Earnings gap a ‘troubling’ trend

Data show immigrants earn 9.6 per cent less than Canadian-born peers and the gap isn’t closing over time

Globe and Mail
November 24, 2009

Tavia Grant and Joe Friesen

Every immigration story begins with high hopes: A new home in a safe, prosperous country, a job that matches the immigrant’s training, and a rate of pay that reflects the person’s qualifications.

For most new Canadians, however, that dream remains elusive. A study released yesterday by Statistics Canada shows immigrants earned $2.28 per hour less, a difference of 9.6 per cent, on average in 2008 than their Canadian-born counterparts, despite having typically higher levels of education.

The gap for immigrants who arrived in the past five years is much greater, as it is for those with university degrees. An immigrant with a university degree earned 16.4 per cent less than his or her Canadian-born equivalent, a gap reduced by only half among immigrants who have lived in Canada 10 years or longer.

“This is very troubling, and affects the incomes of all Canadians,” said Don Drummond, chief economist at Toronto-Dominion Bank.

“As someone who spends a lot of time worrying about productivity growth, if wages have any bearing on productivity… This suggests immigrants are not doing things that are terribly productive – the classic cliché of the person with a PhD driving a taxi. That’s taking someone who has the potential for very high productivity and they’re doing something that has much, much lower productivity.”

About 42 per cent of immigrant workers had a higher level of education for their job than what was normally required last year, while 28 per cent of Canadian-born workers were similarly overqualified.

Mr. Drummond said the data raise the troubling spectre of a social rupture in Canada.

“One of my greatest worries is that it will lead to social divisiveness the longer it persists – and you’ll get some distinctions along racial lines. Canadians, with some pride, have not been subject to too much of that, but this definitely brings that in as a threat,” he said.

The study also showed almost four in 10, or 38 per cent, of immigrants worked part-time involuntarily, higher than the Canadian-born proportion of 30 per cent.

Overqualification was most acute among university-educated immigrants who landed within five years from when the survey was taken. Two-thirds worked in occupations that usually required at most a college education or apprenticeship.

Jack Jedwab, executive director of the Association for Canadian Studies, said historically immigrants have encountered wage gaps, but have overcome them with the passage of time. What’s new in this case, he said, is that the gaps are not being overcome.

Much of the difficulty in finding a high-paying job that matches an applicant’s qualifications relates to the elusive Canadian experience that employers seek. It’s difficult to get a good job without Canadian experience, but impossible to get that Canadian experience without first getting a good job.

“Their best chance at jobs are with people they know, and very often their social networks are not very strong,” Mr. Jedwab said.

“If your best connections are at a local restaurant … then you’ll get a job at a restaurant.”

Mr. Jedwab said Canada’s immigrants are on average better educated than native-born Canadians. This bodes well for the country’s economic health, he said, but if Canada hopes to continue to attract highly sought-after workers it will have to address the growing inequity between immigrants and the native-born.

“It’s important that we be able to describe ourselves as offering opportunity,” he said. “We’re looking at more challenges in getting the type of immigration we’re hoping to attract to the country, and we also run the risk of creating frustration and grievance among certain groups, which I don’t think is good for social harmony.”

 

Reference: The Globe and Mail