Claims that immigration helps or hurts economies may not add up

So which is it: immigration as job killer or steroid for economic growth?

So which is it: immigration as job killer or steroid for economic growth?

The 49th parallel seems to almost perfectly bifurcate the debate about immigration these days. South of the border, we have a president who promises to build a wall to stop illegal Mexican inflows. Donald Trump’s official stance on immigration contends that this hardline approach aims to, among other things, “boost wages and ensure that open jobs are offered to American workers first.”

North of the border, the federal Advisory Council on Economic Growth is recommending that the feds boost immigration to 450,000 people a year, up from around 270,000 in 2015. That would mean an almost 500 per cent surge in the absolute number of annual immigrants since the last Trudeau was in power.

The Advisory Council’s take: “An increased immigrant population has positive implications for business and job creation for Canadians through entrepreneurship and innovation, international trade, and if done right, can raise living standards for all Canadians.”

So which is it: immigration as job killer or steroid for economic growth?

The answer may be more complicated than either side of the conversation would prefer. Judging from the numbers, the supply is clearly there. “A pattern is emerging,” write the authors of a 2016 Harvard Business School paper: “High-skilled migrants are departing from a broader range of countries and heading to a narrower range of countries—in particular the United States, the United Kingdom, Canada, and Australia.”

In B.C., meanwhile, there’s also evidence of demand. The province took in 35,730 foreign nationals as new permanent residents in 2015, the Ministry of Jobs, Tourism and Skills Training reports. Sixty-three per cent were economic class, a category of immigrant selected for their skills and ability to contribute to Canada’s economy. Of 934,000 total job openings the ministry is projecting from 2015 through 2025, 35 per cent will be filled via net in-migration, which includes immigration and interprovincial migration.

Summarizing the provincial government’s immigration policy goals, the ministry states: “The right number of people with the right skills… to meet BC’s labour market needs and economic growth potential.”

An important component of these policies is the Provincial Nominee Program (PNP), which describes itself as offering an “economic immigration pathway for in demand foreign workers and experienced entrepreneurs who can contribute economically to the province.” The idea is that ranking would-be immigrants by skills and other attributes can identify the people most suited to contribute economically.

The data supports the contention that PNP entrants do better than average immigrants, at least in the short term. A 2013 University of Winnipeg study shows that PNP immigrants start working at higher wages than their non-PNP peers, but the difference evens out after seven years.

There’s anecdotal evidence that B.C.’s economy would suffer without these labour inflows. Sandra Reder, founder of Vertical Bridge Corporate Consulting Inc., a Vancouver-based human resources consultancy, gets regular requests from companies that can’t find workers. Welders. Legal secretaries. “Skilled labour is really a problem,” Reder says. “The schools can’t produce them fast enough, and the sector is aging out.”

But does immigration contribute to real growth? Here the numbers are less clear, says David Green, a professor at UBC’s Vancouver School of Economics. Adding more bodies to the economy will expand it on aggregate, what economists refer to as extensive growth. But immigration may not do much per capita, the yardstick for evaluating individual well-being. “If you talk to any economist who studies the impact of immigration on a local economy,” Green says, “the consensus would be that immigration inflow has a very small impact on average wages and on employment rates.”

The most famous case study of this phenomenon took place following the Mariel boatlift of 1980, when an influx of Cuban refugees expanded the labour supply in Miami by a colossal seven per cent in five months. Three years later, after an initial depression of average wages and the employment rate, Miami had returned to the same numbers as before. “You can hit economies with these kinds of shocks, and they tend to replicate themselves,” Green says.

North Americans may choose sides, with one group claiming that immigrants are a stimulus for growth and innovation while the other argues that they steal jobs and depress wages. “What I’m telling you is that five years out, you can’t see either of these effects,” Green explains. “It’s not a big positive or a big negative.”

That shouldn’t be read as a resistance to immigration. “We want a diverse society,” Green says. “We want to help refugees.” Maybe the total Canada accepts should reach that 450,000 figure. But whatever the number, new arrivals might thrive more if we spared them the weight of our expectations or, worse, our pessimism. 

Moving Target

For most of the past decade, the number of landed immigrants entering Canada each year has hovered around the 250,000 mark. But the federal Advisory Council on Economic Growth suggests gradually increasing the annual total to 450,000 by 2021. The only year we saw anything close to that level of immigration was more than a century ago.

Sources: Advisory Council on Economic Growth, Statistics Canada