Toronto supplants US cities as fastest growing tech hub

[Smuttynose1]

Toronto, the Quietly Booming Tech Town

For all the excitement around places like Austin and Miami, the biggest tech expansion has been in Canada’s largest city.

https://www.nytimes.com/2022/03/21/t...tech-boom.html

This article landed in the NY Times back in March, but I don't think it got too much play here. Considering that Toronto has a metropolitan area population of only 6 million, it's pretty remarkable that it's tech employment is only surpassed by NYC and Silicon Valley in North America. This also helps explain why Toronto appears to be attracting more development than other American cities. This is great news for Toronto obviously, and since Canada is viewed so favorably in the US (https://news.gallup.com/poll/390641/americans-rate-canada-britain-france-japan-favorably.aspx), is unlikely to arise much consternation here.

But it does raise the question of why so much North American tech growth is occurring outside the States. The article essentially cites four factors helping drive Toronto's tech growth --

1.) A solid existing tech ecosystem to build from
2.) Good universities
3.) A more liberal immigration system than US
4.) Good policy/investments

To me, Canada's much more rational, common sense immigration policies which prioritize migration of highly skilled workers seems to be the single biggest factor helping Toronto power past US cities. I was struck by the number of US-based companies mentioned in the article that are using Toronto as a hub to recruit talent.

Do you agree? Is four years of Trump immigration rhetoric and a dysfunctional legislative environment in which to advance immigration reform catching up with us economically? Is there more to it than that?

[Tuckerman]

Originally Posted by Smuttynose1

Toronto, the Quietly Booming Tech Town


Do you agree? Is four years of Trump immigration rhetoric and a dysfunctional legislative environment in which to advance immigration reform catching up with us economically? Is there more to it than that?

Agree, but it also reflects the anti-science, anti-global, nationalist rhetoric that is so pronounced in the states at this time.

[JManc]

Tech companies are expanding globally to reach wider net of talent as they become more multinational. Expanding in Toronto makes sense, it's a large diverse rapidly growing economy.

[mhays]

The immigration point is really important here. On one hand US techs employ lots of immigrants. On the other hand we shoot ourselves in the foot by not allowing more, particularly at the high levels where job qualification needs are high.

[lio45]

As others have mentioned, that success is mostly attributable to Canada’s “racist” points-based immigration system. Tech talent can come to this country fairly easily. They’d likely pick the US if they could, but Canada is easier to get in, so that’s where they go. Canada’s gain, USA’s loss.

Even in my midsized Quebec hometown, I’ve had several tenants who were either Chinese or Indian with engineering/computer science degrees and who were here to work in tech.

[Obadno]

Originally Posted by Smuttynose1

Toronto, the Quietly Booming Tech Town

Sounds like Maple hustler propaganda. Don't believe this northern drivel my fellow Yanks.

[mrnyc]

Originally Posted by Obadno

Sounds like Maple hustler propaganda. Don't believe this northern drivel my fellow Yanks.

why? we want all our states to be doing well.

[Obadno]

Originally Posted by mrnyc

why? we want all our states to be doing well.

So subtle I was almost too dumb to catch it

[MolsonExport]

Originally Posted by Obadno

Sounds like Maple hustler propaganda. Don't believe this northern drivel my fellow Yanks.

[CivicBlues]

Ah yes the New York Times, bastion of Canada's propaganda machine

[someone123]

Can't read the whole thing due to a paywall but I think those points are good. For universities I'd point out that Canada's schools are not just good but accessible, with relatively low costs and large enrollments that have been allowed to grow.

There are some downsides in Canada. One is that we have a lot of offices of big companies and some startups but not much in the way of large and dynamic Canada-based companies. The big example people give is usually Shopify these days.

Canadian cities are generally better run than the US but the housing costs here really eat into quality of life. And there's not much that can be done about the weather here. Not only is the climate here at best somewhat bad, we have limited legal travel and work options.

[C3YVR]

The CBRE 2022 Tech Talent report came out last month and scores the top 50 markets in the US and Canada.

https://www.cbre.com/insights/books/...ch-talent-2022

[Northern Light]

Originally Posted by C3YVR

The CBRE 2022 Tech Talent report came out last month and scores the top 50 markets in the US and Canada.

https://www.cbre.com/insights/books/...ch-talent-2022

In that survey/post Toronto is ranked #3 behind the Bay Area and Seattle in that order.

Washington DC and NYC round out the top five.

