Immigrants' Economic Status in Toronto:
Rethinking Settlement and Integration Strategies

© Lucia Lo, Valerie Preston, Shuguang Wang, Katherine Reil, Edward Harvey & Bobby Siu

This paper is presented for discussion and comments.  A revised version of this paper will appear as a chapter in the volume Integrating Diversity, to be published by CERIS-Toronto in 2001.  The authors acknowledge support from the Major Projects Initiative of CERIS-Toronto.

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Although the Toronto CMA (Census Metropolitan Area) has one-twelfth of Canada’s population, it is home to approximately 43 percent of Canada’s recent immigrants. For its size, Toronto has three times as many immigrants as the rest of Canada and a much larger share of recent arrivals (City of Toronto Planning Department 1998). Since most immigrants are of working age, their economic participation, performance, and impact are of the utmost importance for both the immigrants themselves and Canadian society.

Immigrants participate in the labour market in three different ways: salaried employees, self-employed individuals, and entrepreneurs employing others. Their performance and success are often measured by their ability to achieve income parity with native-born Canadians and linked to their socioeconomic assimilation. Historically, the majority of immigrants have achieved some degree of economic success in the Canadian labour market. Upon entry, many immigrants earned wages and salaries lower than the earnings of comparable Canadian-born workers. But as length of residence in Canada increased, their earnings approached, and sometimes exceeded, those of Canadian-born workers. However, recent trends have led many analysts to question this benign historical view of immigrants’ economic integration. Since the 1980s, immigrants’ earnings have stalled and are not converging on those of comparable Canadian-born workers (DeVoretz 1985; Ley 1998; Reitz 1997). At a national level, there is also growing evidence that visible minority workers, many of whom have arrived since 1980, are stuck disproportionately at the bottom of the economic ladder (Akbari 1999; Lian and Matthews 1998; Reitz 1998).

Two factors have been proposed to explain immigrants’ recent economic performance: changes in local labour demand and local labour supply. In Toronto, deindustrialization since the 1970s has resulted in the loss of many manufacturing jobs; at the same time, employment in service sectors expanded (Norcliffe et al. 1986; Berridge et al. 1995). Different skills and experience are required for service and manufacturing jobs, contributing to the feminisation of the workforce. Labour demand in service industries is also bifurcated between well-paid, highly skilled professional positions and poorly paid, semi-skilled and non-skilled jobs. Since 1980, more newcomers have come from Asia, Africa, Latin and South America, and the Caribbean than from Europe. Until the mid-1990s, the share of immigrants admitted on the grounds of family reunification increased steadily; however, since 1994, trends have reversed. Independent and business immigrants account for a growing share of all immigrants. Many family-class immigrants are considered to have poor economic prospects in the new service-based economy (DeVoretz 1995).

Against the backdrop of industrial restructuring, many immigrants see self-employment and small business creation as an alternative to working as employees. The rate is slightly higher among immigrant men than native-born men, 16.6 percent versus 14.2 percent. Previous studies (Razin and Langlois 1995) have shown tremendous variations in the rates of self-employment for immigrant groups in Canadian cities and among those who are self-employed, an ethnic division of labour in which immigrant groups specialize in various industries. The impact of these ethnic businesses and their implications for the employment and incomes of immigrants are still debated. Some authors emphasize that ethnic businesses create job opportunities for immigrants who are unlikely to find other employment, while others highlight the low salaries, poor working conditions, and limited opportunities for advancement that characterize many jobs in ethnic businesses (Liu 1995).

Despite the rise of self-employment and small business development, there is growing evidence that many immigrants, particularly recent arrivals, women, and members of visible minorities, are encountering barriers in their quest for employment and entrepreneurial opportunities. One national study (Lian and Matthews 1998) found persistent differences in earnings among various immigrant groups, even when demographic and linguistic variables are controlled. A recent study by Ornstein (1996) acknowledges that some visible minority groups have low levels of education that contribute to high rates of poverty and unemployment. The findings underscore previous evidence (Ley and Smith 1997; Basavarajappa and Halli 1997; Kazemipur and Halli 1997; Sloan and Vaillancourt 1994; Li 1996; Marr and Siklos 1994; Harvey and Wortley 1993; Daenzer 1991) of significant differences in the economic achievement and assimilation of men and women from different immigrant groups. In this period of rapid economic change, with its diverse consequences for immigrants, public concern about the economic impact of immigrants on the host society has increased.

