Canada’s tech talent challenge may no longer be about whether the country can attract skilled workers. According to a new report from TD Economics, the bigger question is whether Canada can keep them.
In Canada’s Silent Brain Drain, TD warns that Canada is producing strong research, education, and skilled immigration outcomes, but is struggling to anchor top talent inside domestic companies capable of scaling globally. The report argues that Canada’s productivity challenges are being magnified by the loss of highly skilled workers, entrepreneurs, and STEM graduates to larger U.S. innovation ecosystems.
“The core challenge is not in attracting world-class talent, but in anchoring that talent within its borders to build, scale, and lead globally competitive firms at home,” the report states.
TD says Canada risks continuing to function as a feeder system for the U.S. innovation economy, producing talent and selecting skilled immigrants only to see much of the economic upside realized elsewhere.
The report describes today’s brain drain as quieter and more selective than the version Canada debated in the 1990s. Permanent migration to the United States has declined since the late 2000s, but TD says traditional migration data understates the issue because more talent loss now happens through temporary or semi-permanent channels, including U.S. employer-sponsored visas.
Those leaving, TD argues, are not marginal workers. Canadians applying for U.S. labour certification are disproportionately highly educated and concentrated in computer science, engineering, technical management, and related fields. Roughly half work in computer, mathematical, architecture, or engineering occupations.
The trend is also visible among students and recent graduates. TD cites Statistics Canada research showing that graduates in mathematics, computer science, and engineering are less likely to remain in Canada than non-STEM graduates, even among Canadian citizens. Doctoral graduates and graduates from highly ranked universities show some of the lowest retention rates, particularly in the first five years after graduation.
University of Waterloo data cited in the report reinforces the concern. TD notes that the highest-performing students are the most likely to leave Canada after graduation, with exit rates among top Canadian-born students roughly double those at the bottom of the skill distribution. Top-performing international students are even more likely to leave.
TD says the issue is not that Canada lacks talent. It is that Canada has not created enough domestic opportunities to make staying the obvious choice for top performers.
The report points to Canada’s weak record on commercialization, business research and development, technology adoption, and firm scale-up as structural problems. Canada generates ideas and talent, TD says, but often struggles to translate them into globally competitive companies.
One factor is Canada’s “missing middle” of medium-sized, high-growth firms. TD notes that Canada relies heavily on a small number of large enterprises for employment, while the U.S. has a larger share of employment in small and medium-sized businesses. Without more companies capable of scaling, Canada risks losing workers who are looking for career growth, compensation upside, and proximity to major innovation clusters.
Compensation remains a major pull factor. TD cites evidence that median pre-tax wages for tech workers in the United States are 46 percent higher than in Canada, before accounting for exchange rates or the larger equity compensation packages often offered by U.S. technology firms.
The report also argues that Canada’s tax and incentive structure compounds the problem, particularly for high earners, founders, and entrepreneurs. TD says top marginal personal tax rates in several provinces exceed 50 percent and apply at much lower income thresholds than in major U.S. jurisdictions.
But TD’s broader message is that tax policy alone will not solve the issue. Canada needs stronger innovation performance, deeper capital markets, and more firms capable of scaling globally if it wants to retain the people it educates, trains, and attracts.
“The core policy implication is that we must focus on anchoring talent in Canada which excels at producing it,” the report states.
For Canada’s tech sector, the warning is clear. The country’s talent strategy cannot stop at immigration targets, university enrolment, or skills training. If Canada wants to compete in artificial intelligence, software, advanced manufacturing, clean technology, and other high-growth sectors, it must build the companies and career pathways that make top talent want to stay.