Professional Life in the US for Immigrants, NRIs and Visitors to America .. Mohan's Book:

In recent times, aided by the demand for a mobile global workforce, hordes of young professionals from India moved to the US, Europe and other western lands in search of opportunities and wealth. Their quest was aided by the strong demand from western nations that were experiencing unprecedented growth. The real motivator was the dynamics of exchange rate differences between the Indian rupee and other currencies, making migration abroad especially attractive. For instance, a budding professional in India who would have to save for about two years to buy a snazzy motorcycle back home could save enough in a year to buy a compact car.

For people from developing nations like India, the combination of exchange rate differences and Purchasing Power Parity (PPP) makes a migration to a western country especially attractive. PPP theory states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. Take for example the Big Mac sold by Mc Donald’s in 116 countries around the world making it a truly global consumer product. Since 1986, the Economist magazine has tracked the price of the Big Mac around the world, calling it the “Big Mac Index”. To the Indian reader, contemplating a move to a foreign country, a study of PPP and the Big Mac Index will give an indication of the amount one would have to spend in order to maintain a similar “standard of living” in the new environment. What this also means is that a reader will get a more accurate idea on the earning and saving potential in different countries. The percentage of salary saved, say ten percent of one’s salary will have a greater bang for the buck when saved in the US than in India since a US dollar is stronger than a rupee.

In this section of the book, we will look at various aspects of a person’s financial life in the US including savings, taxes, entrepreneurship and credit reporting. While working and earning money in the US, Indian professionals also need to be considering the various savings options available to them. They need to be aware of the credit-tracking and scoring mechanism in the US that will enable them not only to get loans and credit but will also help them operate bank accounts and manage other financial transactions. India follows the British financial model and many Indians with bank accounts are comfortable in the basics of financial management, hence the transition to the US financial system is not drastic. Finance, banking and investing in America is highly regulated and oriented towards safeguarding the interests of an investor. Investors are assured of basic financial stability. However, they need to be aware of the ground rules in order to find one’s way around the maze.

Snapshot of United States Economy (Extract from CIA Factbook)

Overview:

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $36,200. In this market-oriented economy, private individuals and business firms make most of the decisions, and government buys needed goods and services predominantly in the private marketplace. US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, lay off surplus workers, and develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment, although their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The years 1994-2000 witnessed solid increases in real output, low inflation rates, and a drop in unemployment to below 5%. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical costs of an aging population, sizable trade deficits, and stagnation of family income in the lower economic groups. Growth weakened in the fourth quarter of 2000; growth for the year 2001 almost certainly will be substantially lower than the strong 5% of 2000. The outlook for 2001 is further clouded by the continued economic problems of Japan, Russia, Indonesia, Brazil, and many other countries.

GDP:

Purchasing power parity - $9.963 trillion (2000 est.)

GDP - real growth rate:

5% (2000 est.)

GDP - per capita:

Purchasing power parity - $36,200 (2000 est.)

Inflation rate (consumer prices):

3.4% (2000)

Labor force:

140.9 million (includes unemployed) (2000)

Labor force

Managerial and professional 30.2%, technical, sales and administrative Support 29.2%, services 13.5%, manufacturing, mining, transportation, and crafts 24.6%, farming, forestry, and fishing 2.5% (2000)
note: figures exclude the unemployed

Budget:

Revenues: $1.828 trillion
expenditures: $1.703 trillion, including capital expenditures of $NA (1999)

Industries:

Leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining

Agriculture - products:

Wheat, other grains, corn, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish

Exports:

$776 billion (f.o.b., 2000 est.)

Imports:

$1.223 trillion (f.o.b., 2000 est.)

Debt - external:

$862 billion (1995 est.)

Currency:

US dollar (USD)

Currency code:

USD

Exchange rates:

US dollar – Rupees 47.83 (December 2001)

Earning potential in the US

One of the most common questions I am asked in India, when people realize that I happen to be an NRI living and working in the US, is about my earnings. How much do I make? I don’t know about anyone else, but I am extremely squeamish about my earnings and rarely like to discuss it with most people. Jaws drop when people in India find that even relatively inexperienced software professional in the US make a few thousand dollars a month (after taxes). A quick mental arithmetic ensues, converting the figure into Rupees. At that point, it is futile to even explain the concept of cost of living, or even the fact that an apartment rent alone runs hundreds of dollars a month, for that matter even a burger or coke costs a few dollars (Big Mac Index). It is hard to point out the fact that the key is not what one earns but what one is able to comfortably save, maintaining a standard of living that commensurates with local norms.

