Frances Woolley is a professor of economics at Carleton University.
Immigration is neither as good for Canada as recent federal government pronouncements would suggest nor as bad as some critics might claim. The best economic evidence suggests that, in the long run, immigration has limited impact on the average Canadian’s wages or job prospects. Immigration boosts the economy, but it increases our population, too, leaving the average Canadian’s living standards more or less unchanged.
Yet these long-run averages mask the fact that specific policies create winners and losers. A government that ignores the fact that immigration can have costs risks making two mistakes. First, it might uncritically accept the arguments made by those who stand to benefit from immigration. Second, if it does not take the downside risks of specific immigration policies seriously, it might not act to mitigate them.
Temporary foreign worker programs, for example, are a win for employers. In theory these programs are necessary because employers struggle to find qualified Canadian workers. Yet economists Ian O’Donnell and Mikal Skuterud have found that a significant number of jobs filled by temporary foreign workers do not require any qualifications or skills other than the ability to do hard physical labour. The jobs are hard to fill because the wages are low and the work is unpleasant; for example, $15.80 per hour to do physically demanding, fast-paced, dangerous work in a meat packing plant – at night, if needed.
People will take hard, badly paid jobs if they have no better alternatives (or if the jobs provide a route to citizenship). In Canada, those with the fewest alternatives are temporary foreign workers. My colleagues Pierre Brochu, Till Gross and Christopher Worswick have found that such workers, especially those from low-income countries, have less absenteeism and work longer hours than other workers. This is why no amount of immigration will eliminate firms’ claims that they must hire temporary foreign workers: People are more likely to show up to work if being fired jeopardizes their right to live and work here.
It’s not so much a labour shortage that fuels employers’ support for temporary foreign worker programs as a zest for profit – specifically a desire for a plentiful supply of low-wage workers to fill unattractive positions. But more people competing for low-wage jobs makes it harder for less qualified workers to find employment and dampens upward pressure on wages.
Immigration policy, as with all policy, involves trade-offs – in this case, between higher profits for companies and higher pay for employees. Economist Armine Yalnizyan has long argued for replacing temporary foreign worker programs with higher levels of permanent immigration: If people are good enough to work here, they are good enough to stay and build their lives here. But permanent residents have options that temporary foreign workers lack. They can work as many or as few hours as they choose and are free to work for any employer. This means that, to attract permanent residents, employers have to make workers an offer that is competitive with their other options – and that means improving wages or working conditions or both. Different policy, different trade-offs.
The federal government, in announcing its new immigration plans last year, introduced both enhanced temporary foreign worker programs and increased permanent immigration. If it was trying to make everyone happy, it failed.
Newcomers increase the supply of workers, but they also increase demand – for food and shelter, for example. In the long run, these two effects usually more or less cancel each other out. In the short run, they do not.
The government hoped to avoid worsening the housing crisis by attracting newcomers to small towns and rural communities. But such a strategy forgets that immigrants are people, too. Like people born in Canada, they are pulled by economic gravity to urban centres where there are jobs, social networks and cultural supports.
Yet Canada’s big cities have no more room to sprawl – and it would be bad policy to let them. Most of this country’s population lives in a few concentrated areas such as the Quebec City-Windsor corridor and B.C.’s Fraser Valley. Most of the rest of Canada has a harsh climate or would be very expensive to develop or both. We are not a vast, underpopulated country; we are a densely populated, highly urban, diverse country. We need immigration, housing and transportation policies that reflect that reality.
Most of all, we need to stop viewing immigration as a get-rich-quick scheme. Immigration policy involves trade-offs. We need to be honest about the fact that immigration creates winners and losers, at least in the short run, and figure out ways of preserving the benefits of immigration, both for established Canadians and newcomers, while protecting those who stand to lose out.