Saturday, August 20, 2011

A note on changing dependency ratios and migration

The concerns I expressed about Canadian immigration patterns and policies risking the reproduction of patterns of socioeconomic inequality linked to immigration status and ethnicity are all the more salient in light of this Statistics Canada report on projected changes in the Canadian labour force.

Using a range of projection scenarios, the labour force is projected to grow to between 20.5 million and 22.5 million by 2031. In 2010, the labour force numbered about 18.5 million.

[. . .]

Between 1971 and 1976, when the large baby-boom cohorts were entering the labour market, the labour force increased at an average rate of just over 4% a year. This growth rate slowed to about 1.4% between 2006 and 2010. By 2016, growth is projected to be less than 1% on average in all scenarios. Projections show it could slow even further to between 0.2% and 0.7% in the period from 2021 to 2026.

In four of the five scenarios, the growth is projected to stop slowing after 2026, once most baby boomers have left the labour force.

The projections also suggest that, if recent trends continue, the labour force will become older and increasingly ethnoculturally diverse. Close to one person out of four in the labour force could be aged 55 or over by 2021. There would also be higher proportions of foreign-born people and people belonging to a visible minority group (as defined by the Employment Equity Act) in the labour force.

As the growth of the labour force loses momentum, the population of seniors aged 65 and over is projected to grow increasingly rapidly as a result of population aging and the entry of the baby boomers into this age range.

[. . .]

In 2010, the participation rate was 67.0%; by 2031, it is projected to range between 59.7% and 62.6%, which would be the lowest observed since the late 1970s.

The projected decline in the overall participation rate over the next two decades would be largely attributable to demographic phenomena, such as the aging of the baby-boom cohorts, increasing life expectancy and a fertility rate below the replacement level of 2.1 children per woman.

The aging of the baby boomers, which is largely behind the projected decline in the overall participation rate, has had a major impact on the aging of the labour force. Between 2001 and 2009, the proportion of people in the labour force aged 55 and over rose from 10% to 17%, an increase of 7 percentage points in nine years. The first baby boomers reached the age of 55 in 2001.

[. . .]

In 1981, there were roughly six persons in the labour force for each retiree. By 2031, or 50 years later, this ratio is projected to decline to less than three to one, according to all five scenarios. The ratio is projected to decline in every province.

By 2031, roughly one in every three people in the labour force could be foreign born. Between 1991 and 2006, the percentage of foreign-born people in the labour force rose from 18.5% to 21.2%. If recent immigration levels were to continue, that proportion is projected to reach almost 33% in 2031, according to most scenarios.

If labour forces remain largely static, it's not good at all to have a large and growing share of the national population shut out for reasons linked to ethnicity. This is the problem facing the western province of Saskatchewan, where the First Nations population is growing rapidly but remains underemployed.

"If you have a large 65-plus (population) and don't match that with an increase in the labour force size, then your dependency ratio or the health care costs or other costs associated with the retired group may be a concern," said University of Saskatchewan policy and labour expert Rose Olfert.

"On the other (hand), if those baby boomers have good retirement plans and have lots of good discretionary spending, they can also be a source of expenditure and growth for the economy as they begin to spend all their hard-earned money that they acquired over their lifetime."

Olfert warned that as bay boomers retire they will leave "a relative vacuum of experience and skills on the part of the incomers." That puts skilled and educated labour at a premium.

It's not just a numbers game, she said, but an issue of quality. Attracting and retaining workers will be a difficult and competitive process and Saskatchewan will be competing with other provinces and other countries to fill the void.

[. . .]

"We need to engage aboriginal people like never before, both as employers and as employees," he said.

High unemployment rates in the aboriginal community means that population could help meet the labour demand and, with numerous policies and programs in place, progress is being made. A recent Statistics Canada report shows offreserve aboriginal employment in Saskatchewan grew by 3,300 jobs in July from a year ago. Employment among aboriginal youth was up by 500 jobs.

"It's just that the challenge is large and even though these policies and practices are successful and are working to a large extent, they seem to not be enough," Olfert said. "It's as though you are running fast, but you have to run a little bit faster to keep up."

As for the situation in labour-exporting New Brunswick, it can be safely described as potentially catastrophic.

In New Brunswick, the labour force participation rate was at 64 per cent in 2010 and is expected to fall to between 54 and 58 per cent by 2031 - roughly six percentage points below the national average.

While the proportion of the labour force aged 55 and over is expected to reach 24 per cent in Canada by 2031, it's expected to be three percentage points higher in New Brunswick.

At the same time, the ratio of workers to retirees by 2031 is expected to be three to one in Canada and two to one in New Brunswick.

The bleak outlook is partly due to the fact the population in New Brunswick is already older than in Canada overall, Lebel said.

Seniors made up 14.7 per cent of the province's population in 2006, one percentage point higher than the proportion for Canada as a whole, according to census data.

