Douglas Todd: Dramatic jump in guest workers hurts Canadians on low wages

Not sure where Todd is getting the numbers to state his case. The largest part of the increase actually happened under the Conservatives, 2007-15: from 92,000 to 234,000 (IMP), with only Temporary Foreign Workers showing a decline following the reversal of their facilitating their entry in response to business pressures (from 78,000 in 2007, rising to a peak of 104,000 in 2013 before declining to 60,000 in 2015).

The bulk of the Temporary Foreign Workers increase under the Liberal government has been with respect to agriculture workers (a doubling to 52,000, 2016-18), not fast food workers.

And while there are linkages with international students, better to focus on IMP and Temporary Foreign Workers in this kind of analysis:

A big jump in the number of guest workers is hurting low-wage employees and others across Canada, according to economists.

The number of non-permanent foreign workers arriving in Canada each year has doubled in the past decade, escalating particularly after the federal Liberal government was elected in 2015.

Partly as a result of the increasing flow of guest workers, UBC economist David Green and Carleton University’s Christopher Worswick say in a paper that new immigrants are doing “worse and worse” in regards to earned incomes. And it’s Canada’s low-wage workers who are suffering the most.

Even though businesses frequently lobby politicians to allow more guest employees, Green says the latest hikes are putting downward pressure on wages and threatening respect for workers. They’re exacerbating the kind of scenario, he said, that lead to the rise of Donald Trump and Britain’s Brexit movement.

Saying it’s “truly dumb” for the federal government to continue boosting low-skilled guest workers in the country, Green emphasized the vast majority of Canadians don’t appear to be aware of the labour-market shift. “It’s totally under the radar.”

While temporary workers were initially billed as a way to rescue businesses that needed to make up short-term skill shortages in certain sectors, low-skill guest workers from overseas are now increasingly being brought in to staff fast-food restaurants, fill shelves at supermarkets and perform basic kitchen duties.

In the face of a 2013 backlash against the increased volume of foreign workers in Canada, former Conservative immigration minister Jason Kenney drastically cut their numbers. But Prime Minister Justin Trudeau has jacked up the totals much higher.

The new river of guest workers in Canada “releases the pressure on firms to provide better jobs, jobs where you have control over your time, where the pay is decent. It lets the steam off. And that pushes us toward a society that doesn’t respect workers so much,” said Green, a professor in the Vancouver school of economics and a fellow at the Institute for Fiscal Studies in London.

It’s difficult for the public to recognize that guest worker numbers have grown at a much faster pace than more-often discussed immigration levels, which have expanded by 30 per cent since 2015, with about 320,000 now being approved annually.

The official temporary foreign worker program, which attracted such controversy in the Conservatives’ era, has not greatly expanded. But other guest-worker efforts have.

One jump has come through the doubling of international students. In 2015 about 200,000 foreign students were arriving each year. By last year the number arriving annually on study visas had ballooned to more than 400,000. Most foreign students are allowed to work 20 hours a week, plus full-time during their summer or other breaks.

The least-known migration policy change, however, has arguably been the biggest one for the labour market. That is the fourfold expansion of the so-called “international mobility” program, about which few Canadians have heard.

In 2005 about 70,000 guest workers arrived under the “international mobility” category. But by 2018 Canada was accepting more than 250,000 in this category, which is typically made up of people on two-year visas, many of whom find jobs in the service sector.

Informally known as travellers on “holiday worker” visas, such employees are often associated with young Australians working at ski resorts like Whistler, or with British globe trotters serving beer in pubs in Vancouver or Toronto.

A UBC-backed website called Superdiversity, which has created interactive graphics based on immigration department data, shows the largest group of the more than 250,000 “international mobility” workers who arrived in Canada last year were from India, followed by those from the U.S., China, France and South Korea. Toronto took in about 70,000 international mobility workers in 2018, while Vancouver absorbed 30,000.

In line with the research of American economist Giovanni Peri and the University of Ottawa’s Pierre Brochu, Green described how owners of a Tim Horton’s franchise, a café or a supermarket often try to justify bringing in more guest workers by saying they can’t find anyone to fill the low-skill slot.

“So they go to their local MP and say, ‘I’m in trouble here. I can’t get enough workers for my front counter.’ The real response to them should be, ‘Well, pay them more.’ But it’s not the answer they want to hear, because they want to make more profit,” Green said.

Economists don’t really think it’s a problem that a fast-food restaurant owner or other service sector employer can’t hire workers at low wages, said Green. “When something is scarce, the price for it goes up and people and companies adjust. That’s the whole wonder of the capitalist system.”

