Last year, Toronto’s tech job market was the fastest growing in the country with a 14% year-over-year increase (which translates to new 28,900 tech jobs added to the market) and a huge 52% increase over the previous five years. Over the last several years, and especially since the onset of the Trump administration in the US, Toronto, and Canada as a whole, have become increasingly attractive to tech companies looking to house their head offices and operations in a diverse and inclusive country with a stable government and economy, and common-sense immigration policies.
lots of jobs lead to higher competition for housing
The influx of tech workers impacts the communities in which they settle in significant ways. As of August, the average price of a detached home in Toronto was $1,244,275, a rise of approximately 17% over the previous year. While it’s predicted housing prices will eventually drop in Toronto as they have in Vancouver, some areas, like the downtown core and homes close to transit lines will retain their value. The real estate market in the GTA is currently a seller’s market; listings are down and those who sell have limited purchasing options. New housing development is also down, and condos are only now being designed to include family-size units. The retiring boomers are holding on to their homes longer, not only as an option for their children but because there are few affordable options for downsizing.
What happens when starter tech companies and thriving businesses like Amazon join the mix? Toronto was shortlisted as one of 20 cities under consideration for Amazon’s second North American headquarters. Why was this such a big deal? The company plans to invest more than $5 billion in construction and employ as many as 50,000 high paying jobs. The anticipated boom in jobs will likely see an increase in housing prices, especially in those areas closest to the location. With such a high volume of high paying jobs, workers will be better able to afford higher rents and real estate costs, driving those with lower salaries out of the market. That number of employees added to the existing workforce will force new, more creative construction, as the one thing exponential growth can’t provide is extra land on which to build new communities. Don’t be surprised to see public schools quartered on several floors of new highrises.
impact on investment and economic growth
Amazon’s main headquarters in Seattle has 33 buildings covering 8.1 million square feet and employs more than 40,000 people. Amazon says its investments in the city from 2010 to 2016 resulted in an infusion of $38 billion to Seattle’s economy. That said, the ‘Amazon Effect’ was quickly felt in the city as rents increased dramatically and housing experienced rapid inflation. On the positive side, once Amazon established itself in Seattle, other tech companies like Facebook and Google followed suit. The battle for top talent created a job seeker’s market where the best tech specialists were able to demand – and get – top salaries. When Amazon set up shop in Vancouver, adding 3,000 new jobs, the move also drew more tech companies to that city.
Communities experience a ripple effect on resources and infrastructure in proportion to tech company locations. Tens of thousands of new jobs are great, except where will these workers live and how will they get to and from work? How will they and their neighbours cope with an already overburdened, outdated traffic system? Where will their children attend school and day-care? What health care resources will be available to them? What are the long-term effects of higher food, entertainment and cultural costs on the larger community? What is the impact on infrastructure that was never designed for a burden that will only increase?
are we heading for an inevitable shortage of tech workers?
According to IT World Canada, Canada is heading for a major tech talent shortage in the next 5 years. By next year alone, 182,000 people will be needed to fill new and vacant ICT positions across the country. With a shortage of home-grown talent, tech companies of all sizes will look to foreign-trained specialists to fill the gaps; in most cases, these companies, with the support of federal and provincial governments, will need to develop bridging programs that train and provide Canadian work experience in order to allow newcomer job seekers to find work that is commensurate with their skills and qualifications. These new Canadians will need to find places to live and access to transportation, health care – everything that contributes to the quality of life.
As in every cloud, there are silver linings; these are the obvious benefits to workers and their communities where tech companies settle. The challenge will be to create strategies that anticipate potential issues and plan for them before they arise to mitigate the continued impact of tech growth. That way we can all share in the prosperity that comes with growth.