At the same time, New Brunswick's fertility rate of 1.59 children per woman is lower than the national average - 1.68.

Almost half of the population could be more than 65 years of age by 2031, according to medium-growth projections based on historical trends by Statistics Canada.

Saskatchewan at least has a reasonable prospect of following in the path of neighbouring Manitoba.

The famous United Nations report on replacement migration of a decade ago produced some interesting results. One of these results was the confirmation that rapid population aging is irreversible. In the admttedly extreme case of South Korea, experiencing rapid aging owing to the collapse in fertility rates from the very high level of the 1960s to the very low levels of the past decade. In order to keep the exceptionally 1995 high ratio of workers to seniors, 5.1 billion immigrants would be needed. Among other things, transforming the southern half of the Korean peninsula into a vast arcology would be problematic. Declining dependency ratios are inevitable; it's occurring worldwide. Even immigration won't necessarily change dynamics, since immigrant populations would have to have exceptionally and unrealistically high birth rates to reverse secular trends (this, in turn, having its own obvious problems).

That same report on South Korea did suggest that certain relatively medium-term improvements might be sustainable; the numbers and proportions of immigrants and immigrant descended people necessary to sustain either the peak population of South Korea or the peak working-age population of South Korea seems possible. South Korea is more open to immigration than neighbouring Japan, at least, and the movement of people from Vietnam, China, and the Philippines associated with marriage-driven immigration could contain the seeds for a broader migratory movement. South Korea might come to emulate a Canada that is enacting something very much like those policies right now, you could say. For those policies to work, though, you need a labour force that is permeable to people of diverse backgrounds at every level. Besides being a waste of resources, the ethnic segmentation of a workforce carries obvious dangers for social cohesion. Creating immigrant underclasses through migration policies which don't give immigrant the chance to acquire the cultural and economic capital needed to integrate, as we've seen in many countries around the world, is--besides being foolish--self-destructive.

Migration policies really need to be thoroughly thought-out.

Wednesday, August 17, 2011

Some notes on new immigration trends in Canada

In the right-leaning Canadian daily newspaper the National Post, policy analyst and writer Steve Lafleur recently had an article titled "Only more immigrants can save Canada’s economy" published. How many more immigrants, and why so many more?

In his immigration policy remarks on July 19, Minister Jason Kenney acknowledged that Canada would need roughly one million immigrants per year in order to maintain the ratio of working age citizens to retirees. Citing a lack of resources for integrating new Canadians, and a concern that accelerating immigration levels too rapidly could lead to a nativist backlash, he said that it won’t happen.

While the Minister’s expressed concerns are valid, they pale in comparison to the demographic reality. The proportion of Canadians aged 60 and over is projected to increase from roughly one-fifth to nearly one-third by 2020. Our national debt stands at over $582-billion, and is increasing at a rate of more than $1,400 per second. This burden doesn’t include provincial government debts, or unfunded pension liabilities such as the $748-billion shortfall for the CPP. For those Canadians hoping to start collecting CPP in the next decade, the question shouldn’t be if we can integrate one-million immigrants per year, but how.

While taking in four times more immigrants than we do now would present some logistical challenges, they are not insurmountable. One criticism against more immigrants is that more immigrants will put greater stress on the housing market. This assumes that the housing stock is fixed, and that all immigrants will go to the hottest real estate markets. Canada’s three biggest cities have admittedly been hostile to new development, which is pricing many out of the market. A healthier attitude toward development will be crucial if those cities are to remain affordable.

However, the immigration question presents a great opportunity not just for smaller metropolitan areas, but for rural areas as well. Rural areas in Canada are often resource rich, but population poor. It is most evident in Saskatchewan, where there are typically 10,000 vacancies in any skilled trade in the province. There are plenty of resources, but not many people. Saskatchewan is twice the size of Germany, with 1/80th the population. There is no shortage of room or resources.

Smaller centres also offer the advantage of lower cost housing, and would require less expensive infrastructure upgrades. Manitoba is leading the country in terms of targeted immigration to smaller centres. Rural Manitoba received nearly 3,200 immigrants in 2008 alone, and the province is clamouring for more. For too long, our immigration policy has been fixated on Toronto, Montreal and Vancouver. High levels of rural immigration can revitalize communities, and Manitoba has shown the way.

I see any number of problems with this. Leaving aside the question of whether such vastly increased immigration would be acceptable to the Canadian electorate, I wonder if Canada should enact this policy given the continuing lags in income and employment relative to the Canadian average experienced not only by first-generation immigeants but apparently many of their Canadian-born children. Is it ethical for a country to sharply increase levels of immigration if it can't guarantee the integration of these immigrants and their children into the community on equal terms with native-born? Canadians have a myth of their country as a country open to all. The ongoing growth of class and income disparities in the city of Toronto right now defined substantially by ethnicity and immigration status could disprove this thesis quite badly.

