Canada+and+Information+Technology

toc



=Introduction=

Why are Information Technology workers in Canada causing an economic “brain drain”? Canadian IT workers are quick to find work in the U.S. because these employees want to find work for themselves that offer the highest salaries. In the U.S. IT work field, pay scales are higher and tax rates are lower. There are various other reasons that have much to do with the Canadian IT brain drain that will be further discussed throughout this analysis, but the tax rate issue is the most significant cause.

The Information Technology field in Canada has changed drastically over just a few years. Some major findings were that the Y2K craze in the U.S. had a major impact on Canadian IT workers; U.S. advertisements have a strong impact on IT workers in Canada; and tax rates in the U.S. are much lower than in Canada, causing Canadian IT workers to flee to the U.S. for work.

=Y2K Craze=



Y2K and Information Technology
Rumors that formulated in the U.S. about the Y2K technology problems caused Canadian IT employees to flee to the U.S. for massive job opportunities. Ever since this craze developed in the U.S., IT workers in Canada have decreased significantly. This Y2K problem was one of the beginning aspects that started this major Information Technology skills shortage in Canada. This shortage had existed as well before the year 2000, but it was most significant around that time. Many Canadian IT employees used this craze as a perfect opportunity to find work for themselves, as there were many job openings available in the U.S. As fleeing to the U.S. became popular around this time, more and more IT employees began to see the benefits of doing so, mainly because of the salary differences between Canadian and American IT employment.

Future of Canadian IT Workers
Eventually, as years passed, IT employment in Canada continually got worse and some feel that this downfall will continue to occur in upcoming years. “Canada is losing plenty of skilled IT professionals to a paralyzing IT skills crisis south of the border. Of a total U.S. information technology workforce of 3.3 million, 340,000 positions are vacant. On top of that, 1.3 million more people will be needed by U.S. employers by the year 2006” (Brooks, 1998). As predicted, in the following years more and more IT employees are going to be needed in the U.S., therefore the attempt to keep IT employees in Canada will be quite a struggle, as it has been over the years.

Y2K and Information Technology: An Opposing View
Some may argue that this Y2K craze did not have much of an impact on the IT workers that fled from Canada to the U.S. They may feel that the heavy amount of people coming to the U.S. was due solely to individual preference. As this aspect can be true to an extent, the Y2K issue cannot be denied. During this time, the U.S. was desperate for skilled IT workers from anywhere, especially Canada, to help them during this hectic time. It is determined that other Canadian professions around this time were not struggling with brain drain, proving that the IT field was mainly struggling because of the desperate need for these employees in the U.S. “Dr. Ross Finnie, a research fellow and professor with Queen's School of Policy Studies in Kingston, Ont. reported that rates of Canadian workers emigrating are currently at historical lows. Canada has, however, been suffering a net loss of workers in several key knowledge occupations, including high-tech” (Lancit, 2001).

=U.S. and Advertising=

Effect of U.S. Advertising on Canadian IT Professionals
Many U.S. IT companies are strong about advertising their companies to new talent in Canada, more so than Canadian companies do. U.S. employers also go through the effort to get the best employees, even it if means having to travel to Canada to find them. “For their part, U.S. employers are more than willing to come north to get good people, attending job fairs and even tracking down and targeting specific individuals with the right qualifications” (Matthew, 1999). This strong willingness presented by the U.S. is very attractive to Canadian employees, as it shows that the U.S. is very interested in having them as part of their teams, and will go the extra mile to display their interest. Employees like to be treated with care and respect, and by the U.S. employers taking such action, Canadian IT professionals will feel that they are in good hands.

IT Advertising by the U.S: An Opposing View
Some individuals may disagree with the fact that U.S. advertising has a big impact on Canadian IT workers. With the strong need for employees in the U.S. IT field, these employers will do anything they can to win the hearts of the Canadian IT professionals. One of the main advantages that the U.S. has over Canada is that their tax rates are much lower. With this in mind, the U.S. employers will use this fact to their advantage. “Indeed, when U.S. companies rent hotel suites, buy billboard space and park trailers outside of Canadian head offices to scoop up new talent, low American tax rates are often the main part of their recruitment pitch, said Robert Waite, vice president of corporate relations and marketing at CAE Inc” (Friedman, 1999). With this stated, it is clearly seen that the U.S. IT employers are eager to gather as many IT professionals from Canada as possible. If they did not have this goal in mind, their advertisements would not consist of these elements that downplay the Canadian workforce in such a strong way.

=Canada's Heavy Tax Burden=



The U.S. Advantage
In the U.S., tax rates are much lower than in Canada, therefore leaving the U.S. employees with extra money in their pockets at the end of the day. The American workforce, in general, has a strong advantage over Canada because of this tax rate situation. The IT workforce is one of the fields of work that Canada is struggling with the most because of this tax issue. When it comes to salary issues, Canada’s wages are not much different from that of the U.S. “‘Salaries aren't the problem,’ said Andre Gauthier, ITAC's newly- appointed chairman at a breakfast briefing in Montreal. ‘We surveyed the compensation levels for the six most in-demand jobs and found that Canadians are better paid than their American counterparts at the top levels. But they get to keep far less after taxes’” (Gunderson, 2001). From this statement, it is seen that sometimes Canadian IT workers are in fact paid more than American IT workers, however the tax deductions change everything. Canadian IT professionals see this fact as a major advantage because of the pay differences, and because there are many IT job opportunities available in the U.S.

