction to make: foreigners on a 462 Visa aren't actually able to file as residents for tax purposes.
Which means that rather than paying 0% tax, I'm paying about 32% tax. (And that's a lot, but it's still better than what I'd be paying if I didn't have an Australian tax file number. If you don't have one, you can end up paying up to 45%.) I have yet to find out if I'll get any of that money back when I leave.
When I first got here, I was hopeful that maybe I did qualify as a resident for tax purposes. After all, it says on the Australian Tax Office's site that you are "generally considered an Australian resident for tax purposes" if "you have been in Australia continuously for six months or more, and for most of the time you have been in the same job, and living in the same place." (Source: http://www.ato.gov.au/individuals/content.aspx?doc=/content/64131.htm). And that's exactly what I planned to do. But maybe what that actually means is that you need to have already lived in Australia for more than 6 months at the time of application. I don't know. B...
As a West Australian I think that there are certain expenses you're overlooking. You'd need access to a car, there are no buses or trains to many of the towns (sometimes the larger mining companies do organise buses or chartered flights). Internet will be slow painfully slow and prohibitively expensive, where $200 worth of hardware and $40 a month (on a one year plan) gets you a whopping 1GB of quota. Food is very expensive, alcohol even more so if you're into that sort of thing. Living in the outback can be very unpleasant depending on where you go.
My roommate is an electrician and has done plenty of fly in fly out work, while the money is (often not always) good, he can't handle more than 6 months at a time since there is often not much to do in small towns.
Q: What about Australian culture? Will I like it over there?
A: Australia is a highly educated, robustly secular, extremely developed country. If you have any questions about the desirability of Australia, just ask Less Wrong! A disproportionate number of Less Wrongers are Australian.
However, Australia also has the most restrictive Internet censorship policies in the Western world.
The current internet censorship is unproblematic. The proposed internet filter would have been problematic, but the legislation is dead in the water.
We have some fairly arbitrary socially conservative "nanny state" policies. None of them get in the way a great deal, but they do stick in the craw a little.
The political climate in Australia is intensely pragmatic. Voters are stone cold to principle --- they think almost exclusively about the effects legislation will have on their lives. This means that people will support a policy that they think means their children won't be able to view porn on the internet, as they perceive this as a problem. On the other hand, it makes it very difficult for astro-turf organisations to convince people to vote against their interests. That's why we have a decent minimum wage, single payer health care, etc.
I made $110k a year in Seattle, pre tax. I saved roughly $45k/yr in my last two years there. Lived in a nice urban 1br in a good area.
I judge this is a poorly thought out/misleading article.
"-7.65% of your income into Social Security good luck getting that back"
The "Social Security will be eliminated before you collect any benefits" line is one of the great myths of USA politics. It's being intentionally propagated by one political party (hint: the one that voted against SS and has been fighting against it ever since.) SS's finances are in fine shape and the program can continue with minimal or no modification for many years to come.
Your link goes to a very brief piece arguing that most people don't think they will get Soc...
I have a different perspective on these issues, having moved to the US from Israel (fairly recently). Here's why living in Australia would suck for me (Your Utility Function May Vary):
I've lived in Sydney all my life, and often meet people who are here on a working holiday and are very disappointed. For instance, this weekend I met a guy from Jordan working in a convenience store. He was making $800-1000/week working nightshift[1], and enjoying the novel, liberal culture, but found it difficult to save much.[2]
Now I know what to tell people, which makes me feel a lot better. I'd be curious to know whether you could get a similar deal in other parts of the country, though. Alice Springs is not a greatly pleasant place, from what I unders...
Great post, thanks. I would be interested in hearing analogous reports from people in other places, like Singapore, Hong Kong, or New Zealand. Peter Thiel apparently thinks New Zealand is the next big thing.
As was mentioned in the Employment Open Thread, don't forget about the Existential Risk Reduction Career Network.
I wish we had more info on how people who aren't US citizens or under 31 can live and work in AU.
