By Jim Shattuck
April 15, 2011
Let me start out by saying that I am neither an economist nor a human resources professional. I’m sharing here some information I have learned from mining the depths of Google, trying to stitch it all together into a coherent post. Learning about the comparative realities of living here or in the USA (I’m sticking to just one country for simplicity’s sake) is both fun for the expat (I knew I wasn’t crazy – that shit is expensive!”) and cautionary for the lovebirds contemplating a move figuring it will all work out somehow (goddess bless them!).
The first thing to understand is that economies are different on many different levels: the price of things, the salaries people can earn, the taxes one pays, the non-cash (and deferred cash) benefits people earn over time, how value depreciates over time, how the banking and credit systems operate, what services are provided by the government, etc. In the case of Brazil and the USA – believe me – they are two different worlds that do not easily equate/translate.
Most travelers think in terms of the currency exchange rate: “Oh Brazil will be an affordable vacation destination; the exchange rate is in our favor, unlike London (for example).” Which may well be true, but moving here to live, work and retire is another matter altogether.
For the new resident, the impulse is to do a quick calculation in your head converting currencies to decide if something is expensive or not. But currency exchange rates give misleading comparisons because they do not reflect salary purchasing power differences.
To try and sort this all out (OK, not all of it, but enough to wrap your head around it) let’s look at three different ideas: cost of living, salary purchasing power parity, and comparative salaries across borders. This is a vastly simplified view, but as I came to discover online, this notion of understanding how one’s life will change financially when moving abroad is insanely complex and has birthed a whole industry of companies willing to sell you “calculators” and personalized reports to help you see into your future.
Cost of Living
To help me understand this topic I relied heavily on the website Expat American Living in Brazil and a post he posted some time ago.
So the salaries are a bit old (2001 – 2004), which could mean the numbers cited are low-balling it. Actually, given the boom in the economy in Brazil of late (and governmental increases in the minimum salary), chances are the salaries are now a bit higher in Brazil. But given the serious economic realities in the US of late, the salaries listed may not be all too off. In any case, I am trying to compare apples to apples – even if they are slightly old.
I’ve taken just 6 typical jobs across the spectrum for comparison. Go “Qualidade de Vida.”
I guess I can’t really agree with the analysis.
I am semi-retired and own my own home in the state of Rio. I spend the summer months (Dec-Mar) there and usually return to the USA a richer man on account of the lower expenses in Brazil.
The advantages of living in Brazil:
I don’t need or want a car. I can walk everywhere or take a bus for free (as a senior). That represents a tremendous savings.
My property taxes in Brazil amount to $800 per year. Here in Texas I pay over $5000 per year for a much smaller property. My place in Brazil has a game room, gazebo, swimming pool, parking lot, garage, fenced ball court, 2 separate houses and a suite. In the USA, I have a 3 Br house with typical garage and yard.
A cheap bottle of cachaa costs $3 in Brazil. A cheap bottle of vodka costs $12 in Texas.
In Brazil, I pay a housekeeper $30 for a 5-hour day, during which she cleans the house and prepares me food (cassaroles, bolos, salads) for a week using my food.
In Brazil, I pay a gardener $30 per 8-hr day, three days a month to maintain the grass, fruit trees and flowers.
I couldn’t justify employing a regular housekeeper or gardener here in Texas, in spite of the fact that there are Mexicans who will work for $8 per hour.
The advantages of living in Texas:
Everything high-tech costs 1/2 to 1/3 the price charged in Brazil.
Clothing is cheaper and superior, thanks to our Chinese.
Tools are cheaper and far superior, thanks again to our Chinese.
Gasoline is cheaper.
Good used cars are almost free.
Satellite TV, Internet connection and phone cost about the same in Brazil as in Texas.
Airfare is about the same in both countries, but Brazil has by far a superior intercity and interstate bus system. Greyhound sucks big time.
Restaurant food in Texas is superior, owing to the variety not so easily found in Brazil, especially when it comes to Mediterranean, Italian and Mexican offerings.
