Economic Benefits of the U.S. Offer Greater Incentive

OTTAWA (Feb. 9, 1999) – Today’s technology worker enjoys at least 18% more disposable income by taking a job in the United States, rather than staying in Canada according to a new report by PERSONNEL SYSTEMS.

Comparing disposable income in 5 major American high tech centres (Boston, San Jose, Austin, Seattle and Raleigh) to Canada’s major high tech cities (Vancouver, Calgary, Toronto, Ottawa, and Montreal) the report shows that today’s high tech worker is economically better off in the U.S.

The differences in disposable income (salary less major expenses) for a high tech worker in Canada and one in the United States are significantly affected by the costs of housing, health care, transportation, consumables and the country’s tax systems. The largest contributor to these differentials is the difference between the tax systems, followed by housing costs and consumables.

Among the findings:

• U.S. salaries are pulling ahead for hot demand jobs including Software Developers, Hardware Engineers, and Systems Analysts.
• Workers (single, renting) in Canada earning $50K retain 22% of earnings as disposable income. In the U.S., the same worker has 38%. At the same earning level, married homeowners in the U.S. retain 18% in disposable income. In Canada, the married homeowner cannot support the same standard of living on that income, and has to reduce discretionary expenses to compensate.
• Single Canadians pay between 29% and 32% of their salary in income tax. At the same earning level, single U.S. workers in Seattle and Austin pay 18% in income taxes, and 25% in the other cities surveyed
• Canadians filing as married reduce their tax bill by an average of 3%; in the U.S. cities surveyed, the tax burden eases by 7% to 10% for married workers.

The U.S. health care system and higher crime rates are commonly cited by Canadians as reasons not to relocate to the United States. However, these do not hold true for high tech workers. Health Care coverage in the U.S., as in Canada, is typically provided as a benefit to high tech workers, and is 100% employer paid. Crime rates within high tech centres in Canada are actually higher than in the U.S., as high tech is represented in our major cities, including Toronto, Vancouver and Ottawa, whereas in the U.S., high tech centres, like Austin, Raleigh, Boston, are not the major urban centres known for high crime rates.

American companies aggressively recruiting in Canada offer candidates significant relocation allowances, hefty signing bonuses, and promises of greater opportunities for advancement. When considering a choice between a job in Canada, or the U.S., today’s technology worker sees the economic advantage of the U.S. position. Canadian employers, despite offering competitive salaries, will not be able to attract and retain needed skills in the current labour shortage so long as working in the U.S. continues to net a much greater financial advantage with lower taxes, and higher disposable income.

The report used salaries from PERSONNEL SYSTEMS’ Compensation Survey for the High Technology Industry, and 1999 economic data from various public sources. Disposable income was chosen as the purchasing power index providing the best measure of comparison between Canada and the U.S.. A detailed report is available on PERSONNEL SYSTEMS’ web site at http://www.perssyst.com/survey/incomegap.htm

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