Great Article & Info mate, I am a Aussie living in Canada for past 6 years, I am a long haul trucker, When I made the move I was told I would be earning 80,000 CND per year, Okay that meant taking a pay cut for me of 30k per year, I could deal with that as I wanted to Truck Nth America, I have no regrets in my decision,So don't think I am whining:) I have made Canada my home & I have been to every of the lower 48 States more than once, My 1st year here I struggled to earn the 50k I did earn, I was used of more than twice that amount, Also I was hit...
I find your basic proposal sympathetic, since I have more or less been following the idea of optimal employment myself, but with different preferences. In that light, I find your advice highly specific, which is very useful for people with similar preferences, but less interesting for others like me.
To add my current personal choice to the mix: Here in Germany the cost of being enrolled at university is relatively low: from 50-500€ / semester, depending on federal state and university. On the other hand, you get the benefit of being able to work as "W...
-7.65% of your income into Social Security good luck getting that back
This is incorrect. The actual sociality security rate is DOUBLE that. Half is paid by the employer & half by employee to make it look smaller. That half you don't see does count b/c it lowers salaries offered.
Also you included medicare taxes in the figure. social security alone is less.
Also it's a % of your income up to something like 110k, income above the limit has 0 payroll taxes.
I need to quibble with the "compulsory retirement savings" point. Realistically, any amount that the government forces the employer to contribute as a condition to hire you is money that would have otherwise been given to you as wages. There is no way to increase someone's value by fiat, so it's misleading to suggest that you somehow gain from the tax (apart from the social value of the retirement scheme). Also, the US SS withholding is 12.4% of income, as half of it is paid by the employer before the employee sees the funds but, as discussed,...
As an Australian living overseas I'm staggered by the quality of life that Australians enjoy, which seems to me higher than that in the UK or US for any given income bracket.
I suspect the main reason that more Australians who live in cities don't go to the outback is that they highly value a cosmopolitan lifestyle. Great for a working holiday to save some cash, though.
As this is currently in the top position on the front page, I took the liberty of editing the top slightly to trigger fewer perceptual spam-detectors - there's no real reason not to tell people what the article is about up front.
The USA is not the best place to earn money.2 My own experience suggests that at least Japan, New Zealand, and Australia can all be better. This may be shocking, but young professionals with advanced degrees can earn more discretionary income as a receptionist or a bartender in the Australian outback than as, say, a software engineer in the USA.
As a side question, when did a receptionist or bartender become a "professional"? Is "professional" just used as a class marker, standing for something like "person with a non-vocational ...
I read it as "young people employed as professionals can make more money by being not-professionals in the Australian outback".
But to many, "professional" merely means "someone who is paid to do something". I think that usage came into the popular consciousness via "professional athlete", though I'm not sure if that's the first instance of the popular usage.
ETA: according to OED, the relevant distinction in this usage is "professional" vs. "amateur", and it was used somewhat in that sense as far back as maybe 1806 (I assert that their earlier citations were meant ironically, or merely by comparison to actual professions).
Ostrich Effect - Regardless of income, the average American ends up paying close to 40% in taxes yet consistently self-reports as paying only 3%.
Huh? You haven't left off a zero there? How can someone think they are paying 3%?
Is overqualification a concern? That is: if I'm already working toward a Ph.D. and I decide to complete that first, will it work against me in finding hospitality work? (I'd guess such jobs have sufficiently high rotation anyway that the answer is no.)
Do you know if the situation is equally good for more "career-like" jobs? (I.e. instead of making good money without too much strain, can I bust my ass to make even more money?)
Even if both the answers are the less-desired, I'm going to seriously discuss this with my wife.
Is overqualification a concern?
No. I have a Master's degree in Software Engineering. Overqualification doesn't matter.
Do you know if the situation is equally good for more "career-like" jobs? (I.e. instead of making good money without too much strain, can I bust my ass to make even more money?)