[dc_denizen]

So what’s a major Toronto tech company these days ? There were a lot of good ones in the 1980s like Corel. Jack tramiel founded commodore in Canada as I recall

[DCReid]

Originally Posted by dc_denizen

So what’s a major Toronto tech company these days ? There were a lot of good ones in the 1980s like Corel. Jack tramiel founded commodore in Canada as I recall

Actually, Toronto was not the headquarters of the best-known Canadian tech firms. Waterloo, Ontario about 50 miles away, was the headquarters of the famous Blackberry. Corel is headquartered in Ottawa, the capital, as is the current darling of Canada (at least before the current tech swoon), Shopify. Nortel, the telecom and internet bubble darling in late 1990s that Wiki said accounted for 33% of the Toronto Stock Exchange at one point, was also headquartered in Ottawa. Of course, Toronto being so big, would tend to attract a lot of the tech talent and employment, especially for the big multinational firms.

[Northern Light]

A few points on why this is happening beyond those noted above.

1) The exchange rate

Right now, CAD is .78 USD.

So if salaries were otherwise equal (which they are not), a U.S. company can get a 22% discount by shifting jobs to Canada.

That matters. It doesn't matter if the talent isn't there or willing/able to move; but its a critical reason if the above are workable to consider it.

2) Wages are not yet equal. Tech talent in Canada are well paid, the average income is six figures...........but it still trails the typical Bay area income by as much as 1/3, and
probably 1/4 on average, IF dollars were taken at par.

Below is a quote from 2017, so numbers have changed, but it gives you a sense of where things were, particularly when decisions now taking effect were made.

"The study was conducted with over 280,000 engineer profiles. San Francisco salary clocked in at average of $134,000 USD and was trailed by Seattle at $128,000 and New York City at $120,000. Average salary in Toronto was $74,000 USD (or $97,000 Canadian)."

Source:

https://planetweb.ca/news/toronto-sa...hired-reports/

*****

3) Health insurance/benefits are way cheaper in Canada. With core coverages provided by the state, and embedded in routine taxes; the cost of employee benefits for supplementary healthcare (prescriptions, dental, eyeglasses etc.) are much lower than typical employer health benefit costs in the U.S.

4) Not just 'immigration'........but foreign students......Canada has shifted in recent years to nearly unlimited foreign student education. This,in turn has been part of the driver of housing growth and costs. Because foreign student typically pay greatly inflated tuition vs domestic students (though still slightly below U.S. numbers adjusted for currency); Canada has implemented very liberal work rules for students while studying here.

More than that, it has created a very big carrot to stay beyond college with liberal work experience provisions extending one's VISA by 3 years or more, and if you are gainfully employed, setting a path to citizenship.

That, in turn, juices the labour supply which is both a talent availability issue and helps keep wages in check.

Though, wages are closing towards parity w/the U.S. (adjusted for currency); as demand has spiked.

Between all of these factors, and gov't incentives that are similar to the U.S. if one brings in a large job count (property tax increase deferrals, gov't guaranteed loans etc. etc.)

Canada writ large is competitive.......with Toronto, Vancouver and Montreal all doing well.

[Nite]

Originally Posted by Northern Light

A few points on why this is happening beyond those noted above.

1) The exchange rate

Right now, CAD is .78 USD.

So if salaries were otherwise equal (which they are not), a U.S. company can get a 22% discount by shifting jobs to Canada.

That matters. It doesn't matter if the talent isn't there or willing/able to move; but its a critical reason if the above are workable to consider it.

2) Wages are not yet equal. Tech talent in Canada are well paid, the average income is six figures...........but it still trails the typical Bay area income by as much as 1/3, and
probably 1/4 on average, IF dollars were taken at par.

Below is a quote from 2017, so numbers have changed, but it gives you a sense of where things were, particularly when decisions now taking effect were made.

"The study was conducted with over 280,000 engineer profiles. San Francisco salary clocked in at average of $134,000 USD and was trailed by Seattle at $128,000 and New York City at $120,000. Average salary in Toronto was $74,000 USD (or $97,000 Canadian)."

Source:

https://planetweb.ca/news/toronto-sa...hired-reports/

*****

3) Health insurance/benefits are way cheaper in Canada. With core coverages provided by the state, and embedded in routine taxes; the cost of employee benefits for supplementary healthcare (prescriptions, dental, eyeglasses etc.) are much lower than typical employer health benefit costs in the U.S.

4) Not just 'immigration'........but foreign students......Canada has shifted in recent years to nearly unlimited foreign student education. This,in turn has been part of the driver of housing growth and costs. Because foreign student typically pay greatly inflated tuition vs domestic students (though still slightly below U.S. numbers adjusted for currency); Canada has implemented very liberal work rules for students while studying here.

