Transitions into and out of employment by immigrants during the COVID-19 lockdown and recovery (2020)

This study found that recent immigrants were more likely than Canadian-born workers to move out of employment in March and April mainly because of their shorter job tenure and over-representation in lower-wage jobs.

During the widespread lockdown of economic activities in March and April 2020, the Canadian labour market lost 3 million jobs. From May to July, as many businesses gradually resumed their operations, 1.7 million jobs were recovered. While studies in the United States and Europe suggest that immigrants are often more severely affected by economic downturns than the native born (Borjas and Cassidy 2020; Botric 2018), little is known about whether immigrants and the Canadian born fared differently in the employment disruption induced by the COVID-19 pandemic and, if so, how such differences are related to their socio-demographic and job characteristics.

This paper fills this gap by comparing immigrants and the Canadian-born population in their transitions out of employment in the months of heavy contraction and into employment during the months of partial recovery. The analysis is based on individual-level monthly panel data from the Labour Force Survey and focuses on the population aged 20 to 64. Immigrants are grouped into recent immigrants who landed in Canada within 10 years or less, and long-term immigrants who landed in Canada more than 10 years earlier.

There are reasons to expect immigrants to be more negatively affected by the economic fallout of the pandemic. Recent immigrants tend to have shorter job tenure than the Canadian born, and workers with short tenure are more susceptible to layoffs during an economic downturn (Chan, Morissette and Qiu 2020). For instance, in February, before the impact of the pandemic, 31% of employed recent immigrants had been in their jobs for less than one year, compared with 15% of Canadian-born workers. Furthermore, recent immigrants are often much more likely to work in lower paying jobs than Canadian-born workers, and the employment losses in March and April were heavily concentrated among lower paying jobs (Lemieux et al. 2020). In February, 22% of recent immigrants were in low-wage jobs (with hourly wages less than two-thirds of the 2019 annual median wage of $24.04/hour), compared with 12% among Canadian-born workers.^Note   More broadly, recent immigrants often have difficulty transferring their educational and job qualifications to the labour market and finding steady, good paying jobs.

Findings

Female recent immigrants experienced the largest increase in the rate of transition to non-employment during the contraction. Almost 20% of those employed in March were not employed in April, 7 percentage points higher than among Canadian-born women.

These gaps for female recent immigrants became even larger after taking into account their differences with Canadian-born women in terms of age, education, and geographical location. These gaps were likely driven by differential employment growth between recent immigrant and Canadian-born women by industrial sector and wage level. From April to July, recent immigrant women lagged behind Canadian-born women in employment growth in the accommodation and food service sector (4% versus 72%), although they had similar rates of employment growth in other major industrial sectors. Over the same period, employment in low-wage jobs grew much slower (11%) among recent immigrant women than among Canadian-born women (36%), while their growth rates in higher-wage jobs were similar. It remains to be seen whether these differences will disappear as the economy further improves.

The higher share of recent immigrant men with shorter tenured jobs accounted for 30% of their 3 percentage-point gap with Canadian-born men in March, while their higher shareholding lower-wage jobs and living in the three largest metropolitan areas each accounted for another 15% of the gap.