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Canadian tech workers earn almost $40,000 less than American counterparts, research shows

Anecdotally, the story has always been that tech workers in the United States earn a lot more than their Canadian counterparts. Now, we have data that backs up that assumption — and puts a number on it.

Overall, tech workers in the U.S. were paid 46% more than tech workers in Canada. In real dollars, that’s almost $40,000 more, according to the research published by Toronto Metropolitan University’s The Dais.

“The gap between tech workers in Canada and the U.S. is significant, even once purchasing power is taken into account,” wrote authors Vivian Li, Mahmehr Hamza, and Anusha Arif.

Reasons for the gap

A key contributing factor of that pay gap is the fact that a larger share of Canadian tech workers have part-time jobs.

“In fact, when we restricted the analysis to just full-time, full-year workers, the gap decreased to $34,800, or a 10% reduction in the overall pay gap,” the wrote. “This may represent a higher level of flexibility that exists for tech workers in Canada.”

Pay equity issues

Canada did perform better in providing equal pay, as compensation inequity in the U.S. based on gender and educational attainment were “much starker,” they said.

“However, due to the underrepresentation of both women and those who don’t hold a Bachelor’s degree in both countries, closing the already-smaller pay inequity in Canada had little impact on the overall pay gap,” they wrote.

Differences by race

Looking at the U.S., the research uncovered significant compensation issues associated with a worker’s racial identity. For example, the highest paid tech workers are South Asian — and they make 84% more than Indigenous workers, who are the lowest paid group.

Impact of tech hubs

In the U.S., workers who were in key tech hubs had a notable pay premium — though the authors noted that it was somewhat dampened when factoring in the higher cost of living in such hubs.

Whereas in Canada, the notable tech hubs — such as Toronto or Kitchener-Waterloo — had no strong compensation benefits versus tech workers located in other parts of the country.

Implications for industry, policy makers

The research noted that, with the recent downturn in tech and major layoffs, a window has opened that could allow Canadian companies to hire talent given the sheer number of tech companies in the U.S.

It recommended that Canada focus on two paths simultaneously to ensure it has the talent it needs to grow.

Develop growth-oriented policies that, coupled with strong labour protections, allow tech companies to grow, and expand their ability to offer competitive pay: At the end of the day, tech companies will only be able to raise tech compensation if they are able to. Given the vibrancy of tech, competitive pressure is already present, and the right policies that support firm growth will activate Canadian tech companies’ ability to compensate tech workers fairly.

Continue tackling pay inequity across different groups: While Canada is currently in a better position relative to the United States regarding pay inequities for women tech workers, tech workers with specific visible minority identities (such as Black, and South Asian) and tech workers without formal educational credentials, a gap is still present, and more needs to be done in tackling pay inequity.

See the full report at https://dais.ca/reports/mind-the-gap-compensation-disparity-between-canadian-and-american-technology-workers/