Meat is cheaper and better in Texas, though the Brazilian compensates with excellent churrasco. A McDonald’s hamburger costs more and is inferior in Brazil.
Fish is cheaper and better in Texas, especially salmon.
Fruits and veggies cost about the same in both places, though Brazil is far better when it comes to variety and freshness of fruit juices. In Brazil I can get about 20+ varieties of fruit juices at a corner bar, while in Texas I’m limited to apple, cranberry, grape, orange and grapefruit, none of which are generally available fresh on the street.
Brazilian wine and beer are awful. A 16-oz can of Guinness that can be found in only one specialty bar in my town there costs $13, while in Dallas you can get a draft pint of Guinness on the street for $6.
Brazilian tools and appliances are awful and nobody can fix anything. Nobody there knows how to sharpen a tool, especially a chainsaw chain, chisel, saw or drill bit. On the other hand, you can hire a Brazilian electrician, plumber or stone mason for $40 a day. In Texas, they charge $100 per hour, though we can always hire excellent Mexicans laborers for much less. If you’re stuck in Massachusetts, though, you’re screwed.
Brazilian cars are cheap and flimsy, lacking a lot of safety features. A decent Japanese car like a Honda or Toyota costs a fortune in Brazil.
Brazilian bread, ice cream, pizzas, pies and cakes are not up to American standards, though their fresh pãozinhos are great.
Public education is worse in Brazil than in the USA – hard to imagine – though healthcare is more available, cheaper and less byzantine.
In Brazil, families are bigger and closer, parties are more numerous, girls are prettier and wear skimpier bikinis, you can drink booze 24/7 anywhere, there are few pesky cops and almost none of the damn Baptists that pollute Texas.
“Brazil is not for beginners”, I had never heard this before reading your article but I can see where the thinking comes from. I am, in fact, a beginner, 23, Irish, female and fed up of the job prospects that currently exist for people my age in Ireland and the rest of Europe. Having graduated in 2008, I did three years of soul-destroying, dead-end jobs before I decided to move to Brazil in October 2010 with my Brazilian boyfriend. Luckily, I had the same Idea and saved a load of cash before moving, otherwise I would be in trouble now.
I agree with many of the things you write in your article – consumer goods are incredibly expensive compared to the US or the UK (but I think consumers there are global rarities in that there are such a large number of companies vying for their custom that of course the price is driven down – but look how much debt those countries are in now). Given a decade or so, I think Brazil will be just as competitive and cheap.
But this doesn’t really bother me. What I love since moving to Brazil is that I don’t even have a work permit yet and I’m getting job offers left, right and centre. To me, that is progress. My friends in Europe are all miserable because they’re overqualified for the low-skilled jobs they’re fighting for. I might indeed take a pay cut once I get my first job in Brazil but at least it will have prospects for the future.
Most of what you have said holds true for me too. I would say that unless whilst in Brazil you are on the salary you were earning in your home country, assuming you are not from Zimbabwe (ranked the worlds poorest) or have a reasonable income stream from overseas, or a fair amount of cash, you will be POOR in relation to your home country. I have met a number of expats who came out here a number of years ago with little money and they are doing it tough. One English lady who is working as an English teacher here in Florianopolis told me that she had been here a good many years but still was renting and was finding it very difficult to save the cost of a return fare to the UK to visit ageing family. Another couple were relying on the husbands UK aged pension and were finding it tough as they too were renting here.
One big advantage of being a resident here is that you can get VERY cheap housing loans, below 2% PA and Brazil has the world’s highest interest rates on deposits, over 10%. In fact I am getting more each month here than I get in one year on a UK account.
At present we are planning to spend a few years in the UK as we feel we need to top up our cash reserves, as inflation here in Brazil and the rising value of the Real is a bit of a worry, it’s 4 years before I start getting my pensions. I can earn significantly more in the UK than in Brazil and there is the atraction of seeing a bit of Europe too. Despite the depressed ecconomy there I have more employment prospects than here in Brazil, or surprizingly in Australia, we both have visas for there too.