The low-wage problem is exacerbated in places like Metro Vancouver, where the cost of renting or owning homes is extreme. Instead of offering decent living wages to the people who live here, Green said many bosses are inclined to hire “people who live in housing with five other foreign workers.”

A second trouble with Canadian companies increasingly relying on low-wage guest workers, Green said, is it leads to a more fearful workforce, incapable of demanding adherence to local labour standards or of forming a union.

“Everyone knows these guest workers have no rights. If they lose their jobs they’re gone. They’re not about to complain. Canadian firms are now not only getting just lower-wage workers these days, they’re getting very compliant workers,” said Green.

Even though a lot of commentators write off the supporters of Trump and Brexit as just “stupid people,” Green said, many have been workers who have felt that the promise of globalization, the transnational movement of capital and labour, has not benefited them.

“These are people who feel there was a deal promised to them, where everyone would share in the benefits of deregulation and a more flexible labour market,” said Green.

“But then governments did things like bring in more temporary foreign workers and those people are feeling like, ‘What the hell just happened?’ If you want people to feel like they have a share, don’t bring in somebody to replace them every time their wages start looking like they’re going to go up.”

Source: Douglas Todd: Dramatic jump in guest workers hurts Canadians on low wages

Immigration’s impact on Canadian economy cuts many ways for economists

Good summary of what the data shows, largely based on UBC economist David Green:

Are immigrants good for the Canadian economy?

Forty-five per cent of Canadians answer “yes” to this broad question, while 22 per cent say “no” and 33 per cent are not sure. There’s an argument to be made those who told Ipsos pollsters they don’t know are the most honest — and also the most realistic.

Most Canadians don’t follow the economists who track how immigration and temporary workers have an impact on Canada. If they did, they’d soon realize economists’ findings often conflict with the views championed by corporate executives and politicians.

Canada’s traditionally high immigration rates actually cut many unpredictable ways. The more than 300,000 immigrants and 700,000 temporary migrants recently arriving in the country help expand the overall economic pie. But to most economists that doesn’t mean much.

Economists, instead, mine data to discover whether average wages rise or fall because of migration, which types of migrants do best, whether a foreign education or offshore work translates to Canadian success and how much it matters to be proficient in English or French.

UBC economist David Green says it can be misleading to emphasize the gross domestic product. Yet I’d suggest it’s what almost half of Canadians are probably thinking about when they tell pollsters immigration is good for the economy.

“The size of the whole economy is not really what we care about. What we really care about is per capita income. We care about how much each one of us gets in income,” Green said in an interview.

“Think about whether you’d rather be living in India or living here, just in terms of your material wealth. India, in terms of GDP, is bigger than us. But in terms of GDP per capita we’re way ahead of them. So you’d rather be in a rich society than a big society.”

Designing immigration policies mainly to boost the GDP “makes little sense,” Green says. That is, unless you’re a business owner who wants a bigger market for your product (such as real estate or automobiles) and more choice in who you can hire.

Here’s a second lesson from economists: When it comes to what really matters for most Canadians — per capita wages — Green explains the impact of immigration is over time “very close to zero.”

The extreme boosters or critics of immigration, as a result, may have to tone down their rhetoric in light of findings by Green and others that, overall, immigrants neither “steal jobs” nor “magically grow them either.”

Here are eight other discoveries economists have made about migration:

New immigrants aren’t doing as well in Canada as in the 1980s

Historical graphs show immigrants’ earnings, compared to that of the native-born in Canada, were strongest in the 1980s and declined precipitously until about 2003, when they slowly began improving.

There are two reasons for this decline in the 1990s, says Green. One is that all new entrants to Canada’s labour market, including domestic-born, struggled with lower wages during that period. The other is that fewer immigrants came from Europe.

Language matters, a lot

Economic studies have consistently shown the most successful immigrants to Canada are those who are adept at English or French. “There is a positive correlation between language skills and earnings,” says Green.

Source country also makes a difference

“People from source countries where English or French is not the main language, or with different educational institutions, do less well in the Canadian economy … compared to immigrants from Northern Europe or the U.S.,” says Green.

When Australia introduced stricter language testing of immigrants, economist Andrew Clarke and others found immigrants earned higher incomes. But that could be because the new language demands led to more people going to Australia from Europe.

Foreign degrees not quite as valuable as Canadian degrees

Immigrants with a foreign degrees don’t always gain greatly from it, unless they’re literate in French or English, according to economist Joseph Schaafsma.