Existing studies seldom consider the many aspects of Immigrants' economic experiences outlined above. The diverse economic experiences of immigrants in Toronto have not been documented comprehensively. In this chapter, we analyze variations in the work and income experiences of Toronto's immigrants, as well as their economic impact on the host society. We aim to outline the current state of knowledge about the economic experiences of immigrants in Toronto and to identify research and policy gaps that impede efforts to facilitate immigrants' successful settlement.

The chapter is divided into four sections. In the first section we examine the changing division of labour by gender and ethnicity since 1971 as a result of deindustrialization, and compare the industrial distribution of employment of immigrants with that of Canadian-born workers. In the second section we attempt to uncover the extent of immigrant entrepreneurial activities in Toronto, the nature and structure of various ethnic economies, and their role and impact on the overall economy. Specifically, we want to find out why some immigrant groups are more entrepreneurial than others, what makes for successful enterprising, who benefits from this entrepreneurial behaviour, and what the pros and cons of ethnic economies are. Within the context of the industrial division of labour and self-employment activities provided in the first two sections, the third analyses the economic performance of Toronto's immigrants, which both reflects Immigrants' well being and has a major influence on their economic contribution to Canadian society. The analysis considers how the period of arrival in Canada and individual differences (to the extent that they are captured by gender and visible minority status) affect earnings, unemployment rates, and poverty rates. In the last section, we address the concerns of the Canadian public by exploring the economic impact of Toronto's immigrants on Canadian society. Specifically, we assess Immigrants' net contributions to the Toronto economy and, in a limited way, compare the contributions of different classes of immigrants.

Our attempt to explore in the same paper Immigrants' economic activities, performance, and impact necessitates the use of information drawn from a variety of sources, including previous research, unpublished studies, and original analysis of census and administrative data. It is inevitable that the data sometimes cover different time periods or use different classification schemes. Some information refers to 1996, some to the period between 1980 and 1995, and some to 1991. Nonetheless, these sources provide the most contemporary information available at the time of preparing this paper, and all of the sources contribute to our analysis of the period from 1971 to the present.

Since 1971, a series of empirical studies has highlighted the industries employing immigrants living in Toronto. Many immigrants work in a few industries, specifically, the goods-producing sectors of manufacturing and construction and certain consumer services (Preston and Giles 1997; Mata 1996; Richmond 1992). The industrial concentration of immigrants that is associated with low occupational status and low wages (Badets and Howatson-Lee 1998; Ornstein 1996; Richmond 1992; Reitz 1990, 1998) is also affected by ethnic origin and gender. Immigrants from different ethnic backgrounds often work in different industries as do immigrant men and women.

Turning first to ethnic origin, three types of immigrant workers have been identified. They include well-established immigrants similar to Canada’s charter ethnic groups of French and British who are mainly from the United Kingdom, Western and Northern Europe, and the United States and have employment patterns similar to those of the Canadian-born. Postwar immigrants from Italy, Portugal, Greece, and Eastern Europe form a second type whose incomes have increased fairly steadily despite concentrations of employment in construction, manufacturing, and consumer services. Despite their diverse countries of origin, immigrants from Asia, Africa, the Caribbean, and Central and South America, many of whom are visible minorities, are disproportionately concentrated in declining industries and in those that offer insecure and poorly paid employment (Mata 1996; Preston and Giles 1997; Reitz 1998).

Gender alters the effects of ethnic origin on Immigrants' employment (Boyd 1991; Preston and Giles 1996; Ornstein 1996; Reitz 1990, 1998; Richmond 1992). Immigrant women often work in different industries than immigrant men from the same ethnic group and in different industries than immigrant and Canadian-born women of the same ethnic background (Reitz 1990; Ornstein 1996). Gender effects differ among ethnic groups. Liu (1997) found no gender differences in the work histories of immigrants from Mainland China. He attributes the lack of gender effects to the particular history of this immigrant group, many of whom were admitted to Canada as permanent residents after the Tiananmen Square incident. Men and women were equally likely to be well-educated students who had been studying abroad at the time they decided to settle permanently in Canada.

