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Why are US salaries so much higher than CDN salaries?

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Why are US salaries so much higher than CDN salaries? [#permalink] New post 10 Jul 2012, 22:22
I've been looking through various MBA employment reports, and rankings, and it appears as though Canadian MBA programs (even the top-tier schools) churn out graduates with salaries much lower than those of their US counterparts. I'm not even talking about Top 10 US programs - more like those in the 20 and below range.

For instance (source: Financial Times rankings 2012),
Avg post-MBA salary:

University of Western Ontario (Ivey) - $100k
University of Toronto (Rotman) - $94k
York University (Schulich) - $88k
University of British Columbia (Sauder) - $80k

compared to:

University of Virginia - $135k
Carnegie Mellon - $132k
University of Michigan - $130k
Emory - $125k
Georgetown - $123k
UT-Austin - $121k
USC - $121k

these are mostly regional schools too, and we're talking $40-50k difference in annual salaries... the US top 10 are in the $170-190k range but we won't get into that.

Obviously this is just a sample based on MBA employment reports but I had no idea there was such a discrepancy between Canada and the US. Does anyone know why this is? I always thought Toronto had fairly high average salaries but I guess that's not the case.
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Re: Why are US salaries so much higher than CDN salaries? [#permalink] New post 10 Jul 2012, 22:51
I am taking this as is from the economist's article on MBA college rankings and parameters on which the rankings are based:
Quote:
It is the 14th time the FT has published its ranking. It takes into account several factors—career progress, diversity, research output—but it is predominantly calculated on graduates’ earning power. The average increase on MBAs’ pre-programme salary accounts for 20% of its score, and their average salary a year or two after graduation a further 20%.

This latter point raises an interesting dilemma for ranking organisations, including The Economist. The FT adjusts these salaries to take into account cost of living. On the face of it, this is wholly sensible; clearly $100,000 is worth less in New York, say, than in Atlanta. The trouble is that the tool it uses to weight salaries is the purchasing power parity (PPP) exchange rate, a somewhat blunt instrument.


I think this pretty much makes it clear why salaries in Canada and US are different in the FT's ranking list.
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Re: Why are US salaries so much higher than CDN salaries? [#permalink] New post 11 Jul 2012, 00:47
I think the differences exist due to the perceived prestige advantage that U.S. schools have over their Canadian counterparts. The best MBA applicants from Canada, and from all over the world, go to the top U.S. schools for their MBA because these programs are considered very prestigious. And if all the top students go to these schools, then the top employers will follow and in turn pay the highest salaries to the graduates of these programs.

While the FT estimates of salaries are not very accurate (they are looking at salaries a couple of years after graduation I think and also use PPP and cost of living factors), the differences are definitely indicative. You could go the schools' websites to get exact numbers.
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Re: Why are US salaries so much higher than CDN salaries? [#permalink] New post 11 Jul 2012, 17:48
If you sort by salary increase % - CDN growth is a lot closer to the US counterparts for the schools you've listed. Implies in broad strokes CDN pre-MBA salaries are lower than US pre-MBA salaries.

Think that's the short version of why the post MBA difference is so significant.
Re: Why are US salaries so much higher than CDN salaries?   [#permalink] 11 Jul 2012, 17:48
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Why are US salaries so much higher than CDN salaries?

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