“The implication is that, on average, immigrants have lower returns on education because their education skills are not as productive in the Canadian economy,” says Green, who nevertheless adds it’s still valuable to select educated immigrants.

It might help if Canadian officials improved efforts to recognize the credentials of people trained outside the country, Green says, “but it won’t be a panacea.”

Offshore work experience doesn’t pay off as expected

This is a harsh reality for many new immigrants.

“Foreign-acquired work experience obtains a zero return in Canada,” both Green and Carleton’s Christopher Worswick discovered. Work skills that immigrants develop in their home countries might not be as useful in the Canadian labour market as they would like.

While it’s hard to pin down exactly why immigrants do not benefit greatly from work experience in a foreign land, Green says it could partly be attributed to “discrimination.” But it’s also a result of old-country experience not easily transferring to a new land.

There are winners and losers in migration

Although the across-the-board impact of immigration on Canadian wages is flat, some low-wage workers can get hit.

American economist Giovanni Peri is among those who have found that relatively recent immigrants can be financially hurt when a new wave of immigrants arrives soon after them.

Although U.S. evidence doesn’t translate easily to Canada, it suggests immigration can have a negative impact on the wages of lower-skilled workers, including both immigrants and the native-born. Some domestic workers adjust by moving into jobs that require strong English-language skills.

There can also be negative impacts on the wages of those in the host society when temporary workers come to Canada, says the University of Ottawa’s Pierre Brochu. The number of temporary workers in Canada, including the low-skilled, has roughly doubled since the 2015 election of Prime Minister Justin Trudeau.

Immigrants tend to pay less in taxes

Since immigrants start in Canada with earnings that are below the national average before they gradually catch up, Green says it “implies they will tend, on average, to contribute less to the public purse.”

Immigrants lean to self-employment and small businesses

Even though commentators point to the way immigrants appear slightly more likely than the native-born to “create businesses,” the trend is a bit more complicated.

“We find that immigrants are more likely to open firms, but they are much more likely to be spells of self-employment, rather than incorporated firms that employ others,” says Green. “And even the incorporated firms tend to be small.”

• • •

Although the financial data is not all rosy for immigrants to Canada, it doesn’t mean most don’t benefit from leaving their homeland.

Most economists agree nearly all immigrants gain tremendously by moving to a high-wage country such as Canada from their own countries, which typically offer lower wages and are often dysfunctional.

What’s more, the United Nations’ Happiness Report, co-run by UBC economist David Helliwell, finds that immigrants who move from “unhappy” countries (where residents report low rates of life satisfaction) to happier ones such as Canada soon end up as happy as the host society.

In addition, many immigrants make their life-changing move to a new land as part of a long game for their families, so their children can get better educations and grow up in more stable societies and stronger economies.

Indeed, Statistics Canada studies reveal the offspring of immigrants do far better than the native-born in both obtaining university degrees and high-skilled jobs. Says Green: “There are potential gains to Canada as whole from the second generation.”

Many people make sweeping generalizations for and against immigration, but instead of going with bombast, economists show the truth is in the details.

Source: Immigration’s impact on Canadian economy cuts many ways for economists

Douglas Todd: Progressives wrestle with dilemma on migration

Good nuanced summary of the various research:

It’s called the “progressive’s dilemma,” a term popularized by two Canadian scholars of multiculturalism. It describes the way people with left-of-centre views often find themselves in a fix on the issue of migration.

They become ensnared by a 21st-century debate over whether a higher immigration rate weakens domestic support for social-welfare programs. Most scholars conclude it generally does: The main questions they’re now trying to answer are to what extent and why.

Since “progressives” tend to support both strong immigration and a generous social-safety net, they are put in a bind, say Canadian scholars Keith Banting and Will Kymlicka. It’s why Canadians are often in some denial about the correlation between in-migration and support for a welfare society.

Most Americans and Europeans do not shy away from the problem, however, even if they sometimes exaggerate it. The influential Harvard economists Alberto Alesina and Edward Glaeser maintain Western European countries have more generous welfare societies than the U.S. (and to some extent Canada) because their populations are more ethnically “homogeneous,” which makes it harder for European taxpayers to “demonize” the poor.

With the ratio of foreign-born residents expanding in many Western countries, a small army of researchers continue to test the theories of Alesina and Glaeser, to pin down where and when immigration might hurt popular support for such things as universal health care, unemployment insurance, social housing, maternity benefits and welfare.

It’s a distinctly First World problem, but not in a trivial sense.