Yes and no. Australia has a much narrower pay gap between the lowest and the highest paid workers. For example, where I worked, the lowest paid employee (a non-English speaking room cleaner) made 2/3rds of the salary of the highest paid employee (the head chef). Australia simply outlawed having a working-poor underclass by making their minimum wage $15/hr and indexing it to inflation. Most American economists would probably say that this is impossible and would inevitably cause wide-spread unemployment... without realizing that Australia, Japan, and New Zealand have already done it and it works.
To answer your question more specifically: Yes, you can earn absurd amounts of money in Australia if you really want to work hard. The mining industry there pays people something like $200k / yr to sit at computers and order mining machines around. Modern mines in 1st world nations are run by a handful of people working hard but not physically doing the mining themselves. I've heard it's hard to break into this field but you could do it if you really wanted.
The recommendation is sound if:
This sounds like an interesting opportunity! I'm going to be returning to the States from Peace Corps service pretty soon, and I've been considering options for what to do next. I'll look into this one a little more closely.
One question, though: how hard would it be for me to be a vegan in the outback? I'm willing to spend more money on food than typical to maintain a vegan diet; variety and quality of food is more of a concern to me than cost.
Hmmm... this is indeed tempting.
The last time I worked at a job like that, though, I was fired after only three days. (I did something really stupid.)
Also, how many hours a week are the jobs?
wow. really great article, first time here. anyway i'm still going thru comments BUT... what opportunities are available for someone over the age of 30? doesnt have to be australia but damn, that'd be nice.
So, if you do not have health insurance, how do you get around the health insurance requirement needed before applying for the work visa?
Some helpful Tips I've learned
Thanks for this great post Louie!
Australian minimum wage will receive a pay rise of A$00.51hr from A$15.00 on 1 July 2011. http://www.stuff.co.nz/business/world/5097951/Australia-raises-minimum-wage
Note: Don’t forget to get power adapter for your electronics.
Buying plane tickets
http://www.kayak.com/ http://www.tigerairways.com http://www.bing.com/travel/?cid=homenav&FORM=Z9LH5
Transport/Hostels
Sydney: http://www.airportlink.com.au/ Melbourne: http://www.skybus.com.au/service-info-buses-and-transfers-to-melbourne-from-airp...
Great article!
I'm currently trying to figure out my personal optimal employment. (I'm a German CS student and will get my degree next year. Most importantly, I want to leave the country and live in some English-speaking country. I can't stand the cultural isolation any longer.) I was already considering Australia and you have just made it look a lot more attractive.
The specific job you provided, however, isn't right for me. Remote areas are exactly where I don't wanna be right now. I've lived in villages and small towns most of my life and I'm sick of the...
Note that a lot of the financial benefit described here comes from living somewhere remote -- in particular the housing and food costs. That's the reason for the strenuous warning not to live in "Sidney, Melbourne or any major Australian city." From a larger perspective, it partly accounts for choosing Australia over America (low population density --> low housing costs, etc.).
For a full analysis, the cost differentials of living in the Australian outback vs. an American city (or whatever) have to be decomposed into price level, consumption, and other factors. For example, I pay a very high cost for living in New York. But I recover part of the cost in various benefits. Broadly: 1) New York may be the only place in the world where my employment situation is possible, 2) New York is a social coordination point where it is especially easy to meet the kind of people I would like to meet.
This is probably the case for many people who decide to live in New York.
Q Why doesn't it surprise me there's a bartender shortage in Oz?
A I've been to London. They're all there.
Great guide.
Alas I have far too many friends and family keeping me in the cities of Australia.
That and all the culture.
If I needed to save 30k desperately and wasn't married though... I had a friend who did it somewhere in Perth. Earns about half of what I do, saves about twice as much...
Are there any Australians here who have done this? Recently? Is the situation different for residents rather than worker/tourists?
Very seriously considering this. Has anyone else done it? If so, how did it work out for you?
Great post! This sounds like a really good opportunity. I'm still an undergrad, but this sounds like a lot of fun for when I graduate and a great way to have a lot of free time to fill in the gaps in my education. I have a couple questions though.
