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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Subject to the limitations described at the outset of this section, our analyses show that Toronto's immigrants admitted between 1980 and 1995 do not obtain social assistance in excess of income tax they pay. In other words, there is no evidence that these immigrants are an economic drain on the host society; instead, they as a whole make positive net contributions to Canada's treasury. At the same time, our analyses show that immigrants in general have not been able to contribute to Canada's treasury at the same level as average Canadians do. Since a low T-B ratio is usually caused by low income and insecure employment, it is also indicative that immigrants have not achieved levels of economic performance and security comparable to those of native-born Canadians. Among other things, this may be attributed to the fact that 57 percent of the target immigrant population had been in Canada for less than 6 years when their 1995 tax return was filed. As length of residence in Canada increases, the gap in economic contributions between the target immigrant population and the native born Canadians should reduce, if not diminish.

While immigrants as a whole make positive net contributions, important internal differences remain. The economic immigrants have the highest ability to pay income tax. This is especially true of the independent immigrants whose language and jobs skills are subject to full assessment at time of application under the point system. This proves that the point system has been working well for the economic well-being of Canada. The retirees are also able to make a substantial positive net contribution because they pay income taxes but receive (or are eligible for) little social assistance. Entrepreneurs and investors, who are expected to be able to pay high income tax, actually paid less than the immigrant average; and the high UI usage rate of investors (including their spouses and dependants) is also unexpected. These may be accounted for, at least partially, by the following explanations. Entrepreneurs and investors may have paid more business income tax than personal income tax, but business income tax is not included in the IMDB yet and this part of contribution is not captured in the analysis. This points to the inadequacy of IMDB for assessing economic impacts of entrepreneurs and investors. It is also possible that entrepreneurs and investors are better able to shelter their income in various ways. They may, for example, keep re-investing their income, thus reducing or postponing income taxes payable to the government treasury. If this is true, then non-immigrant entrepreneurs and investors would have also paid less income tax than employed workers and professionals. Unfortunately, this cannot be verified in this study due to lack of data. Furthermore, due to the relative recency of the Investors Program, 91 percent of the investors had been in Canada for less than 6 years by the time they filed their 1995 tax returns. Their short length of residence in Canada could have been a factor for their lower-than-average income tax contribution, as most investments are long-term commitments with little return in the first few years. As well, as Kunin and Jones (1995) suggested, their low tax contributions may point to the lack of accountability on the part of their Canadian investment managers.

Contrary to popular belief, immigrants admitted for family reunification, especially assisted relatives, also make positive contributions to Canada, though their T-B ratio is lower than that for economic immigrants. Thus, they are not economic burdens to Canada, as many have perceived. The only classes of immigrants who seem to receive more benefits than the amount of taxes they pay are refugees and their dependants. This seems to agree with Lui-Gurr's (1995) observation that refugees are at a greater risk of welfare dependency. The high welfare dependency rate for Toronto's refugees may be explained by both their lower level of education and their shorter length of residence in Canada. For instance, 64 percent of refugees came to Canada with 12 or less years of education (25 percent with 0-9 years; 39 percent with 10-12 years), and only 9 percent with university degrees. As well, 66 per cent of all refugees arrived in Canada in 1990 and after. Nonetheless, refugees and their dependants are admitted into Canada for political and humanitarian reasons, not for their economic potential. Moreover, they account for only 7 percent of the target immigrant population, and the cost of providing benefits to refugees and their dependants can be adequately offset by the positive income tax transfers from other immigrants in the Toronto CMA.

The differences in economic impact between immigrants from traditional source areas and the rest of the world would seem to result from the former having higher proficiency in English or French; but language ability alone cannot fully explain the differences. Many immigrants from the Caribbean and African countries do speak fluent English or French, but their levels of economic contribution are much lower than those of the immigrants from the U.S., Britain, Western Europe, and Australia. In addition to other possible barriers (including discrimination) that reduce the ability of immigrants from developing countries to contribute to the Canadian economy, both immigrant mix and level of education lend explanations to the differences among immigrants by country of origin. For instance, the majority of the immigrants from traditional source countries came to Canada as economic immigrants (54 percent), but only 1.5 per cent were humanitarian immigrants. Economic immigrants from other world regions range from 22 to 34 percent; and humanitarian immigrants range from 9.6 to 32 percent. As for level of education, immigrants from the traditional source countries have the lowest percentage (20 percent) with minimal education (0-9 years of schooling), but the highest percentage with university degrees (21 percent), especially with graduate degrees (6.5 percent). In the case of Latin America and the Caribbeans, 41 percent the immigrants came to Canada with 0-9 years of schooling, 32 percent with 10-12 years of education, and only 4.5 percent with university degrees. Immigrants from other regions have higher levels of education than those from Latin America and the Caribbean, but still much lower than the immigrants from the traditional source countries.

