This is an addendum to one of my posts last week regarding comments made by Navdeep Bains, Minister of Innovation, Science and Economic Development - he hopes that that Trudeau's new budgetary measures will attract "top-notch workers, scientists and scholars from the U.S."
Lets look at the competition he and Canada faces in trying to attract U.S. workers. USA Today published an article this past weekend on "Tech Job Migration" (the link is at bottom of Blog. The salient points from this article are...
Many Tech startups and even existing "Big Players" are relocating to cities like Phoenix, Tucson, Houston and Denver for reasons of lower operating costs and an increased ability to attract new talent based on the lower costs for housing and lower costs of living.
Lets take a look at the attraction for a potential tech employee and what they will choose Phoenix for example over Ottawa.
Taxes & Cost of Living
An individual in Phoenix making $80K will have a tax rate, before deductions of 17.9%. The save individual in Ottawa will have a personal tax rate of 31.5% (nearly double). In Phoenix the worker will be able to purchase a 2,000 sq/ft home, within a 30 minute commute, for approximately $250K. The same home within a hour commute of Ottawa will cost approximately $650K. The employee in Phoenix will only require a downpayment of $12.5K with 100% of the mortgage interest being deductible. The Canadian will need $65K downpayment to obtain a reasonable mortgages rate without CMHC Insurance. Taxes on the Phoenix house will be $1,900/yr whereas the property taxes on the Ottawa home would be $6,000/yr. Utilities, gas and other costs of living are approximately 17% higher in Ottawa than in Phoenix (https://www.expatistan.com). HST tax in Ottawa 13% in Phoenix 8.6% (only on goods, services not taxed). Health Care, the Ottawa employee will receive "Free" Healthcare, the company will, in all likelihood, have a Benefits package for the employee. As of January 2016 U.S. employers are required to provide adequate health insurance coverage options for employees. At a minimum the Phoenix company will provide the employee with 70 percent/30 percent. Out of pocket premium expense (fully deductible) for the employee would range from $1,118 for single or individual employee coverage; $2,824 for employee-plus-one coverage and $4,236 for family coverage.
Will all the above taken into consideration the Phoenix employee will have approximately $38,000 more for discretionary spending per year than the Ottawa employee!
Get ready for the stampede Minister Navdeep Bains!!!!!
This week a number of Canadian statistics were released; Retail Sales fell in December by 0.5% with 9 of the major 11 sectors registering declines including automobiles. The Canadian consumer price index rose .9%. Inflation now sits at 2.1%. Despite the decline retail sales however posted a 4.5% growth. In a previous post I discussed the growth of a couple of Canadian retailers. Again this is simple math; they are either selling to more people or they are increasing their prices within the existing base! Not too hard to figure out.
The annual inflation rate took its highest jump in the last two years, the leader? Gasoline! The price of which has increased over 20% - the largest increase in six years. How did our friends south of the border do? Well they don't have an issue as their gas prices decreased at the pump over the same period. Oh, and no they didn't see a carbon tax either!
I am a concerned Canadian that is fed up seeing companies and people leave Canada due to the high cost of doing business and living.