I googled around, but couldn't find the legal age to bartend in Australia. Anybody know? I know the drinking age is 18
Also, I saw that you can only work 6 months for the same business. (http://marketing.statravel.com/Web_site/STA-Work-2010AU-Bartender-FAQs.pdf) What did you do when your 6 months were up?
Upvoted. I'm interested in seeing more posts like this, maybe discussing opportunities that are open to Russians too.
Related to: Best career models for doing research?, (Virtual) Employment Open Thread
In the spirit of offering some practical real world advice, let's talk about employment rationality. Let’s talk about optimal employment.1
You're young, smart, and hoping to have a positive impact on the world. Maybe you finished college, maybe you didn't. You want to pay your bills but also have time to pursue your intellectual goals. You want a low-stress job that doesn't leave you drained at the end of the day. And it would be nice to earn lots of extra money, because whatever you value, money tends to be a good way to get it.
And it is possible to find easily obtained, low-stress jobs with flexible hours that allow you to save as much money as someone in the USA making $100,000/yr... if you leave the USA to look for them.
Your instinctive reaction is probably that there’s no free lunch, so I must be mistaken or dishonest. And while you may have the right prior, I hope to persuade you that these jobs exist and tell you how to get one if you're interested.
This, I think, is a special opportunity for rationalists, an illustration that we can get better life outcomes from our investment in rationality - better outcomes such as low-stress jobs that leave us with ample discretionary income and enough free time to pursue whatever else we're interested in, obtained by being willing to break habits and think in numbers.
Employment Biases
First, consider some cognitive biases that may be leading people away from optimal employment.
So the literature on biases is telling us that the ideal job would be something that few Americans are doing, has high purchasing power at the expense of a high nominal salary, will be taxed less than a US-based job, avoids a commute, and minimizes the costs that eat up a typical American's salary.
Welcome to Australia
The USA is not the best place to earn money.2 My own experience suggests that at least Japan, New Zealand, and Australia can all be better. This may be shocking, but young professionals with advanced degrees can earn more discretionary income as a receptionist or a bartender in the Australian outback than as, say, a software engineer in the USA.
Now I’ll detail how to work abroad in Australia because (1) I did it myself (here's my first paycheck), and because (2) I've met hundreds of people working less desirable jobs in several other countries so I have some basis for recommending Australia in particular.
Quick facts:
So let’s compare and contrast Australia with the US:
-7.65% of your income into Social Security
good luck getting that back
+9% extra income paid by employer on top of wages
refundable when you leave the country!
Optimal Employment and Less Wrong
This may be of special interest to Less Wrong because most non-rationalists simply can’t reliably take advantage of this opportunity. They will see it as "too good to be true" or "some sketchy advice from the internet" and move on with their lives. You, on the other hand, can evaluate the evidence and make a decision. This kind of problem, where you must assess probabilities and come to a sound conclusion because immediate feedback is unavailable, is exactly the kind of problem that rationality is good for.
Let's compare the discretionary income you're likely to earn with a stressful $100,000/yr salaried job in the USA to the discretionary income you're likely to earn with a laid-back $39,000/yr job in Australia. Our time frame will be one year.
USA: In a $100,000/yr position, your top end tax braket is 28%, but after taking the "standard deduction" and accounting for the tiered tax structure, your effective income tax rate is only 21.25%. In our target age range of 25-34, you're likely to spend 37.1% of your income on housing (breakdown: 23.3% on rent, 7% on utilities, 6.8% on misc housing expenses), 13.3% on food, 16.5% on transportation, and 7.65% on social security payroll taxes. For convenience sake, we'll call the remaining portion of your income - 4.2% - your discretionary income. 4.2% of $100,000 is $4,200.