The salary one receives in the US could depend on a number of factors like one’s marketability, demand and supply (of the skillset) at the time of hiring, the region, city state of work, the specialization of one’s job, skills and knowledgebase. The kind of employer one works for, nature of industry, length of one’s tenure and experience also play a role. The American free market system extends to jobs and wages; hence, no two people with similar backgrounds, experiences and qualifications can expect the same salary or wages. For instance, working for a large corporation may not be highly paying but the job stability and the number of perks that comes with the job may make it worthwhile. By the same token, risks and rewards go hand in hand. Working for a small startup with limited funding and stock options may be highly risky, but if the company takes off, so do the employees fortunes. Sometimes, as thousands of dot.comers found to their dismay, the risks of working for small companies may be too real to ignore. The bottomline: At an early stage in one’s career, people can afford to take on bigger risks without worrying about the consequences but as years go by, tolerance to risk may be mitigated by the need for security and stability, reflecting on the pay package.

At the risk of sounding a bit pessimistic, I want to point out the fact that cultural background and communication skills of individuals also play an important role in determining one’s marketability and earning potential. There are certain jobs and careers where communications play a greater role. For example in the field of marketing or account management, one needs to be able to market one’s vision and the services to people from different strata of the society. A stellar marketing guru from India who is transplanted to the US will probably require some time in understanding the cultural and social nuances before being fully productive. Other aspects of culture include the accent of one’s spoken communication and usage of English, which also play a role in landing and keeping a job. It can sometimes be difficult, if not impossible, for foreigners who have spent a good part of their life in India to prove to prospective employers that they are on par with their peers in the American job market.

To be fair to the American system, excellence, regardless of race or ethnic background is well rewarded and Indians do succeed in myriad vocations in the US. It also helps that the legal system and affirmative action by the government ensures that employers cannot discriminate against employees on the basis of race, color, religion, sex or national origin, and requires affirmative action to ensure equal employment opportunity without regard to those factors.

There are also nuances involving professional certifications and licensing that people in different professions need to be aware of. For example, CA (Chartered Accountants) from India might need to clear the certification exams before they are granted a CPA (Certified Public Accountants) status. Similarly, doctors, lawyers, bankers and even teachers from India need to clear American certifications before they are allowed to pursue a career. Information Technology is perhaps the most liberal field when it comes to accepting foreigners without requiring additional certifications.

U.S. Bureau of Labor Statistics studies and tabulates data and statistics on the labor market across the country. They also publish periodic reports on unemployment, job markets, cost of living and studies on professional and career trends. A sampling of hourly rates for different occupations extracted from the official US Bureau of Labor data is appended below. This data pertains to the national averages and regional variations may be quite drastic. For example the software engineer working for a Californian startup will draw a much higher salary (adjusted for cost of living) than his peer working for a small company in Kentucky. The data in the table is intended to act as a reference and will help the reader get a ballpark estimate of salary and wage trends in the US. Most fulltime employees in the US work an average of five days a week, eight hours a day. This translates to an average of 2080 hours a year, a figure generally used to compute annual salaries. By this estimate, a Bank Teller who earns about $9.22/hour will have an approximate annual salary of $ 19,177.

Table 1: U.S. Bureau of Labor Statistics (1999)

Occupation	Hourly Rate
White collar occupations	$18.78
Engineers, architects, and surveyors	$29.36
Aerospace engineers	$32.75
Electrical and electronic engineers	$32.10
Mechanical engineers	$24.89
Computer systems analysts and scientists	$28.49
Physicists and astronomers	$37.84
Chemists, exc. Biochemists	$29.16
Geologists and geodesists	$28.27
Biological and life scientists	$23.03
Physicians	$63.07
Dentists	$40.34
Physical therapists	$23.84
Professors, college and university	$35.61
Pre-kindergarten and kindergarten teachers, exc. postsecondary	$16.33
Secondary school teachers, exc. Postsecondary	$28.70
Economists	$28.14
Lawyers	$38.30
Photographers	$18.26
Editors and reporters	$24.30
Licensed practical nurses	$13.40
Administrators and officials, public administration	$26.87
Managers, marketing, advertising, and public relations	$38.03
Accountants and auditors	$21.14
Management analysts	$25.03
Sales engineers	$30.60
Sales occupations, other business services	$19.31
Cashiers	$7.96
Supervisors, general office	$16.35
Secretaries	$13.55
Stenographers	$13.73
Receptionists	$9.74
Order clerks	$12.37
Messengers	$8.70
Bank tellers	$9.22
Data-entry keyers	$10.55
Automobile mechanics	$15.26
Aircraft engine mechanics	$21.19
Electronic repairers, communications and industrial equipment	$18.61
Telephone installers and repairers	$18.21
Carpenters	$17.25
Electricians	$19.12
Machine operators, assemblers, and inspectors	$11.41
Truck drivers	$12.72
Bus drivers	$12.38
Marine engineers	$15.56
Cooks	$8.24
Guards and police, exc. Public service	$8.89