Migration might affect wages depending on region, sector

The boosters of high migration to Canada claim it’s the key to economic salvation.

Critics counter that large numbers of immigrants and temporary workers “steal jobs” and reduce the wages of the host population.

The truth, it is turning out, is somewhere in the middle.

The answer to one of the most controversial political questions in Canada — does high in-migration depress wages? — is complicated.

There is little doubt that Canadian politicians’ decision to create arguably the most open border in the world increases Canada’s gross domestic product, the total volume of goods and services.

But economists are also finding some wages in some regions can be reduced by new immigrants and non-permanent workers. And Ottawa has been allowing in more of both in the past three years.

There is relatively little data on the effect on wages.

One complication is that migration affects incomes only in some regions. Most migrants go to Canada’s largest cities, such as Vancouver and Toronto, both of which have tepid wages despite astronomical housing prices.

Migration’s influence also varies by job sector. Canadian-born and recent-immigrant workers in low-wage jobs tend to suffer disproportionally from strong inflows of people, say economists.

Across occupations, wages also generally go down in the short term. They’re inclined to level out over time.

And immigrants from some countries do better than others.

University of B.C. economists Craig Riddell and David Green, and Carleton University’s Christopher Worswick, caution both boosters and critics of high in-migration to temper their rhetoric.

The economists could have been referring to Immigration Minister Ahmed Hussen, who on Nov. 1 pushed up immigration levels while showcasing a prosperous newcomer family.

“Our ambitious plan,” Hussen said, “will benefit all Canadians because immigration contributes to our economic growth and keeps our country competitive in a global economy.”

The federal Liberals’ target for immigrants in 2020 is 340,000, which is a 36 per cent jump from 250,000 in 2014.

Without publicizing it, Ottawa has also sharply increased the number of temporary workers. The number of non-permanent residents in Canada last year, 891,000, was more than twice the total in 2006.

More than 330,000 of them are international students. Another 55,000 are temporary foreign workers, while 289,000 are “international mobility” workers.

Metro Vancouver gets almost 30,000 immigrants each year, in addition to being home to 130,000 non-permanent residents, mostly international students (who also get work visas).

The economists focused on immigration rates, not necessarily temporary workers, in concluding that “increased immigration inflows have small impacts on wages and employment in the medium to long run.”

The UBC economists, however, caution that “immigration cannot be relied upon as a source of higher per capita incomes.”

In a major article in Policy Options, the three economists warn “it is important not to get distracted by individual stories of successful immigrant entrepreneurs. They certainly do exist, but that is not really relevant.”

The economists challenge the immigration minister’s claim that increasing immigration rates “will help us ease the great challenges of the coming years, such as … labour shortages linked to Canada’s aging population.”

It’s not possible to replace the aging baby-boomers, the economists say. “The results are definitive: Immigration is not a means to substantially alter Canada’s age structure and impending increase in the dependence ratio. Inflows of immigrants are just too varied in their age structure.”

Similarly, SFU’s Wu Qiyan says bringing new people to Canada’s major cities is a “double-edged sword.”

At one level, Wu said, an influx of newcomers into Toronto and Vancouver can “create less job opportunities for locals,” while raising rents and housing costs.

On the other hand, Wu said, more people “can also create more opportunities,” by increasing consumers and businesses.

UBC economist Thomas Lemieux said the question of whether more immigrants and temporary residents reduce wages is one of the most controversial in his field, particularly in light of rising nativist movements in the U.S., Europe and Quebec.

Virtually every labour economist says the Canadian public and prospective immigrants deserve more research into, and more robust discussion of, the links among immigration, nonpermanent workers, economics and wages.

With Canadian politicians making the country a unique global experiment in mass migration, few issues call out for more investigation.