Study Reveals Wages Declining for Immigrant Men

Despite a massive increase in their educational attainment, recent immigrant men employed on a full-year, full-time basis saw their real earnings fall 7% on average from 1980 to 2000, according to a new Statistics Canada study based on census data.

During the same period, however, real earnings of Canadian-born men went up 7%. Earnings of recent immigrant women rose over the period, but not as quickly as among Canadian-born women.

The study found that in 1980, immigrant male workers who had arrived in Canada from 1975 to 1979 and who were working full-time for at least 40 weeks earned $40,600. Twenty years later, their counterparts, that is, male immigrants who arrived from 1995 to 1999, earned only $37,900.

This substantial decline cannot be attributed to changes in the educational attainment of recent immigrant men, as it occurred during a time when their level of education rose substantially. In 1980, of all recent immigrant male workers employed on a full-year, full-time basis, 22% had a university degree. By 2000, this proportion had doubled to 44%.

While earnings of recent male immigrants have fallen over the past two decades, those of Canadian-born workers have risen. As a result, the gap between the pay rates of recent immigrant men and those of their Canadian-born counterparts has widened substantially.

This growing gap suggests that unless they experience a marked improvement in their earnings in the near future, male immigrants who arrived during the late 1990s will need more time than their predecessors to achieve earnings parity with Canadian-born workers.

Men who immigrated during the late 1990s were not the only group to experience significant decreases in earnings over the last two decades. Canadian-born men aged 25 to 29 also saw their earnings fall markedly. In 1980, they received $39,800. Two decades later, however, their counterparts earned only $35,700, a 10% decline.

The study also found that earnings of recent immigrant women increased during the 20-year period. However, Canadian-born women saw their earnings increase considerably more. As a result, a growing earnings gap also emerged between recent immigrant women and their Canadian-born counterparts over the last two decades.

For both sexes, the poorer performance of recent immigrants was observed mainly among workers in prime age groups. In general, young Canadian-born workers had no stronger earnings growth than their recent immigrant counterparts.

While the factors underlying the growing earnings gap between recent immigrants and their Canadian-born counterparts are still largely unknown and thus deserve further investigation, some explanations can be ruled out.

First, the poorer performance of recent immigrants cannot be due to diverging changes in educational attainment since the education level of recent immigrant men and women employed on a full-year, full-time basis rose faster than that of their Canadian-born counterparts over the last two decades.

The performance of the Canadian labour market in 1980 and 2000 cannot explain this growing earnings gap either. The reason is that the unemployment, rate of workers aged 25 to 54 was exactly the same in both years: 5.7%.

Furthermore, changes in the age structure of recent immigrants must be ruled out as an explanation, since these changes were controlled for in the study.

Real earnings of young Canadian-born men have also dropped substantially during this period. This suggests that the problems faced by recent immigrant men may not be unique to them. Rather, they may have an impact on all new entrants to the Canadian labour market, whether or not they are born in Canada.

Since the poorer performance of recent immigrants was observed mainly among prime-aged workers, problems faced by recent immigrants appear to affect mainly individuals with substantial foreign work experience.

Even though it has been documented in several studies over the last decade, the drop in wages of new male entrants to the Canadian labour market is still not well understood.

Potential factors include increases in competition within industries or from abroad. As a result of globalization and/or technological changes, these increases might lead firms to cut labour costs by decreasing wages, mainly in entry level jobs. This would affect pay rates of new entrants to the labour market. The decrease in union density observed among young workers may also have played a role.