Australia: In a $39,000/yr position as a bartender or receptionist in the Australian outback, you'll pay 13% in taxes but immediately gain back 9% by cashing in your employer-provided retirement benefits upon leaving the country. Because room and board is heavily subsidized in the outback, you'll pay only 5% for housing and 5% for three excellent meals a day. You'll be commuting on foot because you'll live by the hotel or resort that you work at so the only transportation you'll need is a couple airplane tickets and legal documents, which will cost about 4% of the $39,000 yearly salary. That leaves you with a stagering 83% of your income as true discretionary income, or $32,370!
So working in Australia at a laid-back job with no responsibilities will likely earn you significantly more discretionary income than working at a hard-to-get, stressful, "high-paying" US job. In addition to the personal enjoyment of traveling to Australia, working at a resort in the outback will provide you with a comfortable living situation where all your bills are paid for, all your housing and meals are provided for you, you have no commute and you can enjoy 83% of your $39k salary as discretionary income.
On the other hand, a typical year working a stressful $100k/yr job in the US, if you’re highly-qualified and fortunate enough to land one, will mostly create value for the US government, real estate owners via your rent payments, oil producing nations whenever you fill up your car to commute to work, and retailers such as WalMart who provide household necessities from overseas suppliers. You definitely "create value" by earning that $100k and then immediately blowing it all back out into these giant economic sectors, but are you really executing your own values, or just the values of those around you? Assuming you're not a tax, rent, and car payment enthusiast, this arrangement is probably sub-optimal. That's why you need to learn...
How to Work in Australia
In six steps:
Though you may want to "play it safe," most of the jobs available in the Australian outback will not be listed online. My own recommendation is to skip step 1 and don't get a job lined up ahead of time. Fly to Alice Springs in May when the high season for hospitality jobs is starting to pick up, check into a hostel for a few nights, and look through the physical job boards. The person at the front desk of any hostel will be able to tell you where they are. That's what everyone I met working in Australia actually did to land jobs.
Or, if this sounds too overwhelming, have someone else do the planning for you. The site Oz Work Visa was founded by a fellow LWer (who went to Australia after reading this post) to help other optimal philanthropists and rationalists have a smoother time planning their working holiday abroad in Australia. I definitely recommend the services.
Conclusion
Of course, each person must assess the expected utility of this opportunity for themselves. Maybe you have a child or significant other you can't leave behind. Maybe you live with your parents, so you aren't spending much on housing or food in the US, and therefore staying in the US is the quickest way to build up discretionary income. Maybe the math above doesn't work for your particular situation. The USA's financial incentive system is extremely complex and, in the words of Kotlikoff & Rapson, "bizarre."
I don't mean to say that this opportunity will be best for the average Less Wrong reader who is single and in his or her 20s. But I do want to present one particular opportunity that may offer more optimal employment than whatever you're currently doing for a paycheck. I'd also like to suggest that in general, optimal employment might not be found in your home country.
Here's me enjoying some optimal employment in Australia:
Common Concerns
Q: This sounds too good to be true. How could there be this wage and cost of living imbalance? Shouldn’t the efficient market conspire to eliminate this huge pile of "free profit"?
A: The efficient market hypothesis assumes that humans collectively converge on rational beliefs. But most humans aren’t strategic enough to take advantage of an opportunity like this. They’re on a treadmill from high school to college to a nominally "high-paying" USA-based job + spouse + 1.5 children + dog. The thought of working outside their own country or outside of the field they got a degree in never seriously occurs to them, no matter how smart they are. Also, many people currently believe that working abroad is a bad idea simply because the best opportunities that existed 5 years ago (teaching English, peace corps) actually were bad economic opportunities.
Q: So how come all my smart friends aren't doing this?
A: Americans couldn't get these work visas until 2007. Since then, less than 8,000 Americans have taken advantage of the program. Your odds of knowing an American aged 18-30 who went to Australia and did this are very low. By comparison, over 170,000 British citizens aged 18-30 went to Australia just in the last 5 years via a nearly identical visa program. Basically, if you're living in the UK, or lots of other countries in Europe or Asia, the evidence is already beating you upside the head that working in Australia is a great way to save money. You already know several people in real life who can stand in front of you and tell you how great it was for them. I predict that working in Australia after college will be a trendy option for Americans in a few more years, but until it's completely obvious to everyone, you'll actually have to look at the evidence and be rational enough to process it without immediately rejecting the idea just because it sounds amazing.
