The Canadian brain drain and why it won’t stop anytime soon

“Cali or bust” and “US or bust” are common terms I heard throughout my undergrad in engineering. Now, over a year out of school and two job hops later as an engineer, I’m starting to realize the Canadian brain drain is real.

Countless of my university classmates are leaving in droves for the US at the first opportunity, for work or graduate studies. In extreme cases, such as University of Waterloo’s Software Engineering program, more than 2/3 of the graduating class relocated to the US post-graduation.

Even in the currently poor economic background with a looming recession, if you’re a talented individual in an in-demand industry such as tech, finance, or healthcare, there are still many incentives for moving to the US instead of staying in Canada post-graduation.

Here I detail some reasons why:

The US has always been, and will always be the pinnacle of innovation and finance, the land of opportunity. Silicon Valley, Wall Street, Ivy League, Hollywood, you name it. If you’re ambitious, you want to be at the top. Doesn’t matter how much the media tries to prop up Toronto as the next whatever, it will realistically take a long time to catch up to the reputation of the US as the top. In the US, you are more likely to work with the latest, cutting-edge technology, whether in tech, healthcare, finance, media, or the arts. If you’re interested in entrepreneurship, it’s also a lot easier to start a business in the US compared to Canada, with a lot more resources and funding available to startups.

Pay is much lower in Canada compared to the US for in-demand industries. It is even worse if you factor in the CAD to USD exchange rate and the cost of living in major cities such as Toronto and Vancouver, as well as the lower income tax rates in some states in the US. You end up saving a lot less in cash, especially if you compare it to somewhere with a relatively lower cost of living and low taxes, such as Texas or Arizona. Even though salaries in Canada have been on the rise in the recent years, I don’t see them catching up to the US anytime soon. Why?

• Not enough of a market and population in Canada to support large industries, especially in innovation, resulting in less capital available to be invested in the tech and financial sectors, thus resulting in lower salaries overall.
• Policy in Canada does not put an emphasis on innovation. No matter how the media wants to change this narrative, Canada has always been, and will always be an economy focused on exporting natural resources. Also, real estate accounts for roughly 20% of Canadian GDP! An economic recession will only make the problem worse. Even in Toronto, the tech industry is still an afterthought compared to the financial services sector here, so it won’t receive nearly as much emphasis.
• Too many skilled immigrants entering Canada with advanced degrees taking up the local jobs, thus keeping the salaries low. The Canadian government is doubling down on immigration (target of 500,000 per year until 2025!) so it will only get worse. US immigration and work visas, on the other hand, are much tougher to obtain, thus limiting the supply of talent and raising pay. Basic supply and demand.
• People in Canada are generally more complacent about their careers compared to the US. People here mostly just settle and live a chill life instead of hustling for the next big pay raise. In tech especially, compared to the major tech hubs such as the Bay Area or Seattle, tech workers in Canada don’t job hop as often and are satisfied with standard raises or promotions instead of demanding more pay. There is less pressure for Canadian employers to raise their pay if their employees are content.
• Canada is becoming a cheap outsourcing destination for major American companies, especially with the pandemic-driven popularity of remote work. From anecdotal accounts from my engineering peers, my own experience working remotely for a major US tech company, as well as numbers on levels.fyi, Canadian salaries (working remotely or working for a satellite office in Canada) are about 30-50% lower at the same position and level compared to the US at the same company, factoring in the exchange rate. There is little pressure for US employers to pay much higher than the market rate in Canada.
• Take a look at some numbers for yourself (for tech geeks and fellow engineers): Software engineer salaries in Canada Software engineer salaries in the US. Some of these higher total compensations given out in the US are unheard of in Canada unless you’re an executive.

In the US, the highs can be higher, but lows can be lower. Sure, there is less social security and more crime in the US while their healthcare system is a s*** show. However, most places in Canada aren’t much better in these aspects (our healthcare system, despite it being public, is understaffed and overwhelmed). For most young and healthy Canadians, especially in high-paying industries such as tech, finance, and healthcare, the low is not usually a problem since they can afford a decent lifestyle in the US. Worst comes the worst, they can always return to Canada or find another job with ease. Therefore, there is little risk for a new grad to move to the States with a very high reward potential.

The climate of California and the southern US cannot be beaten. Even without other incentives, people will keep moving there for the warmer climate alone. In fact, even my Asian parents are considering retiring in the southern US just to escape the harsh Canadian winters. Also, climate change won’t warm up the Great White North overnight.

More interesting things to explore in the US. You should explore the world while you’re still young and don’t have many strings attached. NYC, LA, San Francisco, Miami. The US is much more culturally rich, and there are many more interesting things and places to see and experience in the US compared to Canada.

Canada has a reputation as a retirement home. Even most immigrants who come here use Canada as a springboard to jump to the US, or set up their next generation to move to the US. People like to associate Canada with good benefits and merely as a place to raise a family or retire.

Finally, you can always come back to Canada. A lot of Canadians come back to Canada to start a family once they have gained some experience in the US. They come back with a lot of saved-up cash, with competitive work experience or education, and can take advantage of the relatively lower cost of living here compared to New York, California, etc.

Now please understand that this is coming from the perspective of an ambitious recent grad from a top university in Canada, working in an in-demand industry, so the point of view is very biased. There are a lot of benefits of staying in Canada too, such as being closer to family and friends, generally safer and less crime, as well as better social services. However, it doesn’t hurt to dream big when you’re young.