More than that, it has created a very big carrot to stay beyond college with liberal work experience provisions extending one's VISA by 3 years or more, and if you are gainfully employed, setting a path to citizenship.

That, in turn, juice the labour supply which is both a talent availability issue and helps keep wages in check.

Though, wages are closing towards parity w/the U.S. (adjusted for currency); as demand has spiked.

Between all of these factors, and gov't incentives that are similar to the U.S. if one brings in a large job count (property tax increase deferrals, gov't guaranteed loans etc. etc.)

Canada writ large is competitive.......with Toronto, Vancouver and Montreal all doing well.

IT professionals have been the greatest beneficiary of Work from Home, but what many of them don't relieve is that that means the competition for their jobs just went from local to global.
so the local restrictions which afforded them higher salaries is now gone.

As we are seeing now, many US IT companies are laying off many of their US workforce and appear to be moving those jobs to more affordable locations.
I don't foresee US wages being as inflated from a global median for the rest of the decades.

Basically IT will be going the way of manufacturing soon as people are just as good or better at it than Americans and cost a lot less.

Tech Layoffs In 2022: The U.S. Companies That Have Cut Jobs
After a banner year for tech, layoffs are here. In fact, as of early August, more than 34,000 workers in the U.S. tech sector have been laid off in mass job cuts so far in 2022, according to a Crunchbase News tally.
Tech companies as big as Netflix have slashed jobs this year, with some citing the effects of the COVID-19 pandemic and others pointing to overhiring during periods of rapid growth. Robinhood, Glossier and Better are just a few of the tech companies that have notably trimmed their headcount in 2022.

https://news.crunchbase.com/startups/tech-layoffs-2022/

Candaa where the labour cost are half that and where the quality is equal of better than the US will continue to see a growing IT workforce.

[homebucket]

Originally Posted by Nite

Candaa where the labour cost are half that and where the quality is equal of better than the US will continue to see a growing IT workforce.

Source?

Toronto might be improving compared to other secondary tech hubs in the US, but it's still got a long ways to go before it can compete with the best of the best.

Most tech companies here hire the best of the best from Stanford, Berkeley, UW, and Texas, as well as UCLA, Carnegie Mellon, Michigan, and San Jose State. Only one university in Canada cracks the top 20 of feeder schools to tech and that is University of Waterloo.

And that also leads to the larger point. What are the top 5 tech companies in Canada (has anyone even heard of them before) and how do they compare to FAANG? What would lure a Berkeley EECS graduate to move to Toronto? It's certainly not to work for a bigger name company, not for better pay, and it's not cheaper cost of living, and it's not better weather. So what would be the incentive?

[homebucket]

According to this, Toronto has a tech quality score of 57.1 with an average annual salary for a software engineer of $71,914 USD. The Bay Area comes in with a tech quality score of 100 with an average annual salary of $154,047 USD.

Other cities that scored higher in terms of tech quality include the following. Of note, the only other city that pays less than Toronto is Edmonton.
- Seattle 97.9
- Pittsburgh 95.9
- Austin 93.8
- Los Angeles 91.8
- San Diego 89.7
- Waterloo 87.7
- Madison 85.7
- NYC 83.6
- Raleigh-Durham 81.6
- DC 79.5
- Phoenix 77.5
- Denver 75.5
- Edmonton 73.4
- Salt Lake City 71.4
- Atlanta 69.3
- Vancouver 67.3
- Chicago 65.3
- Boston 63.2
- Detroit 61.2
- Portland 59.1

[Nite]

Originally Posted by homebucket

According to this, Toronto has a tech quality score of 57.1 with an average annual salary for a software engineer of $71,914 USD. The Bay Area comes in with a tech quality score of 100 with an average annual salary of $154,047 USD.

Other cities that scored higher in terms of tech quality include the following. Of note, the only other city that pays less than Toronto is Edmonton.
- Seattle 97.9
- Pittsburgh 95.9
- Austin 93.8
- Los Angeles 91.8
- San Diego 89.7
- Waterloo 87.7
- Madison 85.7
- NYC 83.6
- Raleigh-Durham 81.6
- DC 79.5
- Phoenix 77.5
- Denver 75.5
- Edmonton 73.4
- Salt Lake City 71.4
- Atlanta 69.3
- Vancouver 67.3
- Chicago 65.3
- Boston 63.2
- Detroit 61.2
- Portland 59.1

Despite your metric, Tech jobs in the US are going down and expanding rapidly in Canada. I am sure the organizations doing the hiring don't see a difference in the quality of the work produced.
Toronto is already the 3rd largest tech hub on the continent with the largest growth in the last few years and is destined to be number 1 in a few years.