Canadian tech workers make 46 per cent less than U.S. counterparts: TMU study

TORONTO -

A new study from Toronto Metropolitan University says Canadian tech workers are paid 46 per cent less than their U.S. counterparts.

The research from the university's The Dias public policy institute found a typical tech employee in Canada makes $83,700 per year compared with $122,600 for workers in the U.S. sector.

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The report, which took into account the exchange rate and cost of living, quantifies a stark reality the sector has long known -- American tech workers are better compensated.

But its authors, Vivian Li, Mahmehr Hamza and Anusha Arif, stress "to revel in lower wages and celebrate a downturn that would facilitate them would be the wrong focus."

Instead, they say the report should be taken as a call to action.

"This essentially sounds the alarm that we need renewed efforts to scale Canadian tech companies, to invest more to attract startups and scale ups and attract foreign investment and venture capital into the Canadian tech sector in order for firms to be able to pay Canadian tech workers at a level that is competitive with the American tech sector," said Li, a senior economist.

Should the country not act on these items, it risks further contributing to brain drain, a term denoting the mass migration of Canadians to the U.S., which has hit Canada's tech sector particularly hard.

A 2018 study based on the LinkedIn profiles of graduates from the Universities of Toronto, British Columbia and Waterloo in 2015 and 2016 revealed 66 per cent of software engineering and 30 per cent of computer science students were leaving Canada for work after graduation.

Researchers at U of T and Brock University found students moved south of the border because they felt a big employer would boost their future hiring prospects, their scope of work would be larger and they were promised higher salaries.

The Dais' research found at least 10 per cent of the wage gap is attributable to a larger share of tech workers in Canada being part-time or not working the full year than in the U.S.

When only full-time, full-year workers are studied, the research said the gap amounted to $34,800, reducing the overall pay gap by 10 per cent.

In addition to Canadian tech workers lagging behind on salaries, the study found the average U.S. tech workers' equity holdings -- a typical perk companies in the sector offer staff to lure in prized hires -- were valued at twice that of a Canadian tech worker.

There was also a difference in one of the industry's key methods of retaining staff -- refresh grants. These grants are equity compensation packages given to existing employees to match initial equity compensation provided to new hires.

The median U.S. tech worker was given 41 per cent larger refresh grants than the median Canadian tech worker.

Incentive pay -- bonuses usually given at the end of the year if performance targets were met -- were also higher in the U.S., with the median tech worker there receiving 43 per cent higher incentive pay compensation than the median tech worker in Canada.

The study also looked at gender- and racial-based gaps, finding the typical male tech worker in Canada makes $86,600 annually compared with $74,000 for the typical female tech worker in the country.

The research said the typical tech worker who is South Asian, Chinese, or Japanese in the U.S. makes among the highest annual wages, earning upwards of $160,000.

The typical Canadian tech workers in these groups earn upwards of $83,000 in annual wages, which is among the highest across all racial identities.

The typical U.S. tech worker who is Black, American Indian and/or Alaskan Native, Native Hawaiian or Pacific Islander makes the lowest annual wages, earning less than $100,000.

In Canada, median wages are the lowest for tech workers who are Black, Arab or Filipino. They earn less than $77,000 per year.

This report by The Canadian Press was first published Oct. 12, 2023.