Q: Won’t working in Australia prevent me from gaining experience in my narrow professional sub-field, thus reducing my total lifetime earning power?
A: This is almost certainly not the case for anyone under 30. Companies pay professionals more based on their abilities and their age as opposed to their actual years of experience. And, they pay more for older professionals than young ones just starting out cause they know these people really do have higher expenses and are less likely to quit. So taking a year off in your 20s to work abroad is only exchanging a year in which you would have earned the lowest salary you’ll ever have during your career for a year of higher earning power in Australia. You can always come back to your career in a year and pick up where you left off. Besides; who follows a straight-up-the-ladder career path anymore? Almost nobody.
Q: What about Australian culture? Will I like it over there?
A: Australia is a highly educated, robustly secular, extremely developed country. If you have any questions about the desirability of Australia, just ask Less Wrong! A disproportionate number of Less Wrongers are Australian.10
Q: I'm really bad at following instructions. What are the biggest mistakes I could make?
A: Don't make the mistake of settling down to work in Sydney, Melbourne or any other major Australian city. Those places all have exceptionally high costs of living, fewer job opportunities, no housing and meal benefits, and predictably lower pay. Make sure you travel to a remote area of Australia like I suggest. Go to the outback near Alice Springs or at least outside Darwin or Perth if you read up on it yourself and know what you're doing. Also, I recommend going to Australia in May when hiring is strongest. April can work too. June and July will work also. Just don't go in February or March when people aren't hiring yet. One last tip: it's very expensive to be a tourist in Australia (how do you think you're being paid so much?) so I recommend that if you want to combine this opportunity with a vacation for yourself, fly to Bali or somewhere else in Southeast Asia where your money will go 10x further.
Q: It says the $295 Visa application fee is non-refundable. What if I apply for the Work and Holiday Visa and then I don't get it?
A: Did you read through the eligibility requirements to make sure you qualify? If you meet their requirements, you'll get it. Australia rubber-stamps American Visa applications. They're working hard to admit as many of us as possible since so few Americans apply to vacation or work in Australia and they want us to be better represented. The application is painless and I was issued my visa in less than 24 hours.
Notes
1 Many thanks to lukeprog for his help in writing this article.
2 Note to international readers living outside the US: Although I write much of this from the perspective of an American considering the possibility of working abroad, you can easily substitute “the UK” or any other first-world nation wherever I say “America” or “the US”.
3 Australian minimum wage is $15/hr AUD. Right now, the exchange rate between AUD and USD is basically equal.
4 Approximate, based on the third tax bracket in the year 2011. See the USA rates here, but note that these are nominal tax rates. The actual tax rate is lower due to the standard deductions.
5 An estimate, assuming you file as a resident for tax purposes and earn between $6,000 and $37,000. You are taxed at 0% for the first $6,000 earned, and at 15% for your earnings between $6,000 and $37,000. See here for the details.
6 See the 25-34 year-old age bracket from the latest Consumer Expenditure Survey.
7 Of course, this depends on how much you make, and is assuming you use the highly subsidized room and board offered to you in the Australian outback.
8 My real world costs of going to/from Australia:
$1166 round-trip ticket SFO - MEL (skyscanner.com)
$196 MEL - ASP (tigerairways.com)
$235 Work and Holiday visa
This might look like a lot of money if you’re not currently working or if you’re a broke college grad, but it only takes about 2 weeks on the job in Australia to earn back the cost of emigration, repatriation, and valid work papers.
9 Australian “Work and Holiday” visas are only available to those 18-30. If you’re almost 31, you can still apply for the visa now, have it issued before you turn 31, and then travel to Australia after you turn 31.
10 Based on traffic data for Less Wrong.