So in short if you have reasonable amounts of cash or a secure substanstial income stream from overseas (but remeber the rising value of the Real$) you can live a VERY pleasant lifestyle here in Brazil. If not you can still have an enjoyable life, but a simple one.
I think the easiest way for a newbie to get an insight into the way tradespeople operate here is to read “A Year In Provence”.
I’d say it all depends. If you are single, not fussy about particulars and make more than the min. wage in Brazil (I once made the min. wage there and it sucks *big time*), it can be a great choice in terms of moving.
I’m not too into electronics, aside from my Macbook Air bought off Craigslist in California, and as for Brazilian clothes, I don’t need them since I have my own here in the States (that I’d bring to Brazil). With even US$1000/month coming in, personally, I could live (what I would deem) well in Rio.
On the flip side, if you are the type of person who is going for the whole sha-bang (house, car, corporate job, etc) and like electronics and clothes, then yes, make sure you come well prepared, otherwise you’ll soon find yourself up the creek without a paddle.
Oh, and knowing Portuguese does wonders.
As you said yourself, the salaries cited are outdated. There may be semi-illiterate primary teachers earning R$745 in some poorer states, but I recently read that in São Paulo the minimum wage is approx. R$ 1.200, and that not for a full 40-hour week. As for auto mechanics earning R$649, I doubt very much you’ll find one today working for such a wage – more likely, nearer to R$2.000 in São Paulo.
As for high-level executives, salaries in Brazil today are on par or even higher than in some developed countries, including the USA. (You can check this out with any specialized head-hunter).
Comments to Jim’s comments:
While agreeing with most of what you say (for instance tools and cars), I take issue with two of your comments:
1. Brazilian wine and beer are awful. A 16-oz can of Guinness that can be found in only one specialty bar in my town there costs $13, while in Dallas you can get a draft pint of Guinness on the street for $6.
The better Brazilian wines are comparable to Argentinian, Chilean or South African ones, and cost the same or slightly more (due to our overvalued currency). As for beer, where did you get the notion that it’s “awful”?! We have dozens of brands, from standard stuff like Brahma, Antarctica or Schin, which are very cheap (R$ 0.80-1.20 per 300ml can in supermarkets), to wonderful specialty brands, which also cost much less than $13. As for draft, you can get a decent 300ml “chopp” for R$3 or 4 in any bar or “chopperia”.
2. Brazilian bread, ice cream, pizzas, pies and cakes are not up to American standards, though their fresh pãozinhos are great.
Apart from the ubiquitous “pão francs”, you can today get many variants (whole grain, etc) in better “padarias” in larger cities; Brazilian pizza is often much superior to the stuff sold in many places; ice cream can be lousy if you mean the standard kind (Kibon etc), but you can also find many other better (and more expensive) brands – unfortunately, mostly too sweet for foreign tastes. And only here you get the wonderful tropical fruit ice cream (umbu, maracuj, etc)!
I like the article and the analysis. However, I think that it’s a little too US-centric for comparison since the US isn’t the only country that others are coming from to immigrate to Brazil.
If you actually do the analysis with a lot of other countries, the salaries are actually better in Brazil especially for certain fields. Also, the Financial Times and many other financial publications are stating that financial specialists make easily 15% more (and double with respect to China) than their counterparts in all other countries: https://www.bluesteps.com/blog/Brazil-Best-Salaries-in-the-World-for-High-Level-Executive-Positions.aspx
Granted, the lower levels aren’t on par or better than the US as yet but that will change with companies like JP Morgan Chase and others aggressively expanding there: http://news.yahoo.com/s/yblog_thelookout/20110418/ts_yblog_thelookout/beached-white-males-the-downturns-true-victims If this is so bad for the white males, how do you think it is for the others? Blacks, Latinos, Asians, etc?
And, when you consider outsourcing, jobs in the US are getting fewer and fewer: