Health-care advantage helps keep Canadian tech sector competitive

Salaries in region now on par with those in Silicon Valley

WATERLOO REGION During the pandemic, the salary difference between software developers working in California’s Silicon Valley and this region all but closed.

The average starting salary for a software developer right out of school in Waterloo Region is now $87,000. In Silicon Valley, it starts at an average of $68,000 (U.S.). When adjusted for exchange rates, the gap is only $4,000.

“That differential is quite small,” said Chris Albinson, the CEO at Communitech.

The average salary for an experienced software developer in this region is $110,000 a year.

In Silicon Valley, that figure is $111,000 (U.S.). When you factor in exchange rates and the cost of private health care in the United States, the difference shrinks to about $5,000.

The Canadian health-care advantage is significant. In the U.S., tech companies pay about $25,000 (U.S.) annually for each employee to cover private health care, said Albinson.

There is downward pressure on tech salaries across North America, said Albinson, after 350,000 tech workers in the U.S. were laid off during the past 15 months.

In contrast, there are thousands of openings for tech jobs in the Toronto-Waterloo corridor, even after cuts at several Canadian companies.

“We are in a state of flux,” said Albinson of tech salaries. “There is a lot of talent looking for work.”

Less than two years ago, it was almost impossible for a tech company in Waterloo Region to hire a software developer with 10 years’ experience.

“And now you can hire somebody with that skill set and background out of Google,” said Albinson. “You couldn’t find them 18 months ago.”

Another trend impacting tech salaries is immigration.

In the last five years, the U.S. has been fundamentally disadvantaged on talent, especially when compared to Canada.

CHRIS ALBINSON COMMUNITECH CEO

Silicon Valley was good for talent, access to global markets, information about foreign markets and venture capital, but that is changing, said Albinson, who came to Communitech in May 2021 after more than 20 years in San Francisco.

“In the last five years, the U.S. has been fundamentally disadvantaged on talent, especially when compared to Canada,” he said. During the past year, more than a million newcomers arrived in Canada, half with degrees in science, math, engineering and technology fields. That compares with about 200,000 similar new arrivals in the United States.

“The U.S. has really shot themselves in the foot on immigration,” said Albinson.

About 40 per cent of the tech workers who were laid off in the U.S. were there on H1-B visas. So, they must find a new job in the States or leave the U.S. within six months.

American governments and tech companies don’t want them to return to China, Iran, India and Russia, said Albinson, and would rather see them come to Canada.

Albinson is working with the federal minister of immigration to bring as many as possible to Ontario. There are 6,781 job openings at tech companies across Canada.

About 60 per cent of the openings are in the Toronto-Waterloo corridor, according to the Communitech job board.

“Immigration helps in a couple of ways, not only as a source of talent, but also a source of information and connections to international markets,” said Albinson.