It is clear that TC for Software Engineers in Canada (Toronto/Vancouver/Montreal) is about 40-50% of the USA (Silicon Valley/Seattle). Some explanations in order of strength include a lack of Venture Capital culture, a demand-supply issue, and slightly higher operating costs in Canada due to regulations/taxes. The thing is, even with all these reasons, I don't think the incredibly low salaries are warranted or justified. Even in comparable US cities such as Chicago (slightly bigger than Toronto) or Austin/Denver (slightly smaller than Toronto) or Seattle (very comparable in location and size to Vancouver), the salaries are still only maybe 60% of their US counterparts, and that may be an overestimate. Hell, even some flyover states' cities pay more than top Canadian TC. Having lived and worked as a software engineer in both countries, I think the real, most overlooked, never-talked-about reasons are the following: "Salaries have always been low in Canada, so let's just continue this to save company money - the candidates will accept because even they know the salaries are low here so their expectations are low - just tack on 10k more than the market and they will be satisfied" and The mentality, (yes just the mentality!) that anywhere outside the US is considered a low-cost development center, so if we hire outside the US we gotta pay em lower to justify it. Someone may try to attack this argument by saying something along the lines of "if the companies pay the engineers under the market, the market will correct itself." Yes, in a free open market, that is what would happen, but that does not happen in this scenario because of the mental angle, which really is my main point: "The candidates know that other companies in the area don't pay more, so they don't go looking. If they don't go looking, the market rate does not rise. Even when they switch jobs, they won't negotiate too high because the applicants know the companies don't pay so high. This is a cycle that feeds itself and therefore the market stays at a low equilibrium." I am optimistic that as more companies start to pay more and more, and people get to know about it (yes, it is important that people know about it, there needs to be media attention about high TC), then only will the market correct itself. But so far, no companies are really adventuring out into USA level TC, to minimize costs and keep Canada as a low cost development center as long as possible. As long as this remains the case, all the "aware" engineers (not necessarily top engineers) who don't have some secondary reason to stay in Canada (such as family or visa issues), will keep moving to the USA. #canada #salary #low #compensation #TC #toronto #vancouver #montreal #us #usa p.s. I think the cold Canadian weather alone should justify a HIGHER salary than USA, but that's wishful thinking...
It is just offer and demand ... Canada and European cities have high unemployment, and great (and cheap universities), and tons of immigrants. Salaries are low because candidates are plentiful. You put a job offer and get lots of great candidates...
I am not convinced of this argument very much. If you consider the Bay Area for example, there's many good universities like Stanford, UC Berkeley, SJSU, and you consider people from all over the USA come here and also so many H1B workers. Texas has many great universities too but Austin salaries are almost as high. Seattle is a bit questionable though. No good universities and bad weather. And are you saying a city like Chicago or NYC has fewer tech talent per capita per company than Toronto? I doubt it.
I also think it is just supply and demand. Instead of tech talent per capita, I would say Bay Area, NYC, Seattle and some other hub has a much higher tech positions per tech talent compared to other cities like Toronto. Of course I don’t disagree that other factors are in play as well.
You don't account for the total cost of the employee. The salary is just one part. The payroll taxes are waaaay higher in Canada and western Europe. (cpp, pensions, Healthcare, unemployment etc). In the US the salaries are higher to make up for the lack of benefits. If the salaries were the same, why would someone work in the US when they have skills that could land them a job in a country where they would be treated better?
I worked in both Toronto and Silicon Valley. Payroll taxes are about the same for TC over 100k USD. I think at some point between 150k and 200k California overtakes Canada (not sure 100% but I know for sure at least they're about the same) Even if not true, top companies in the USA provide a very cheap benefits program to their employees.
Not to mention that capital gains taxes are even lower than the US (they cap out at ~25%).
Another reason is US is where the revenue comes from, Canada is not a focus market for companies. You need to stay closer to your customers. Canada also has less competition for talent and Dev centers in Canada are not innovation hub, just implementation hubs. In Bay Area, Seattle you get talent from Stanford, UC Berkeley & myriad Ivy league US universities, trained by Google, Amazon, Facebook with cutting-edge startups trying to hire those talent to compete Google or Facebook. This is simply not the culture in Canada to disrupt industry which keeps the salary low.
