Canadian tech sector pays better than U.S.

Tax bite leaves Americans better off, study says

Canadian high tech companies are paying top workers better salaries than their U.S. counterparts, says a survey of the industry pay.

The survey, commissioned by the Information Technology Association of Canada (ITAC) and its U.S. equivalent, the Information Technology Association of America, was based on an annual data collected by the human resources consultant William M. Mercer Ltd.

The two associations asked Mercer to break out the six most in-demand categories, then compare salaries in the U.S and Canada.

The salary comparisons are based on "purchasing power equivalent," which gauges how much the salaries could buy. Canadian salaries would have been lower if the exchange rate in U.S. dollars had been used as the conversion.

The study also considered only workers who are in the top 25 per cent of their job categories, because the industry groups wanted to compared salaries of the highest performers.

The study concluded that in three of the categories -- senior and junior software developers and systems experts -- salaries were significantly higher than in the U.S.

Both junior and senior software developers earned 21 per cent more in Canada than in the U.S., with Canadian senior developers earning $96,100 and junior developers earning $60,900.

Systems experts in Canada earned $137,600, about 13 per cent more than those in U.S.

Help-desk technicians and project managers both earned slightly less than those in the U.S., while Web site designers earned about 19 per cent less than those in the U.S.

But despite tempting salaries in Canada, the brain drain is real and after-tax income is probably the reason why, said Gaylen Duncan, the president of ITAC, which represents 1,300 Canadian computer and telecommunications companies.

"The answer isn't in gross salary," he said. "It may be in take-home salaries."

The survey did not try to calculate after-tax income because this would vary, for example, from state to state, and on whether the employee is married or has a mortgage, he said.

About three months ago, a number of high-profile figures said publicly that high tax levels are driving high-tech talent out of Canada. Industry Minister John Manley said personal income taxes must be cut to U.S. levels to stop the flow of workers to the U.S.

In an April 16 letter to Ontario Finance Minister Ernie Eves, the Canadian Advanced Technology Alliance urged Ontario to introduce a $1-million lifetime exemption on taxes on capital gains from stock options for research and development-intensive companies.

But on Tuesday, the Canadian Association of University Teachers said skilled workers were going south for better pay and more job opportunities, rather than to escape taxes in Canada.

Mr. Duncan said ITAC's next move will be to commission a study to compare high tech salaries after taxes in Canada and the U.S.

"We have a tax problem," he said. "But that's not the only reason people go to the 'States. It may be because of job variety or the action in the 'States."