The “progressive’s dilemma” only applies to advanced, democratic countries that welcome immigrants. Since most large or developing countries either don’t seek immigrants or don’t have significant social programs, there are relatively few nations in which progressives have to struggle with the trade-off.

It’s telling that one of the most important studies into whether immigration undermines support for a liberal safety net focuses on just 17 countries (including Canada), which University of California sociologist David Brady and Ryan Finnigan, of Berlin, chose because they are affluent, long-standing democracies.

Some First World progressives believe it’s best this topic, in the name of tolerance and diversity, not be publicly aired. But Finnigan and Brady (the latter is the author of Rich Democracies, Poor People), say that “of course it is reasonable to ask” whether immigration undermines public support for social programs.

“Immigration is changing labour markets, reconfiguring ethnic composition and altering the politics of affluent democracies,” Finnigan and Brady write. “In the past few decades, there has been rapid growth in immigration to affluent democracies. In recent years, there has seemingly been an even more rapid growth in concern for the political consequences of immigration to the welfare state.”

They see weaknesses in the theories of the Harvard economists, who basically maintain the U.S. has more stingy welfare policies because the country is more ethnically diverse than Western Europe and more prone to racial rivalry (partly because of a history of black slavery and undocumented migration from Hispanic countries).

Yet they maintain their findings “do not actually contradict” Alesina and Glaeser. Even though Finnigan and Brady found through their comprehensive study that rising immigration rates do not necessarily erode support for unemployment insurance and pensions, they did discover a conflict over job programs.

When a sample of residents of affluent nations were asked if they supported government programs that would “provide jobs for everyone who wants one,” there was significant resistance.

The authors believe that domestically born people often see immigrants as a “threat” and “competition” for limited jobs (and, to a lesser extent, for social housing and universal health care).

“Individuals with low education, those with low income, and the unemployed tend to be both anti-immigrant and pro-welfare,” say Finnigan and Brady, referring to the way policies that increase migration make some members of the host society feel more “instability, vulnerability and insecurity.”

The authors also point out a common fallacy: That North Americans often mis-label European political parties that want to lower immigration rates as “far-right.” The reality, they say, is many of Europe’s so-called extreme-right parties actually champion the left-wing values of a welfare society.

How foreign-born populations are growing in 17 affluent countries. (Source: David Brady, Ryan Finnigan)

What are the consequences of all this for Canada?

There is cause for concern, since the federal Liberals are increasing immigration rates at the same time immigrants are relying in greater numbers on social assistance than native-born Canadians, according to UBC economists Craig Riddell and David Green and Carleton University’s Christopher Worswick.

“Before 2000, social assistance receipt among immigrants was generally below that of the native-born (in Canada), but recently it has consistently been higher,” Riddell et al say in Policy Options.

“These trends imply that newly arrived immigrants are a net drag on government budgets: they pay less in taxes on average and make average or slightly above average use of government services and benefits. Second-generation immigrants do well, which may offset this net drag to some extent, but the initial impact of a large increase in immigration should be expected to be an increase in taxes, a decrease in services, an increase in deficits, or some combination of the three.”

The “progressive’s dilemma” is also exacerbated in places like Metro Vancouver, in part because the region is a popular destination for wealthy trans-national migrants, who some real-estate analysts, such as Richard Wozny, say are not paying their fair share of taxes. It’s led to the rise of domestic housing-affordability organizations, such as Housing Action for Local Taxpayers (HALT).

For his part, Banting acknowledges there is increasing danger the “progressive’s dilemma” could develop into a bigger predicament in Canada.

Canadians’ over-riding commitment to a “multicultural identity” has served as a kind of “cultural glue,” Banting said, thus forestalling broad antagonism to immigration based on fears it will reduce support for the country’s welfare policies (which, in terms of generosity, lie somewhere in between those in the U.S. and northern Europe).

“But past successes can never be taken for granted,” Banting says. “The slowing economic integration of newcomers has increased their need for support, and their average benefits now exceed those of the native-born. … As a result, we seem to be heading toward territory that has proven politically combustible elsewhere.”

Source: Douglas Todd: Progressives wrestle with dilemma on migration

Todd: High migration might trim wages … in some places, in some jobs

Valid notes of caution by the economists cited:

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.

Lemieux’s own research focuses on how immigrants themselves fare in Canada’s labour market, with the general conclusion being they’re doing worse financially than in the 1990s.

Newcomers from Europe “tend to do much better” than those from India and other South Asian countries, Lemieux said, “even while there are fewer and fewer coming from Europe.”

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

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

via Todd: High migration might trim wages … in some places, in some jobs | Vancouver Sun