In 1996, immigrants are significant participants in the Toronto labour market where immigrant men and women each account for almost one quarter of the workforce, 24.9 percent and 21.6 percent, respectively. Looking at the composition of the workforce for major industries, longstanding gender differences consistent with those reported nationally (Statistics Canada 1998) are evident for Canadian-born and immigrant workers (Table 1). Many women work in service industries, particularly consumer services, health and education services, and finance, insurance, and real estate services, while men are more likely to work in the goods-producing industriesCconstruction and manufacturingCand in the distributive servicesCtransportation, utilities, communication, and wholesale trade. Employment in accommodation, food, and beverage services is an exception to this pattern of gender differences. Among the Canadian-born, women and men have almost equal shares of employment in the industry, 22.8 percent versus 21.0 percent. The relationship is reversed for immigrant workers. Immigrant women are 24.5 percent of the workforce, while immigrant men are 31.7 percent. The large number of male immigrant workers may indicate difficulty finding suitable employment. Immigrants settle for jobs in the accommodation, food, and beverages sector because entry costs are low, skill requirements are minimal, and other job opportunities are not available to them (Waldinger 1996).

Analysis of the proportions of immigrant men and women's total employment in each industry highlights the importance of manufacturing jobs for immigrant workers. The sector employs 16.8 percent of immigrant women and 25.5 percent of immigrant men ( Table 2). Immigrants' continued reliance on manufacturing jobs as a major source of employment, at a time when employment in the sector is declining, renders them vulnerable to layoffs and unemployment. The unstable nature of employment in the other industries where large proportions of immigrants work underscores their vulnerability. For immigrant men, seasonal and cyclical construction jobs account for 8.9 percent of all their jobs, whereas for immigrant women, other services, a catchall category for many consumer services, in which insecure and poorly paid jobs predominate, comprise 9.9 percent of all their jobs. Furthermore, only small proportions of immigrant men and women work in educational, government, and business services, service sectors where, traditionally, employment has been well paid and secure.

Location quotients that compare the proportions of immigrant women's employment in each industry with those of Canadian-born women and the proportions of immigrant men's employment with those of Canadian-born men confirm the vulnerability of immigrant workers. Immigrant women's jobs are concentrated in manufacturing with lesser concentrations in the accommodation, food, and beverage services (Table 2). Immigrant men are overrepresented in construction as well as manufacturing and accommodation, food, and beverage services. Location quotients less than 1.00 indicate that immigrant workers of both sexes are underrepresented in many service industries including distributive services, retail trade, and business, educational, and government services.

The location quotients reveal that immigrant women are more likely than immigrant men to work in growing service industries such as finance, insurance, and real estate services (Economic Council of Canada 1991). Immigrant men's proportions of employment in finance, insurance, and real estate and in other services are less than those of Canadian-born men, while immigrant women's proportions of employment in these industries are approximately equal to those of Canadian-born women. Immigrant women's parity with Canadian-born women's employment in the industry is a hopeful sign that the employment circumstances of some immigrant women have improved.

Despite the growing importance of self-employment in the Canadian economy (Statistics Canada 1998), the vast majority of immigrant workers in Toronto are employees. In Toronto, the proportion of immigrant women who are self-employed is identical to the proportion for Canadian-born women, 8.4 percent, while a slightly higher proportion of immigrant men than Canadian-born men are self-employed, 17.0 percent versus 14.7 percent. There is little evidence that, in aggregate, immigrants are more likely than the Canadian-born to be self-employed.

Hours of work are also very similar for immigrant and Canadian-born workers in Toronto. The majority of people work fulltime, at least 30 hours per week, although women are more likely than men to work fewer hours. Canadian-born and immigrant women both work part-time at approximately twice the rate of men. For example, more than 20.0 percent of immigrant women in Toronto work part-time compared with 10.0 percent of immigrant men. Part-time work is slightly more common among Canadian-born women than among immigrant womenC26.9 percent versus 20.0 percent. Economic necessity may well account for the slightly lower rate of participation of immigrant women in part-time work.

