Visa Crunch

Employment Levels Of Canada Lags Behind The USA Due To Lower Immigration Levels

According to a new CIBC analysis released on Monday, job growth in Canada is falling behind that of our neighbors, owing to high levels of immigration.

According to Bay Street economist Benjamin Tal, one of the most important reasons in comparing Canada’s trailing wage growth to that of the United States is the disparity in immigration levels between the two countries.

“To put things in perspective, [Canada] got 410,000 new immigrants in 2021. In the U.S., altogether, they got 500,000,” said Tal, deputy chief economist at CIBC Capital Markets, in an interview Friday. “The last time I checked, the U.S. is 10 times larger than we are. But the [level of immigration] is basically the same.”

Tal stated that Canada’s unrestricted immigration plans are helping to alleviate the country’s labor deficit, which is slowing wage rise. Reduced immigration numbers in the United States exacerbated the country’s labor crisis.

The most recent jobs data from Statistics Canada, released on Friday, indicated that hourly wage growth in Canada grew 2.7 percent year over year in December, falling short of the 3.2 percent gain predicted by the average Bay Street analyst. Tal also claimed that, in response to rising wages, a growing number of firms are enhancing productivity by investing more in technology to replace labor.

In December, Canadian businesses added 54,700 jobs, more than doubling economist projections. It finished off a record year for employment creation, but Tal warned that this trend might not be sustainable. Although immigrants who received permanent residency status in 2018 reported median pay of $31,900 in 2019, the highest amongst every group of immigrants who came to Canada since 1981. It was also almost 4% greater than what 2017 immigrants earned in 2018.

Conversely, it was roughly 18 percent lower than the median wage of Canadian-born workers in 2019, which was $38,800. In 2019, the median incomes of economic-class immigration program applicants were greater than those of the Canadian-born population. One year later, these immigrants who arrived in 2018 had a median pay of $43,600, which is more than 12% higher than the Canadian median earnings in the same year ($38,800). 

Work-related experience, in particular, aided immigrant salaries in the first year after arrival. Immigrants with no prior work experience had a median wage of $39,300 in 2019, which was also greater than the Canadian-born population.

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