Recent immigrants make less money than Canadians: study (external - login to view)
By Peter O'Neil, Postmedia News March 15, 2012
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Jocelyne Nyandwi takes the oath during a citizenship ceremony in Ottawa in this June 2011 file photo. Immigration Minister Jason Kenney's assertion that very recent immigrants are performing much better economically is incorrect, according to a new Fraser Institute analysis to be made public Thursday.
Photograph by: Jana Chytilova , Ottawa Citizen
OTTAWA — Immigration Minister Jason Kenney's assertion that very recent immigrants are performing much better economically is incorrect, according to a new Fraser Institute analysis to be made public Thursday.
Economists Herbert Grubel and Patrick Grady issued their report, obtained exclusively by Postmedia News, to refute assertions from two Simon Fraser University academics who critiqued a Grubel-Grady analysis last year.
That 2011 paper, also published by the Fraser Institute, found that immigrants who arrived between 1987 and 2004 cost the economy about $16 billion annually.
The analysis was based on total taxes paid weighed against overall costs for programs such as health and education.
The new analysis, which defends that calculation, also took issue with Kenney's comments in a December interview with Postmedia News.
Kenney said he doesn't disagree with the Grubel-Grady arguments that immigrants' incomes and employment levels over the past quarter-century have been in decline.
But Kenney said their conclusions are based on dated statistics that don't take into account Conservative reforms to bring in skilled workers who can better adapt to the Canadian economy.
"The most recent data that I find really exciting indicates a significant turnaround in economic results for immigrants in the past three years in particular," Kenney said in December.
But the new paper from Grubel and Grady cited recent figures from the Statistics Canada Labour Force Survey showing that the average hourly earnings of immigrants who had been in Canada for five or fewer years in 2010 were $6.30 below comparable Canadian-born workers.
The statistics also showed that very recent immigrants had an unemployment rate rise to almost 15 per cent from 11 per cent between 2008-10.
The jobless rate for Canadian-born workers rose only to 6.1 per cent from 4.5 per cent over the same period.
"Far from making our estimate of the fiscal burden obsolete or just too high, these new data suggest that we may in fact, be underestimating it," Grubel and Grady argued in the new analysis.
The Fraser Institute report was prompted by two Simon Fraser University economists who produced data last year to refute the assertion that immigrants are a burden on society.
Krishna Pendakur and Mohsen Javdani found that the burden was roughly $2 billion a year rather than $16 billion, and that immigrants eventually would be net contributors.
"If you look at the longer term, these immigrants are going to contribute through higher incomes and paying higher taxes," Javdani told the Burnaby Now newspaper.
But their report included immigrants dating back to 1970 and excluded, in the calculation of "public goods" that are "consumed" by Canadians, defence spending.
The new Fraser Institute report says going back to 1970 isn't valid because far more immigrants came from the U.S. and Europe from 1970 to the late 1980s.
Visible minority immigrants, who have made up a much higher percentage of newcomers, "have had much more difficulty than others competing in the Canadian job market," according to the authors.
The report also said defence spending should be included because the North Atlantic Treaty Organization sets its expectations for military spending based on percentage of gross domestic product, which is hugely influenced by population levels.
The new report rejects the argument of federal and provincial politicians, and many in the business community, that Canada needs to maintain immigration at around a quarter-million people a year to combat labour shortages.
The authors say the demand for immigrants is being driven by the private sector.
"The immigrants keep wages down, which raises their profits and allows them to avoid the need to invest in the training of Canadian-born workers and labour-saving capital and technology."
The report also argues that high immigration levels also exacerbate labour shortages, since high numbers fuel demand for public services such as housing, health care, education, and infrastructure such as roads and sanitation.
They said adding 250,000 newcomers annually over the next decade will require an additional 5,329 physicians.
They will have to be found when governments are scrambling to deal with the impact of baby boom doctors retiring at a time when an aging population prompts greater demands on the medical system.