NOT ALL VISIBLE MINORITIES FACE LABOUR MARKET DISCRIMINATION The most popular way of determining whether Canada’s visible minorities face discrimination in the labour market is simply to compare their average wages and annual earnings with those of white Canadians. This is naive in two ways: It does not distinguish among different visible minorities and it does not control for other possible differences between visible minorities and white Canadians—in education or experience, for instance. A statistical explanation of the wage gap finds that among native-born Canadians only blacks face a statistically significant wage gap once other variables are controlled for. Among immigrants, however, an Derek Hum unexplained wage gap is common. This suggests policy should focus less on employment or wage equity and more on helping immigrants integrate into and Wayne Simpson Canadian society. La façon la plus courante — et la plus simple — de juger si au Canada les minorités visibles sont en butte à la discrimination sur le marché du travail consiste à comparer les salaires moyens et les revenus annuels moyens de ces minorités avec ceux des Canadiens de race blanche. Mais le procédé comporte deux faiblesses : d’une part, il n’établit aucune distinction entre les diverses minorités visibles; et, d’autre part, il ne tient aucun compte d’autres différences observables entre minorités visibles et Canadiens de race blanche — en matière d’instruction et d’expérience, par exemple. Or, l’analyse statistique révèle que, une fois prises en compte les autres variables, l’écart salarial parmi les Canadiens de naissance ne touche de façon significative que les Noirs. Parmi les immigrants, par contre, on observe généralement un écart salarial qui reste sans explication. Cela donne à penser que les politiques du travail devraient mettre l’accent sur l’aide à apporter aux immigrants pour faciliter leur intégration à la société canadienne, plus que sur les problèmes d’emploi ou d’équité salariale. anada’s image of itself as a multicultural country immigrants of late have been visible minorities—that is, reflects its proud history of welcoming immigrants “persons, other than Aboriginal peoples, who are non- C and its more recent record of tolerance for peoples Caucasian in race or non-white in colour” (as the federal of different colour. Rich in resources but sparse in popula- Employment Equity Act puts it). If visible minorities do face tion, Canada has traditionally encouraged people from narrower economic opportunities than whites, then it may other lands to farm its West, construct its railroads, settle its well be true that the most recent waves of immigrants may North and live in its cities. In time, Canada’s population not fare as well in the labour market as their predecessors would both prosper and grow, and its economy would move have. In the United States, blacks and hispanics earn less from its reliance on staples and become an industrialized than whites, while Japanese- Americans earn more. Is the one. Despite this history and despite today’s hearty eco- same true for Canada? And if there are differences in eco- nomic performance and low unemployment, Canadians are nomic outcomes across ethnic groups, what explains them? ambivalent about immigrants. Some of us want more; oth- Differences in education? In skills and work experience? ers believe we attract too many. Those who would put Cultural or language factors? Or simply discrimination? In stricter limits on immigration may fear that Canada’s econ- this short article, we can’t hope to answer all these ques- omy cannot absorb more people, or that our labour market tions. But we will try to shed light on one important ques- cannot provide lesser-qualified workers with jobs. It may tion by investigating the wages offered to different visible even be worrisome to many that two-thirds of Canada’s minority groups. POLICY OPTIONS 45 DECEMBER 2000 Derek Hum and Wayne Simpson Table 1 Economic outcomes by visible minority (VM) group Only 6.3 per Group Annual Hourly Annual Average Per cent Per cent earnings wage hours age male immigrant cent of the non- Not VM $26,328 $14.99 1623.6 36.5 52.4 6.3 visible minority VM 23,133 12.75 1621.7 35.3 51.4 78.0 Black 24,880 12.94 1558.7 35.5 39.2 63.9 sample are Indo-Pakistani 21,461 11.83 1657.7 33.1 60.4 86.1 Chinese 22,424 13.47 1480.2 35.9 47.2 72.5 Non-Chinese 25,411 12.70 1739.3 36.4 45.0 83.1 immigrants orientals Arab 22,711 14.11 1915.1 35.2 68.9 82.0 while between Latin American 19,085 11.52 1470.5 35.1 60.6 85.8 64 and 86 per Note: Non-Chinese Orientals comprise Korean, Japanese, South East Asians, Filipinos, and Oceanics. Because the sample size for each of cent of each these groups individually is relatively small results are weighted to provide estimates for the Canadian population. Source: Calculations