Lafleur does bring up the interesting success of the province of Manitoba. Manitoba Labour and Immigration's 2009 report does suggest that the province, twice as many immigrants as the neighbouring province of Saskatchewan that also has a population of roughly one million (13 520 in Manitoba in 2009 versus 6 890 in Saskatchewan). This may have something to do with the distribution of the Manitoban population. Winnipeg is the province's capital and largest city, and with its hinterland, accounts for seven-tenths of the province's population. Opportunities offered by economies of scale may exist in Manitoba thanks to Winnipeg that don't exist in Saskatchewan, where less than a quarter live in the largest city of Saskatoon and a fifth in the provincial capital of Regina a substantial distance away. The previous mentioned report does suggest that a percentage of immigrants roughly proportional to Winnipeg's share of Manitoba's population does settle in Winnipeg, however, suggesting that the rest of province is also attractive. Rates of unemployment in Manitoba are consistently 2% or more below the Canadian average, with Saskatchewan in a similar position. Presumably Manitoba is doing something right insofar as attracting immigration goes. Is it doing right by its immigrants? Research is called for.

For that matter, my native Prince Edward Island is also apparently doing something right. Taking in absolutely as many immigrants (some two thousand per year) as the much larger adjacent provinces of Nova Scotia and New Brunswick, the province is really surprising me.

When a Chinese immigrant visits Brown’s Volkswagen in Charlottetown, general manager Skip Rudderham is prepared: He has interpreters on speed-dial and bilingual business cards. Prince Edward Island, with its reputation of homogeneity and conservatism, may not seem the likeliest province to require such measures, but require them it does: Chinese immigration is transforming the island both culturally and economically.

“We would quite literally hire every qualified [Chinese] person we could get our hands on,” said Mr. Rudderham. “Our Chinese clientele is large enough that we could keep this person busy basically dealing with that clientele alone.”

[. . .]

Since the province started recruiting skilled and affluent immigrants through its Provincial Nominee Program in 2001, upward of 10,000 newcomers have called P.E.I. home. But while the province of just 143,200 is undergoing a metamorphosis at the behest of immigration generally, it is immigration from a land of nearly 1,337,000,000 in particular that is driving the novel shift.

China has been the chief source of immigration to P.E.I. for the past five years, with nearly 2,400 newcomers arriving between 2006 and 2009 alone, according to the province’s Population Secretariat. Most of those newcomers at least initially settled in Charlottetown, where the population was just 32,000 at the time of the census in 2006.

[. . .]

That fact has not been lost on the government, which is looking to counter a natural-population-growth rate that has shrunk to almost zero. Provincial spending on resettlement programs doubled to more than $4.2-million between 2008 and 2009, and it has paid off: P.E.I’s population rose by nearly 400 in the first quarter of this year, making it the only Atlantic Canada province to see an increase.

[. . .]

Hamish Redpath, a realtor who recently launched a monthly bilingual publication called Ni Hao PEI (Mandarin for “Hello P.E.I.”), said he regularly shows homes to Chinese newcomers at prices ranging between $400,000 to $1.5-million. He said the Chinese community is peppered throughout Charlottetown and across the bridges in communities such as Stratford and Cornwall.

“They’re interested in beautiful homes, with water views or right on the waterfront,” Mr. Redpath said, adding that he serves Chinese families looking for more modest abodes, too. “I have also shown Chinese families some rural homesteads outside of Charlottetown. They have lived in Beijing all their lives and they talked to me about the pollution and the crazy traffic, so to come here and have five acres and a little farmhouse for a couple hundred thousand bucks is a dream come true.”

A fourfold increase in immigration is probably impossible. If Manitoba and Prince Edward Island, two provinces not known as receivers of immigrants, are encountering success, then there may well be a diffusion of immigrants beyond the country's traditional gateway cities--Toronto, Montréal, Vancouver--that could bode well for immigrant integration into the country's labour markets and national life as a whole.

Sunday, August 07, 2011

Rust belt migration in the USA

I recently came across a site titled Burgh Diaspora authored by Jim Russell, a geographer who focuses on human capital issues particularly related to the city of Pittsburgh, but covers the wider area commonly referred to as the "Midwest" and "the Rust Belt"(referring to abandoned factories).

Russell's point of view is unconventional and he challenges the conventional wisdom regarding the relative prospects of metro areas throughout the US. The site asks the question:

Since education makes a person more likely to leave your region, how do you justify your investment in human capital?

This seems based on the idea that graduates of local universities leave due to the industry centers of modern America being located anywhere but Russell's home region. Russell challenges the idea that a "brain drain" from the heartland is actually taking place.

One factor affecting migration to this region that seems to appear in Russell's accounts is a certain amount of xenophobia in this region; he documents instances where the residents of some areas are hostile to "outsiders" potentially migrating in. This would be a major obstacle if attracting workers from other parts of the US is a goal for governments in this region.