For decades now, Silicon Valley has been the greatest technological hub in North America. However, a recent CNBC feature notes that a few Canadian cities are on the cusp of overtaking the San Francisco Bay Area. Not only are Montréal, Toronto, and Vancouver home to some up-and-coming new startups, those cities are also welcoming swaths of skilled engineers, developers, and designers.

Canada is supplanting America as a leading home for tech innovation for two reasons: the Trump administration’s immigration policy and Silicon Valley’s high cost of living.

Policy Informs Prosperity

The Department of Homeland Security reported that the government approved 10 percent fewer H-B1 (specialty work) visas in 2018 than in 2017. Indeed, while U.S. Citizenship and Immigration Services allowed American companies to sponsor 373,400 work visas in 2017, it only allowed 335,000 last year. The agency became more restrictive because the Trump administration wants American companies to prioritize the hiring of American workers.

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Lever CEO Sarah Nahm said that Washington’s decision creates a situation where firms have to turn down skilled, qualified workers because they aren’t American citizens. The executive noted that she made 20 hires in Toronto in two months because of its diverse and robust workforce.

Toronto’s status as a hub for hot tech startups is reflected in the fact that it will host Collision 2020 next June.

It isn’t surprising that firms like Lever, Tile, and Postmates have opened offices in Canada recently. All three startups want to take advantage of the country’s candidate pool.

Like the United States, Canada has hundreds of thousands of open tech positions to fill. However, unlike the U.S., it isn’t solely relying on domestic college graduates to address the problem. Instead, the country launched an initiative called the Global Talent Stream in 2017. The program shortened the visa application wait times from 10 months to two weeks for workers with STEM experience.

As a result, the Canadian government helped 1,000 local companies hire more than 4,000 skilled workers.

Due to factors like proximity to the U.S., lack of immigration hurdles, and a diverse, skilled workforce, a growing number of American corporations want to establish a presence up north. Envoy Global’s survey of HR professionals found that 38 percent of U.S. firms are looking into opening Canadian offices.

The Comparatively Low Cost of Living

Meanwhile, American workers are choosing to live in Canada because of the more affordable cost of living.

Admittedly, Canada is not the most affordable country on earth. Toronto, the nation’s most populous city, has a median home price of $850,000. Tech hub Vancouver, the country’s third-largest municipality, has a median home price of $869,000. Even so, the median home price in the Bay Area is $1 million.

Silicon Valley’s expensive cost of living also affects wages. In San Francisco, the average tech worker makes $145,000 annually. That means that most technology industry professionals can’t live in the same city they work in. However, in Toronto, techies earn a more equitable average salary of $100,000.

The economic situation is even more favorable in Montréal. In the Québec city, IT workers make an average of $45,000 a year and enjoy median home prices of $365,700.

Due to these factors, it’s easier for companies and their employees to operate in Canada than in the United States. It isn’t inconceivable that Silicon Valley could experience a significant “brain drain” or minor tech sector departure in the next 10 years without major changes to national policies and local economics.

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