When Vancouver wanted Amazon to locate its new headquarters (HQ2) in the region, it pitched the fact that tech workers make less money than they do in any tech hub across North America.
That pitch didn’t succeed.
The e-commerce giant is nevertheless expanding its presence in the city — and it’s still likely to enjoy a heck of a deal when it comes to employee salaries.
Coverage of Amazon on Globalnews.ca:
Amazon is set to inject 3,000 jobs into Vancouver’s economy as it looks to locate a tech hub at the old Canada Post building in the city’s downtown, growing Amazon’s total workforce in the city to 5,000 by 2022.
Staff there are expected to work in areas such as e-commerce technology, machine learning and cloud computing.
Prime Minister Justin Trudeau was on hand for the announcement, saying that Canadian cities are “poised to attract premier investment that creates the jobs of tomorrow.”
They may bring the jobs of tomorrow.
But the pay of today in Vancouver is below anything that tech workers earn across North America, according to data released last year.
Employees in all Metro Vancouver tech occupations made an average of C$79,402 in April 2017, according to CBRE’s 2017 Scoring Tech Talent report.
That’s US$58,179.34 when adjusted to the exchange rate at the time.
That salary was lower than in any city cited in the report, including Toronto ($60,365.04), Oklahoma City ($74,424) and Miami ($75,700).
At the other end of the scale, tech workers make the most money in the San Francisco Bay Area ($123,158), Seattle ($113,906) and New York ($108,878).
Between Seattle and Vancouver, that’s a difference of over $55,000.
Vancouver’s comparatively low tech salaries are an “added sweetener” in Amazon’s expansion, said Marc-David Seidel, a professor of entrepreneurship at UBC’s Sauder School of Business.
But he also said average wages are likely to go up over time.
“Salaries are a little bit lower, so that’s attractive in the short run,” Seidel told Global News.
“Realistically, that goes up as the activity increases. So I don’t think that’s the primary concern for them.”
Seidel thinks there are other reasons why Amazon is increasing its presence in Vancouver.
One is that it’s located close to the company’s original headquarters in Seattle, and it won’t be difficult to move people back and forth.
Another is that Vancouver’s innovation ecosystem has been growing, and there’s an oversupply of labour, he said.
CBRE’s Scoring Tech Talent report shows that Vancouver’s supply of labour has been growing.
Vancouver’s tech talent labour pool grew by 36.8 per cent from 2011 to 2016, hitting 65,100 that year.
That growth was faster than a number of cities, including New York (32.9 per cent), Toronto (31.8 per cent) and Los Angeles (19 per cent).
Tech wages remain low in Vancouver because people are coming out of universities, but there aren’t enough jobs for them, Seidel said.
That’s led to the excess labour supply.
“So the wages stay low because there’s lots of people looking and not that many jobs,” Seidel said.
Another reason Amazon may be locating in Vancouver — the low value of the Canadian dollar.
The loonie was worth $1.28341 against the U.S. greenback on Monday.
“For Amazon, versus hiring a Canadian worker to do that software, and you can sell the result of all that hard work in the United States, you already add 20, 25 per cent to your bottom line,” said Lindsay Meredith, a professor of marketing at Simon Fraser University (SFU).
“China’s made a whole career doing this, basically driving the yuan into the bucket and it gives them a huge discount and international advantage. We’re doing the same thing.”
Amazon told Global News that the reason for expanding in Vancouver isn’t so much the cost of labour, but that the city has “phenomenal tech talent.”
The company also said that Seattle has become a saturated tech market, and can be difficult to recruit in.
That task is easier in Vancouver.
Amazon said employees are paid different rates in cities, based on market conditions.
The lower salaries may be a consideration, but the talent is key to its decision.
- With files from Amy Judd