The empirical findings raise a number of policy and program issues. They also point to directions for further research. Beginning with the policy issues, the findings underscore the heterogeneity of Immigrants' economic experiences. We found a number of intergroup and intragroup patterns. With only a few exceptions, recent immigrants work in a wider range of industries and experience higher unemployment rates and lower incomes than the earlier immigrant counterparts. The varied experiences of recent immigrants suggest that it may be useful to review the assistance provided during the initial phases of settlement. We need to determine if current settlement and integration programs in Toronto prepare recent immigrants for the job market with its demanding educational, skill, and language requirements. Elsewhere, the provision of specialized language training designed for physicians, nurses, engineers, and other professionals has facilitated accreditation and recognition of foreign credentials enabling immigrants to re-engage in their chosen their professions (Hathaway 1999).

Some recent immigrants may require more assistance than others. European immigrants "fare better" on socioeconomic indicators compared with visible minority groups. Effective strategies are needed to reduce the current gap between the incomes and unemployment rates of European and visible minority immigrants. However the task is complex. Incomes and employment rates do not increase in a linear fashion with years of residence of Canada. The complicated relationship illustrates the need for sophisticated policies that take account of diverse immigrant realities. Moreover, the interactions among settlement services, public education initiatives, skills development programs, and other settlement infrastructure need to be evaluated when programs are under review. The impact of changes in the provision of language training illustrates the importance of considering how policies interact. In the early 1990s, Citizenship and Immigration Canada attempted to increase the availability of language training courses by eliminating training, transportation, and child care allowances and redirecting the funds to provide more language classes. Subsequent research demonstrated that without the allowances, many women are unable to attend language training (Preston and Man 1999).

The persistence of Adisadvantages@ for specific immigrant groups as evidenced by high unemployment, low income, and poverty illustrates the failure of immigrant settlement and integration policies. For example, Latin American visible minority immigrants have persistently high unemployment rates and low employment incomes; Blacks have persistently low employment incomes and high levels of poverty; Koreans and non-visible minority Latin Americans have persistently low employment incomes; and West Asians have persistently high levels of poverty. The "persistence" implies that these immigrants face systemic barriers, requiring a sustained institutional response that may include regulatory responses in addition to the provision of settlement and integration services.

On many economic dimensions, unemployment, incomes and poverty, the impact of recency of immigration is strong and affects both sexes. Recency of immigration differentially affects women and men, appearing to reverse the traditional advantages of men. For example, in the most recent immigration period, European and visible minority men had higher unemployment rates than women. In some cases, one's ethnocultural group has a stronger influence than gender. For example, European groups have higher incomes than visible minority groups regardless of gender. Other indicators underscore the importance of gender. For example, non-visible minority West Asian and Latin American women have higher unemployment rates than their male counterparts. The wide gaps among immigrant cohorts suggest that service agencies should have a repertoire of flexible strategies that can be adapted to changing demographic components in the communities. Government funding formulae may need to permit more local autonomy. The variation among immigrant groups also highlights the need for increased representation and voice for all immigrant communities. More attention to community consultations with immigrant groups and inclusion of immigrants themselves in the governing bodies of service agencies are essential first steps to the removal of the employment barriers faced by many immigrants, specifically, recent immigrants and visible minority immigrants.

The varied experiences of immigrants reveal the incongruity between immigration selection policies and integration policies. The concentration of many working immigrants in manufacturing and other declining sectors and the long period of time required for immigrants to achieve parity in income and employment are two indications that the skills and work experiences of immigrants selected carefully under the current points system are not fully utilized. The underutilization of a skilled immigrant labour force has implications for national productivity, regional/local economic development, and the commercial/consumer market.

Education has emerged as a good predictor of Immigrants' net economic contributions and the probability that immigrants will rely on social security programs. While in the short run, economic immigrants are also more likely than other classes of immigrants to make positive net contributions to the Canadian economy, all Canadians, native-born and newcomers, are entitled to normal family lives. To enrich and facilitate family life, immigrants should be allowed to bring their immediate family members, such as spouse, children, and dependent parents, to Canada. Of course, all immigrants must meet Canadian health and security requirements.

