Salaries in USD vs other currencies...a question

Question

Hi

I am in middle of my research about schools and I have been trying to find the following but without any luck:

How does one convert a salary in USD to that in Indian Rupees or for that matter, any currency?

Of course there is the conversion rate, but that does not take into account the purchasing power of the currency in the locale where it is used. So, if I am getting a job for USD 100,000 in US, whats the  lifestyle equivalent  in Indian Rupees in India or Euro in Europe???

I read somewhere that the real conversion factor that includes PPP (purchasing power parity) between USD and INR is 8:1. Now, I dont get this at all. Any suggestions out there????

beny · Answer

IRPT states that PPP is included in the exchange rate, thus it is the most accurate indicator.

No need to overcomplicate things.

venky1979 · Answer

So are you saying that 100,000 USD is equivalent to earning 8 lacs in India

BTW 100,000 is take home or gross???

Also have you taken in consideration taxations they may be diff
so your salary may have comparable PPP but tax could turn the tables

Example in Japan tax is 6%?

riverripper · Answer

If you make 100K and live in a state with income tax. After you pay your taxes, health care, any retirement you put in then your take home will be 55-65% depending on deductions, tax rates, how much you put into your retirement...thats just a broad generalization. 

How far that goes is very different depending on location. In a place like NYC or San Fransisco that is not a very large sum of money and wont get you nearly as far as one would think. You will be renting unless you want to live in a not very nice area. If you live in a smaller midwest city you could live very well, get a nice house and still a ton left to play with.

pelihu · Answer

I've always been quite wary of so called "equivalent" salary comparisons. The bottom line is that such comparisons are only useful if you spend your entire lives in said locale. Don't even think about taking your equivalent salary in some Midwest city on vacation in New York.

As professionals with MBAs, you should really consider what it will take to enjoy a national and global lifestyle. I don't care how many Lira would give me an equivalent lifestyle to 100k in New York (not much in NY actually), if said Lira wouldn't even be enough to purchase dinner for 2 in London or San Francisco (I do not know this to be true, I'm just saying).

dukes · Answer

I agree with Pelihu that these PPP or cost of living adjustments are usually not useful. There are too many factors to consider that can't all be captured in an index.

rhyme · Answer

Wait wait wait... Don't we all get like $2MM salaries anyway?

bsd_lover · Answer

Agree with Pelihu on the global lifestyle point. One of my major considerations to pursue an MBA is indeed to move my career to a global scale as opposed to the localized Asia Pacific scene which I am familiar with at present. 

My compensation would need to adequately cover a lifestyle that might involve being physically present in 3 different continents for over 3 months in a year; in which case any type of PPP comparison goes out of the window.

Now if I were to move back to say Australia and revert to working locally, then I would have to consider what the local market pays me here; even then the differences will be remarkable between what Sydney pays and what Perth pays.This would be similar for India as well. 

However the most important thing is individual choice - what kind of lifestyle do I want ? Am I happy sharing a 2 bedder with 2 smelly mates or do I want a 50th story penthouse all to myself ? Am I happy with my Honda Civic or should I upgrade to a Lamborghini Gallardo ? Do I head to McDonalds every time want to 'eat out' or do I prefer Tetsuya's ?

sangoman · Answer

I think they want to see the growth in your salary......... as opposed to seeing your oppertunity cost. 

But even though I am simply converting my salary in rupees to dollars (w/o PPP taken into account)........I am still faced with a problem. The value of the rupee has been fluctuating vis a vis the dollar. So what value am I supposed to take into account for converting.........one standard, or different values for different points of time.

pelihu · Answer

Yeah, and I don't even mean you necessarily have to be a world traveler. Your dollars, or euros, or rupees, or whatever, will be competing against those of people from around the world. If you are consuming entirely on a local level, then no problem. But a dinner at a world-class restaurant (no matter the locale), or a BMW, or a bottle of 1st growth Bordeaux, or a vacation in Las Vegas or Greece, will have a price not affected by local salary adjustments.

So, the local quality of life in Bentonville might be great (low cost of living, low average salaries), but if you ever want that car or bottle of wine or ski vacation you'll be competing with people earning dollars in San Francisco and New York (high average costs, high average salaries) - not a great feeling.. To think of it in reverse, people in SF and NY might not "feel rich" because their discretionary money doesn't go as far in those cities, but they feel like kings when visiting lower cost locales - which is pretty much everywhere else (I know there are even more expensive cities around the world).

MBAbot · Answer

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Salaries in USD vs other currencies...a question

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