A Study Between U.S. and Canada's IT Employment
William M. Mercer conducted a study about this particular issue to show the effects of Canadian and American IT wage differences and the effects of Canada’s heavy tax burden. “The study, conducted by William M. Mercer Ltd., compared the salaries and take-home pay of 27,000 Canadian and 165,000 American IT workers in the 75th percentile of pay, based on the Bank of Canada's purchasing power index. It found that while the Canadians were paid more - 21 per cent in the case of a senior software developer - they are being hammered by income taxes, making them receptive to U.S. recruiters” (Stefanac, 1999). This statement serves as proof to show that the U.S. IT field has such a major advantage of the Canadian IT workforce. Employees in general want to do anything they can to earn the bigger buck, and fleeing to the U.S. is an easy way for these employees to get this. Therefore, IT employees in Canada are quick to find work in the U.S. mainly for wage advantages.

The U.S. Advantage: An Opposing View
Some may argue that this tax rate issue is not a major cause of Canadian IT employees’ eagerness to find work in the U.S. Some feel that brain drain is not even an issue at all! “On July 13, the Canadian Association of University Teachers released a study of its own, citing Statistics Canada figures to show that there may, in fact, be no brain drain at all. ‘The so-called 'brain drain' is almost entirely anecdotal,’ said CAUT policy director David Robinson. ‘It could equally be that our universities aren't producing graduates to keep up with the demand from a growing high technology business sector.’ More to the point, CAUT charged that corporate leaders are using the ‘brain trickle’ to promote a conservative agenda of tax and public spending cuts” (Lancit, 2001). Although, some aspects of this may be true, the issue of brain drain due to Canada’s heavy tax burden cannot be denied. As displayed in the previous paragraphs, employees’ main goal is to find work that offers the highest pay. If Canada wants to limit the amount of these skilled employees leaving to the U.S., then Canada needs to take action by decreasing tax rates and perhaps offering better benefits and incentives.

=Conclusion= Why are Information Technology workers in Canada causing an economic “brain drain”? Canadian IT workers are quick to find work in the U.S. because these employees want to find work for themselves that offer the highest salaries. In the U.S. IT work field, pay scales are higher and tax rates are lower.

Three main conclusions about the effects of Information Technology workers causing an economic “brain drain” were developed throughout this analysis. Firstly, the Y2K technology problems, an idea formulated by the U.S., caused Canadian IT employees to flee to the U.S. for massive job opportunities. Ever since this craze developed, IT workers in Canada have decreased significantly. Secondly, many U.S. IT companies are strong about advertising their companies to new talent in Canada, more so than Canadian companies do. Lastly, in the U.S., tax rates are much lower than in Canada, therefore leaving the U.S. employees with extra money in their pockets at the end of the day. A major recommendation to the Canadian IT workforce is to mainly expand the job openings and opportunities in this field so Canadian IT professionals will feel that they have many options open to them. Another major recommendation would be to decrease tax rates in Canada to attract more IT employees in Canada, and also to perhaps offer better job benefits and incentives.

=References= Brooks, Andrew. “IT skills flow down south in free trade (‘Brain Drain’ from Canada to the US)” Computing Canada (1998) March 16, 1998, 33, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 9 Feb 2004. .

Friedman, Matthew. “Brain drain debate: ITAC, CAUT at odds. (The Information Technology Association of Canada and Canadian Association of University Teachers disagree on Canada’s loss of IT workers to the US).” Computing Canada (1999) July 30, 1999, 1, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 9 Feb 2004. .

Lancit, Carla. “Emigrating Canadian Workers AT All-Time Low: Researcher says he is tired of the notion that we have to cut taxes in order to reduce the brain drain.” Computing Canada (2001) March 23, 2001, 26, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 29 Jan 2004. .

Gunderson, Morley. “Union-Management Relations in Canada.” Addison-Wesley Longman (2001), 331-336, University of Toronto Library Catalogue. SIRSI. University of Toronto Libraries. 11 Feb 2004. .

Stefanac, Rosalind. “Brain drain is for real, ITAC’s Duncan argues.” Computing Canada. v25 i27 (1999): 29. ProQuest Periodical Abstracts. Research II. ProQuest. University of Toronto Libraries, Toronto, ON. 29 Jan 2004. 

“2000 The Year In Review: Brain drain, Linux, wireless, XML, ASP, portals, e-biz boom, e-biz bust, mergers and acquisitions as reported this year in the pages of Computing Canada.” Computing Canada (2000) December 16, 2000, 8, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 10 Feb 2004. .

Naval, Michael. Finding solutions to Canada’s brain drain. (Shortage of skilled workers in the Canadian information technology industry). Computer Dealer News. N.d. Online. 9 Mar 1998. Retrieved February 9, 2004. .

“Measuring the brain drain (Canadians taking high paying jobs in the United States).” Maclean’s (1998) October 26, 1998, 2, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 10 Feb 2004. .

“Taxation and brain drain.” Computing Canada (1999) July 30, 1999, 8, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 11 Feb 2004. .

“The real ‘brain drain’ problem.” Worklife Report. (2001) Summer 2001, 10, Expanded Academic ASAP. Gale Group Databases. University of Toronto Libraries. 11 Feb 2004. .