Researchers need more detailed information about immigrants' employment experiences. Census information can only describe aggregate trends in the labour market. Qualitative research examining the work histories of immigrants is needed to understand the social and economic processes that contribute to their persistent vulnerability in the Toronto labour market. Research should consider the work histories of immigrants who have succeeded in obtaining remunerative jobs commensurate with their qualifications as well as those who struggle to find and keep appropriate employment. Such comparative research may reveal the factors contributing to success more readily than many previous studies that have concentrated on the least successful.

The emergence of a large immigrant middle class, the expansion of the immigrant working class, together with the growth of a variety of ethnic economies and varying degrees of ethnic niching and economic incorporation, provide a rich context for studies of immigrant entrepreneurship. However, the activities of only a few groups have been studied and compared. Compared with the United States, little is known about the determinants of entrepreneurialism and its relative merits. We still do not know what social and economic factors promote entrepreneurialism among immigrants from various backgrounds. A few studies have examined social barriers to entrepreneurship, but none have considered policy barriers. We need comparative research focusing on the interplay between ethnicity, race, and gender and successful entrepreneurialism. In particular, the role of women has hardly been discussed.

The role of space and place in ethnic entrepreneurship has also been overlooked. We do not know the significance of changes in the locations of ethnic economies. For example, the reasons for the relocation of Italian businesses from Kensington Market to Corso Italia and most recently, to the northern suburbs of the Toronto metropolitan area as well as the impact of relocation are open to interpretation. The assumption is that businesses followed the Italian population that had relocated to the suburbs. However, much residential development in Toronto's outer suburbs is preceded by commercial development. This pattern of development suggests that the suburbanization of Toronto's Italian population may be due in part to the relocation of the community's ethnic economy. The meaning of changes in the location of an ethnic economy are also unclear. Does a change in location indicate that the ethnic economy is becoming more diversified and more integrated into the larger urban economy? What factors contribute to the persistence of ethnic economies at one location even as one immigrant group is succeeded by another? How do changes in the locations and sizes of ethnic economies affect the relations among immigrant groups?

More empirical studies of Immigrants' economic impact are needed to guide future changes in Canada's immigration system. Empirical studies must consider many more forms of economic contributions and burdens than was possible here. Among the most important may be the contributions of immigrants to establishing and maintaining international business links. If possible, a comprehensive contribution-benefit ratio that is acceptable to Canada can be derived and an appropriate mix of immigrants then be determined to achieve the ratio. The economic impact of immigrants should also be periodically monitored against the critical C-B ratio and adjustment to immigrant mix made if necessary.

Our research has highlighted the diversity of the immigrant experience in Toronto's economy. Toronto's immigrants are better off than immigrants across Canada, although the variations among visible minority groups and among European groups are higher than the national figures. This suggests that Toronto's high economic performance provides some benefits to its immigrants. Despite the advantages of living and working in Toronto, immigrants do not always achieve economic success. Our research has allowed us to outline the contours by which immigrants are differentiated, but additional research is needed to specify the processes creating difference.

Recency of immigration is a factor meriting further attention since our research shows it differentially affects women and men. Yet when both sexes are combined, recency acts as a direct correlate of socioeconomic status in Toronto. Recency of immigration appears to reverse the traditional advantages of men (for example, in the most recent immigration period, both European and visible minority men fared worse in unemployment than women). In some cases, ethnocultural group origin is stronger than gender. For example, European groups have higher incomes than visible minority groups regardless of gender. Alternatively, there are indicators that show the importance of gender. For example, women of certain ethnocultural groups (such as West Asian and Latin American, not visible minority) have higher unemployment rates than their male counterparts. Future research may be done in several areas: (a) identifying the causal factors for immigrants' unemployment, incomes, and poverty status through a study of their education, former occupation, language, place of origin, etc.; (b) determining the importance of the "ethnicity" factor by disaggregating the visible and European categories; (c) determining the relevance and usefulness of settlement and integration infrastructure in Canada when immigrants arrived; and (d) identifying the "success factors" for some immigrants

The complex ways that different variables affect each other indicates the need for policies and programs that are grounded in current research designed to target specific issues. Although we recognize the necessity for further research, our study has enabled the identification of potential priority areas for funding and program design.

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		Updated February 09, 2004