Friday, August 30, 2013

Understanding the Difference in Salaries between the Philippines and the USA.

One of my online Filipino friends told me that according to her Americans make 100 times more money than Filipinos. Some Filipinos have mentioned such numbers as 10, and even 40 times more money. I decided to sit down and crunch some numbers to see if this was really the case. Let’s assume for argument’s sake that an average American (the key word is ‘average’- not a nurse, not a doctor) makes $2000 a month which is what an garden variety person in a garden variety US state makes. And let’s assume that an average Filipino makes $200 a month which is about close. In pesos it would be Php 88,000 and Php 8,800 respectively. So, yes the figure 10 does ring true. Let’s subtract the tax now. Again, an average tax in the Philippines would be around 15% give or take while in the US, it would be 26%. Which leaves us with a net salary of $170 for a Pinoy and $1480 for a Kano. In pesos it would be Php 7480 and Pho 65120 respectively. The Kano’s salary now is 8.7 times higher and not 10 times as before. Now, let’s factor in prices on most daily services and commodities. Some people say that in the Philippines prices are about 3 times less. This is hard to gauge but it does seem so for most things. Now, let’s divide 8.7 by 3= 2.9 times. So, while the salary is higher 10 times the cost of living and taxes erode it until it’s only about 3 times higher. Does anybody agree with these calculations?

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