by authors from SLID (1993) master file. visible-minority group consists he kind of information reported by the there is extremely wide variation in immigration T media concerning earnings of visible status: Only 6.3 per cent of the non-visible of immigrants. minorities is typically very aggregated and con- minority sample are immigrants while between ceals important relationships. Consider Table 1, 64 and 86 per cent of each visible-minority group Thus, if being an for example. It presents annual earnings and consists of immigrants. Thus, if being an immi- hourly wage rates, as well as selected characteris- grant means facing disadvantages in the labour immigrant tics, for whites and various visible minority market, this could be more responsible for the groups. The figures are calculated from Statistics wage differentials observed across groups than means facing Canada’s Survey of Labour and Income being a visible minority per se. disadvantages in Dynamics (SLID) master file. It provides finer Yet another complication is the variation in distinctions among groups than the public- hours worked by the various visible-minority the labour release data, which only report whether a groups. For example, non-Chinese Orientals and respondent is, or is not, a visible minority mem- Arabs apparently compensate for their lower market, this ber. Accordingly, most commentators simply wage rates by working longer hours. Accordingly, report comparisons between whites and all visi- hourly wage rate differentials are probably a bet- could be more ble minorities combined together as a group. ter measure of labour market opportunity for The first two rows of Table 1 indicate that, paid workers than annual earnings. In fact, there responsible for grouped together in this way, visible minorities may be more differences in economic opportuni- in Canada had annual earnings of $23,133 in ty than differences in annual earnings might sug- the wage 1993 and an hourly wage rate of $12.75, com- gest, and the minorities in question have to make differentials pared to $26,328 and $14.99, respectively, for up for these differences by working longer. On whites. It looks very much as if “colour” is a dis- the whole, Table 1 is a useful warning against observed across criminating factor in Canadian labour markets. hasty generalization about the structure of Although each of the visible-minority groups opportunities or discrimination in the Canadian groups than in Table 1 has less earnings and a lower wage rate labour market than white Canadians do, there is evident varia- being a visible tion among the different visible-minority groups. ithin limits, the detailed nature of the They are roughly the same age on average, but W SLID data allows estimates of the relative minority per se. the proportion of males differs considerably magnitudes of wage differentials for different vis- across groups. It therefore seems possible that the ible minority groupings. Still, the need to build hourly wage rates and annual earnings of visible up samples that are of a significant size statisti- minorities are driven down, not so much because cally forces us to mask considerable variation they are visible minorities but because they are within sub-groups. For example, although disproportionately women, who are well known Japanese-Canadians have annual earnings well to earn lower wages than men. In the same way, above those for whites, their small numbers make 46 OPTIONS POLITIQUES DÉCEMBRE 2000 Visible minorities in the labour market statistically reliable comparisons difficult. In fact, expect to be so unlucky as to draw a sample that small sample sizes for Koreans, Japanese, suggested it was only once in 20 draws. Southeast Asians, Filipinos and people listed as Our results are summarized in Table 2. As the “Oceanic” force us to group them together as first line of the Table shows, after accounting for “non-Chinese Orientals.” other factors, including how long it has been Membership in As mentioned, many other factors beyond since people immigrated and how old they were colour and immigrant status may give rise to dif- when they did, the simple fact of being a mem- a visible- ferences in wage offers to job seekers, among ber of a visible-minority group is significant in minority group them: gender, age, education, skill level, language explaining the wage gap with white Canadians knowledge, Canadian work experience and the only for immigrant men. For Canadian-born is significant in like. Economists argue that a number of these men, being a member of a visible minority has no variables represent a person’s “human capital,” significant effect in explaining the wage gap. The explaining the since they are assumed to increase productivity same is true for both immigrant and native-born and are therefore likely to attract higher wages.