How do we know if immigrants are succeeding in Canada’s economy?

Canada cares deeply about ensuring immigrants succeed in its economy. Its economic class immigration programs are designed to select candidates who have the highest chance of finding a good job in the Canadian labour market.

Decades of federal government research shows that immigrants who arrive in Canada at a young age, with a high level of education, and strong English or French skills have a better chance of success.

Canada’s commitment to supporting economic integration is further demonstrated by the $1.5 billion in funding it provides annually in settlement supports for newcomers. These supports help immigrants find jobs and improve their language skills.

When it comes time to evaluate the performance of immigrants in the Canadian labour market, the focus tends to be on comparing their incomes with the Canadian-born population. This makes sense to some extent, but such comparisons can be misleading. On the one hand, we want immigrants to earn salaries similar to those of Canadians. Salaries give us a strong sense of whether immigrants have similar living standards as the Canadian-born population.

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Three reasons why income is a misleading indicator of economic integration

On the other hand, focusing on salaries can be misleading for several reasons.

First, immigrants tend to arrive in Canada at a disadvantage in the labour market. They often arrive without social or professional networks and need time for Canadian employers to recognize their skills. Immigrants that earn high salaries typically need at least five years in Canada before their salaries match those of Canadian-born individuals.

The second reason why income can be a misleading indicator of economic integration is that the majority of Canada’s immigrants are welcomed for social and humanitarian reasons.

While the economic class accounts for about 60 per cent of all immigrants to Canada each year, the actual share of immigrants who are assessed for their skills accounts for about 25 per cent of all newcomers admitted by Canada on an annual basis.

These are principal applicants evaluated under the economic class for factors such as their age, education, language skills, and work experience. Hence, Canada does not welcome most of its immigrants to grow its economy, but rather, it welcomes them in an effort to reunite families and help refugees.

The third reason is that income alone does not allow us to understand the economic performance of newcomers. There are several other useful metrics that we can also use to assess economic integration.

Immigrant economic integration is better than you think

One of these metrics is the degree to which immigrants participate in the housing market. The biggest purchase that Canadians and immigrants make is buying a home. Statistics Canada research shows that homeownership rates among Canadians and immigrants are identical (69 per cent of both groups own a home). The average value of an immigrant’s home in Toronto and Vancouver is the same as that of the Canadian-born population. This tells us that immigrants bring significant savings with them which increases their purchasing power in Canada.

Second, the household incomes of immigrants are nearly at the same level as those of Canadian households. The average immigrant household earns about $85,000 per year, compared with about $90,000 for Canadian households. This tells us that even if the average immigrant earner makes less money than the average Canadian, the fact that the average immigrant household has multiple earners enables immigrant families to have nearly the same purchasing power as Canadian-born families.

The first and second findings also help to underscore the importance of family class immigration. Canada’s decision to reunite families is good policy because families can support one another financially and increase their overall living standards.

Third, the fairest way to measure how immigrants are performing is by comparing current immigrant cohorts with previous immigrant cohorts. Given that immigrants have a natural disadvantage in the labour market, it does not make sense to compare them with Canadian-born workers. What Canada should aspire to instead, is for current immigrant cohorts to outperform previous immigrant generations. Government research over the past decade shows this is, in fact, the case.

Finally, the economic performance of second-generation immigrants is comparable to that of Canadian-born children. This tells us that while first-generation immigrants do not perform as strongly as we all hoped, their children help to enhance the family’s overall contribution to the Canadian economy. We should never lose sight of the fact that immigration is inherently long-term in nature.

Immigrants are succeeding in Canada

There is no question that more can be done to improve the economic performance of immigrants in Canada. At the same time, there are numerous indicators that undoubtedly show immigrants are succeeding in Canada.

Canada will continue to improve its economic class programs and make investments in settlement and integration supports. This, plus the fact that nine million Canadians will reach retirement age within the next decade suggests that the economic performance of immigrants, as well as their incomes, will continue to improve.

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Kareem El-Assal is the Director of Policy & Digital Strategy at CanadaVisa.