Vancouver is closer to Seattle than any other medium or large US city. So I don't get the "closer to your customers" argument. All of Canada also lives 100km from US border, I think that is close enough to the US. Also the TN Visa should create an open market for tech workers. What you explained about implementation hubs instead of innovation hubs is a mental thing akin to my argument about companies seeing anything outside the US as low cost development centers. Your arguments about startups and Stanford etc. dont hold water in lesser US cities like Denver, yet Denver TC is much higher than Toronto. The "culture in Canada" is quite accurate, but that is encompassed in my "mental game" argument about Canadians not looking for TC because the companies don't offer it to start with. Whereas if you imagin you are non ambitious SWE in Denver, since the companies already offer high TC, you just apply and accept the high TC. There's no cycle in Denver.
When you say Denver, let me give you an example. Most of the tech giants are headquartered in Silicon Valley. For example, CK itself pays way too much in Charlotte because salaries are adjusted based on Bay Area salaries. US is capitalist, that also plays a role. Another thing is, because US has big hubs like Seattle, NY, Bay Area the companies need to pay on par so they can attract employees in low CoL regions too. If not, young employees might just move to NY Bay Area since it is the same country. Whereas in Canada, if someone doesn't pay you good money in Toronto or Vancouver, you don't really have an option to get high TC except coming to the US. Denver might not be big hub or any example but it still enjoys the privilege of business friendly laws and Ivy league international talent of the US. Most important point of all is as you mentioned, all Canadian cities are close to US border, this plays a negative role. There should be incentive to open Canada office, if you need to pay the same money as US in Canada, why would you open a Canada office? Canada doesn't have stellar university network as US to keep supplying talent. Denver (or Austin) has Apple, Amazon, Google and UC Boulder, UC Springs, UC Denver. Canada has not more than robust 10 university to supply talent. Brain drain is also a big factor, out of the limited universities Canada has, top grads from Waterloo move to Silicon Valley anyways. All in all, I don't see salaries ever going up in Canada, if they go up they might just setup a shop in other US cities. (Boston with MIT, Harvard!)
İ agree with 1) supply and demand. Canadian tech does not vaccum up supply like SV does. 2) most major companies dont see canada as their innovation center, but as their implementation center. But also, we have to consider one additional point. Culture. İ did a startup in ottawa with my brother (he lived there, i lived in SV). There isnt a culture of startups in canada. People arent money hungry. They are satisfied getting a good job, a good house a good life and enjoying it. They value work life balance over killing themselves for tc. You can insult them and call them lacking in ambition. Or you can envy them saying they have amazing life balance where they enjoy work and their life. So when money isnt as valuable to a candidate, the business doesnt offer as much. Whether they offer anything else is questionable. All the people I hired in canada were amazing people. And what they learned from me they advanced in their career a lot. But they were good employees. They did an amazing job at what they did. But they weren't innovators. They weren't the people who will create something like in SV.
Your argument number 2 is essentially my second argument in my OP about anything outside of US being viewed mentally as a low cost development center. Your argument number 1 is overstated since if you consider anything outside of SV or Seattle, there really aren't many jobs but still cities like Denver have much higher TC than Toronto. The TN Visa should in theory create an equivalence for anywhere in USA outside the hubs to anywhere in Canada with respect to demand and supply. It's all just one market for the general trend if you look and observe lesser US cities.
İ mentioned it with regards to Canada cause that was where your question was based. Same sort of cultural issue lies with most places in the US outaide your tech hubs. Salaries that are high are in a couple places. Bay area, seattle, nyc, austin maybe one or two more. Rest is not high. And again same thing. Because the innovation and creation culture and spirit is not there. Nobody in Nashville ever talked to me about starting something. Just about how good their job is. Canada was like that too. So Nashville and Toronto is similar to Montreal and Indianapolis. They are not the tech hubs and salaries are nothing special.
I think that TC is just obscenely high in the Bay because of the sheer number of jobs available and the lack of quality candidates. That concentration of high paying tech jobs isn't really available anywhere else. And because the Bay is in the US, other US cities benefit from it since the baseline is set in the Bay.
Your last sentence, I don't get. Why is that baseline followed in other US cities but not in Canada. The TN Visa should make the markets, at least for SWE, open and free across the borders right?
Well, Canada has several social safety nets and healthcare benefits that the US doesn't have - so a like for like TC comparison will likely never work. Despite those safety nets, yes the TC still doesn't quite get there but that's where the prevailing social conditions will always be different from other US cities. With other US cities, the only difference is cost of living. With Canadian cities there are just many more differences.
