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There is a peculiar cultural issue where many Canadians think of work as being granted a job as a reward for their virtuousness instead of being part of a mark

There is a peculiar cultural issue where many Canadians think of work as being granted a job as a reward for their virtuousness instead of being part of a market. You can hear it every time someone complains how qualified they are but unhappy with their lot. As though business were some great paternal force that gave out jobs and higher salaries for good behavior. When you view this ostensible sense of fairness as entitlement to rewards for having merely complied with social norms, in addition to a general suspicion of deal making, it becomes clear why they will work for less. There is also a structural problem in Canadian tech where much of the real money is made by "consulting," companies who exist as the result of it being difficult to fire and lay off employees, and the delta of high marginal income vs. corporate tax rates. These companies take a %50 or more cut of a contractor's pay to insulate employers from the regulatory and tax risks of keeping and firing real employees. That is, to maintain public entitlements instead of private ones. Companies still pay top dollar for talent, just not to the talent. So long as you aren't a busybody about what the Jones's are up to, Canada has a great quality of life. Unfortunately for Globe writers, that temptation appears to be too great.

graeme 9y ago
How are the consulting companies legal? From what I've read, it sounds like the workers are really employees.
- marvin 9y ago
  Same deal in Norway, consulting is huge because businesses want the convenience of firing at will but are not allowed due to employment law. Example scanario: Salary for an experienced engineer (employed) is $80k. Salary for a consultant (employed) is $80k. This consultant is hired out to a company that wants his services for $230k usd per year, but the company can now terminate this contract at will. The consulting company has to pay the employee's salary regardless of whether they have a contract or not. The consulting company sets aside a portion of the $150k/year/employee profit to pay their employees if it's hard to get a new contract, but of course they will lay off their surplus workforce if there is ever an economic crisis. It' a super profitable business when talent is in demand. If demand is unusually high, the consulting companies compete to provide slightly higher salaries, so they do push the median wages up. So at least that's good. The consulting companies love hiring new grads, because then they get away with paying a $50k salary, but earn the same profit. The clients can't tell the difference! If you're smart, senior and well-connected, you'll get your own consulting contracts without the middleman, and make $230k/year directly. You do take some more risk; if the market tanks, you'll be laid off immediately instead of with 3-12 months notice. You'll also be the first to go. As a freelancer, it can be hard to get contracts with the best clients, because they don't want to spend effort hiring recruiters that recognize talent, and hence pick exclusively from the top 10 consulting companies. So to answer your question: If this setup looks suspiciously like a shady wage fixing scheme, it's because countries with a predomimantly Protestant work ethic like Norway and Canada don't think that's such a big deal. People were born equal, they're supposed to make equal money. (Company owners notwithstanding, now as during the Industrial Revolution). Market efficiencies don't factor into it at all, and you're a right-wing conservative if you suggest otherwise. I am not joking.

graeme 9y ago

How are the consulting companies legal? From what I've read, it sounds like the workers are really employees.

marvin 9y ago
Same deal in Norway, consulting is huge because businesses want the convenience of firing at will but are not allowed due to employment law. Example scanario: Salary for an experienced engineer (employed) is $80k. Salary for a consultant (employed) is $80k. This consultant is hired out to a company that wants his services for $230k usd per year, but the company can now terminate this contract at will. The consulting company has to pay the employee's salary regardless of whether they have a contract or not. The consulting company sets aside a portion of the $150k/year/employee profit to pay their employees if it's hard to get a new contract, but of course they will lay off their surplus workforce if there is ever an economic crisis. It' a super profitable business when talent is in demand. If demand is unusually high, the consulting companies compete to provide slightly higher salaries, so they do push the median wages up. So at least that's good. The consulting companies love hiring new grads, because then they get away with paying a $50k salary, but earn the same profit. The clients can't tell the difference! If you're smart, senior and well-connected, you'll get your own consulting contracts without the middleman, and make $230k/year directly. You do take some more risk; if the market tanks, you'll be laid off immediately instead of with 3-12 months notice. You'll also be the first to go. As a freelancer, it can be hard to get contracts with the best clients, because they don't want to spend effort hiring recruiters that recognize talent, and hence pick exclusively from the top 10 consulting companies. So to answer your question: If this setup looks suspiciously like a shady wage fixing scheme, it's because countries with a predomimantly Protestant work ethic like Norway and Canada don't think that's such a big deal. People were born equal, they're supposed to make equal money. (Company owners notwithstanding, now as during the Industrial Revolution). Market efficiencies don't factor into it at all, and you're a right-wing conservative if you suggest otherwise. I am not joking.