Gender structures the industrial division of labour in Toronto, but its effects interact with those of colour, birthplace, and ethnicity. Ethnic origin, as described by self-reported ethnicity, affects rates of self-employment and industry of employment with little impact on hours of work. Regardless of their birthplaces and ethnic origins, men are more likely to be self-employed than women. While the proportions of self-employment for immigrant men range from 37.1 percent to 9.7 percent and those for Canadian-born men range from 37.7 percent to 5.2 percent, those for immigrant and Canadian-born women range between 20.5 percent and 2.7 percent (Table 3). The variations in the proportions of self-employed workers among ethnic groups are much greater than the differences between Canadian-born and immigrant workers from the same ethnic background. Self-employment is more common among Jewish, Chinese, and other European immigrants than among any other ethnic group.

There are substantial ethnic differences in Immigrants' industries of employment. Location quotients were calculated to identify the industries in which immigrants from each ethnic group are overrepresented and those in which they are underrepresented. The importance of manufacturing jobs crosses all ethnic and gender groups. For immigrant women, 11 of 13 location quotients exceed 1.0 and for immigrant men, 13 of 13 exceed 1.0 (Table 4). Immigrant workers of both sexes are also concentrated in accommodation, food, and beverage services where the location quotients for 9 of 13 ethnic groups exceed 1.0 for men and 10 of the 13 location quotients for women exceed 1.0. Without exception, immigrant men and women are underrepresented in government services where every location quotient is less than 1.0 and almost equally underrepresented in regulated utilities. Immigrants from most ethnic groups are also excluded from education and, ominously, business services.

Gender differences cut across the ethnic division of labour. Immigrant women often work in other services and health and social services, while the vast majority of immigrant men are excluded from other services. Construction is an important source of employment for immigrant men from several ethnic groups: Italian, Polish, Southern European, British, French, and Latin, Central, and South American, while it is relatively unimportant for immigrant women. Even

where the location quotients exceed 1.0, the numbers of immigrant women working in the construction industry are small compared with those employed in manufacturing and other services.

Comparing the location quotients among ethnic groups rather than industries, offers some evidence of the three employment patterns identified in previous research. Jewish and Charter immigrants stand out with location quotients close to 1.0 in business services and finance, insurance, and real estate, while their location quotients in manufacturing are relatively low. There are also large concentrations of Jewish immigrant women in health and social services and education, services where jobs have been stable and well paid. Ukrainian immigrants, a long-established ethnic group, have remarkably similar employment patterns, suggesting that in Toronto they are attaining the same economic success that has been observed earlier for Jewish, British, American, and Northern European immigrants.

The location quotients highlight the persistent concentration of Polish, Italian, and Southern European immigrants in the goods-producing sector (Table 4). The manufacturing location quotients for women from these ethnic groups exceed 2.0. These women are also concentrated in construction, perhaps because of involvement in family businesses, particularly on the part of Italian women. Construction is also an important source of men's employment for these ethnic groups with location quotients that exceed 1.0 by a wide margin. The reliance on goods-producing sectors is balanced by under-representation in business, government, and health services, where the location quotients are low for men and even for women. Italian immigrants have the most extreme concentration in goods-producing industries accompanied by the greatest under-representation in services. One example is business services where the location quotient for Italian immigrant men is 0.25. Although the earnings of these immigrants from Southern and Eastern Europe who immigrated mainly in the 1960s and 1970s have increased, their failure to penetrate the dynamic service industries indicates the lingering effects of limited education. Many immigrants from Southern and Eastern Europe were skilled tradespeople but lacked the formal education that is often required in business, finance, insurance, and real estate services; government; and health, social, and educational services.

Despite the continuing concentration of recent immigrants in manufacturing, their employment patterns differ from those of Southern and Central European immigrants in three respects. First, men from Africa, Asia, and the Caribbean are underrepresented in construction, perhaps because of the importance of ethnic networks in this industry (Waldinger 1996). Only immigrant men from Central and South America have a location quotient for construction greater than 1.0 (Table 4). Secondly, retail and wholesale trade are important sectors of employment for women from Asia and South and Central America. Chinese men are also involved in these sectors, perhaps a continuation of their historic roles as traders. Thirdly, African, Caribbean, and Chinese immigrants of both sexes have location quotients that approach or exceed 1.0 for finance, insurance, and real estate services, a promising indication that some recent immigrants are finding jobs outside the declining manufacturing sector (Table 4).

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		Updated February 09, 2004