How Much Do Immigrants Make in Canada?

Canada has long been a beacon for immigrants seeking better opportunities, but the question of how much they earn remains a critical topic of discussion. Recent data highlights significant disparities in earnings between immigrants and Canadian-born workers, raising important questions about integration and economic outcomes.

The Wage Gap Between Immigrants and Canadian-Born Workers

Newcomers to Canada often face a stark reality: their earnings are significantly lower than those of native-born Canadians. According to Statistics Canada, immigrants who arrived in 2014 had a median income of $24,000 in 2015, compared to $36,000 for Canadian-born workers. While this represented the highest median income for new immigrants at the time, the gap remains substantial.

Historically, immigrant incomes typically caught up to the Canadian average after about a decade. However, recent studies indicate this trend has shifted. In the early 2000s, recent immigrants were several times more likely to have low incomes than their Canadian-born counterparts, suggesting a persistent challenge in achieving economic parity.

Trends in Temporary vs. Permanent Immigrants

Recent years have seen a dramatic shift in Canada’s immigration landscape, with a significant increase in temporary residents. Between 2015 and 2024, temporary workers became younger, less experienced, and more likely to come from lower-income countries. Their share in skilled occupations has also declined moderately during this period.

The wage gap between temporary and Canadian-born workers has more than doubled, from a difference of -9.5% in 2015 to -22.6% in 2024. This growing disparity is largely explained by observable characteristics such as age, experience, job type, and country of origin. Researchers estimate that if the characteristics of temporary workers had not shifted over the past decade, aggregate wages in Canada would have been 0.7% higher in 2023–24.

The Role of Canadian Experience and Immigration Selection Programs

Immigrants who arrive through programs that value Canadian work or study experience—such as the Canadian Experience Class (CEC) and Provincial Nominee Program (PNP)—tend to have higher initial earnings and employment rates than those arriving as Federal Skilled Workers (FSWP). These programs often prioritize individuals with existing ties to Canada, which can ease the transition into the workforce.

Two-step immigration selection, where individuals first come as temporary workers or students before transitioning to permanent residency, has also improved average earnings for new immigrants. This pathway has been particularly beneficial for those with medium or high Canadian earnings before becoming permanent residents. However, while CEC and PNP immigrants typically fare better initially, PNP immigrants may have lower earnings than CEC or FSWP immigrants five years after arrival.

Other Key Observations

Despite policy changes aimed at attracting more highly educated immigrants, low-income rates among newcomers have increased. As of the early 2000s, recent immigrants were over three times as likely to live in low-income households compared to native-born Canadians. This challenge persists across most immigrant categories, highlighting the need for targeted interventions to address income inequality.

Recent improvements in employment rates and entry earnings for immigrants are largely attributed to the expansion of two-step immigration selection, rather than one-step skilled worker programs. This suggests that providing pathways for temporary residents to gain Canadian experience and transition to permanent residency may be a more effective strategy for improving economic outcomes.

In summary, while immigrants continue to face a significant initial income gap compared to Canadian-born workers, those with prior Canadian work or study experience tend to fare better. However, the rise of temporary residency and shifting characteristics of temporary workers have widened wage gaps, underscoring the ongoing challenges in achieving income parity for all newcomers.

Source: CIC News

Regional Variations in Immigrant Earnings

The wage gap between immigrants and Canadian-born workers is not uniform across the country. Data shows significant regional variations, with immigrants in certain provinces earning closer to the Canadian average than others. For instance, immigrants in provinces like Ontario and British Columbia tend to have higher earnings than those in other regions, though the gap persists. This regional disparity highlights the impact of local labor market conditions and the concentration of high-demand jobs in specific areas.

The Impact of the COVID-19 Pandemic on Immigrant Earnings

The COVID-19 pandemic had a profound impact on immigrant earnings, particularly in sectors heavily reliant on temporary and low-skilled workers. Immigrants in industries such as hospitality, retail, and food services experienced significant job losses and wage reductions. However, the pandemic also accelerated demand for workers in healthcare, technology, and logistics, creating new opportunities for immigrants with specialized skills. Despite these shifts, recovery rates for immigrant workers have lagged behind those of Canadian-born workers, exacerbating existing inequalities.

Gender Disparities Among Immigrant Workers

Gender plays a significant role in the earnings of immigrants in Canada. Female immigrants, on average, earn 28% less than their male counterparts, a gap that persists even after accounting for factors such as education and work experience. This disparity is particularly pronounced among newcomers, where cultural and systemic barriers often limit access to higher-paying jobs and career advancement opportunities. Addressing gender-based wage gaps remains a critical challenge for achieving income parity for all immigrants.

Education and Earnings: A Complex Relationship

While higher levels of education generally correlate with higher earnings, the relationship is more complex for immigrants in Canada. Immigrants with advanced degrees often face challenges in having their foreign credentials recognized, leading to underemployment and lower wages. Data shows that immigrants with university degrees from Canadian institutions earn significantly more than those with foreign credentials, highlighting the importance of credential recognition and equivalency assessments in improving economic outcomes.

The Role of Language Proficiency in Earnings

Language proficiency is a critical determinant of immigrant earnings in Canada. Immigrants with strong English or French skills tend to earn higher wages and experience faster wage growth than those with limited proficiency. Language barriers not only limit access to higher-paying jobs but also hinder career advancement and integration into professional networks. Programs aimed at improving language skills have shown promise in narrowing the wage gap, but access to these programs remains uneven across different immigrant groups.

Policy Implications and Pathways to Income Parity

Addressing the persistent earnings gap between immigrants and Canadian-born workers requires a multifaceted approach. Policymakers are increasingly focusing on programs that prioritize Canadian work experience, language training, and credential recognition. Additionally, expanding pathways for temporary workers to transition to permanent residency, particularly in high-demand sectors, could help reduce wage disparities. However, the effectiveness of these measures will depend on their implementation and accessibility to all immigrant groups.

Conclusion

Immigrants in Canada face a complex landscape when it comes to earnings, with significant wage gaps compared to Canadian-born workers. These disparities are influenced by factors such as regional variations, the impact of the COVID-19 pandemic, gender differences, education, and language proficiency. While policies like the Canadian Experience Class and Provincial Nominee Program have shown promise in improving economic outcomes, challenges like credential recognition and temporary residency persist. Addressing these issues requires a multifaceted approach, including better recognition of foreign credentials, enhanced language training, and expanded pathways to permanent residency. By implementing such measures, Canada can work towards achieving income parity and ensuring that immigrants fully contribute to and benefit from the economy.

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