Yeah I 100% agree with your analysis of the situation. This basically encapsulated how I feel about the canadian tech scene. I think people underestimate how much VC culture has to do with it. Startups in the bay can attract talent from G, FB, Amzn etc. They have real, solid product and engineering teams. Contrast this with the start up scene in Waterloo and Toronto, and it’s kind of a joke. A lot of them, very early in their days with minimal funding from the big banks, not willing to take on that risk. With no real start ups in the area, your possible useful competing offers (not to mention jobs in total) are cut down, so FAANG can simply undercut you. Lowering max compensation.
Okay but how about startup culture in lesser US cities such as Denver or Boston? Still much higher TC than Toronto or Vancouver. The TN Visa for SWE should in theory mean there is no difference between a non-technical US city and anywhere in Canada. So if startup culture is the argument, it needs to holds true for non-tech US cities as well, but it doesn't, voiding the argument.
You keep saying that the TN should make remove all barriers, but that simply is not true. Only a specific set of candidates with the right credentials or experience qualify. It’s is stressful AF for Canadians because you can only get that visa once you show up at the border. Second, in general, Canadians are just less willing to move for work whereas the US has one of the most mobile labour forces of the developed world. So only a small subset of the Canadian SWE labour force would be willing to move, and most of them don’t even know how ridiculous the TC is in the states anyways.
Lived in both places: 1. It all comes down to supply and demand-plain and simple.If company x offers you around 150k CAD there are very free companies which go above it so you have no bargaining power. The important point to note is that Canadian salaries are on par with London and better than EU.I can imagine it must be more frustrating to live in Germany(way lower salaries and higher tax rates) It’s American salaries which are way higher-your lucky to live in the US as a skilled immigrant. Always amusing to read posts on blind on people claiming “well just pack our bags and move to Canada” lol!!
This argument might have some bite if the US market was closed to Canadians. But it is not because Canadians can readily get jobs south of the border thanks to the TN Visa. If they were TC-sensitive, candidates would keep moving to the U.S. until wages converged in the two markets. Wages in free markets with lots of independent emoloyers and workers don't depend on "mentality." Having worked as a SWE in both countries, my take on it is that most Canadian SWEs find the prospect of living in the U.S. sufficiently unappealing (healthcare, guns, the Republican party, being away from friends and family) that they don't go there in sufficient numbers. Many that do end up coming back. Also, beyond a certain amount, extra money isn't a strong motivator and SWE wages in Canada exceed that threshold already.
Why do these things always have to be spun to be blamed on something else? It has been and will always be supply and demand. Mentality is different because supply and demand is different, not the other way around. The entire tech industry was created in america. All the biggest tech giants are here. All the biggest VCs. All the money is here. Where the hell is the money going to come from in Canada? Outside of the much more financially conservative bay st VC scene and a small handful of remote tech offices, nearly all the local companies are hiring for secondary markets where tech plays a supporting role to other businesses. Traditional businesses aren't flush with cash. They are not going to pay you extravagant packages for playing support to their primary business. On top of that skilled immigration is flooding the market with candidates way more experienced than yourself. Why should they have to compete with silicon valley TCs? Why should anywhere in the rest of the world compete?
2 points that I need to make: 1. The entire (or mostly) tech industry was created in Silicon Valley and Seattle (for just Amazon/Microsoft), so explain why salaries all over the USA, even smaller "middle of nowhere" places have higher salaries than Toronto/Vancouver. 2. Someone else pointed this out but the TN Visa should make the border a lot more porous and in practice would mean that a person in the USA outside of Silicon Valley/Seattle would be equivalent to a person in Canada.
1. It's not. Middle of nowhere do not pay that much. Even bigger cities like Chicago, Atlanta, Philly aren't much more different from Toronto/Vancouver. 2. Sure? It is. That's why so many people from Canada are moving.
Lol now imagine how all of us working at FANG in Europe feel like, especially in very expensive cities such as London. IC4 at FB can make around £140k ~ $173k while COL is higher than Seattle, and almost as high as Bay Area.
If FB was in Toronto, the IC4 TC would be lower than that, probably around $130k USD which would be at the absolute top of Canada TC for that level, and Toronto is even more expensive than London now, unless you do a long commute from the suburbs in a broken transit system.
I don't want to argue about this because I've never been to Toronto but according to this website https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+Kingdom&country2=Canada&city1=London&city2=Toronto London is more expensive. Especially rental prices which is the biggest expense (28% lower in Toronto). One bedroom flat in a decent location in London is ~ $2.4k. Anyway, I think we're making the same point here - local tech salaries are quite high compared to the national average, but way lower compared to the US.