Economic and Social Reports, February 2022

The February issue of Economic and Social Reports is now available and contains six articles.

Differences in weekly earnings between visible minority and White categories most prevalent in small commercial firms

In a comparison of weekly earnings of workers in designated visible minority and White categories employed in large commercial sector firms, medium-sized commercial sector firms, small commercial sector firms and firms and organizations of all sizes in the non-commercial sector, differences in earnings were most prevalent in small commercial firms and least prevalent in the non-commercial sector. Differences in weekly earnings are expected to be less prevalent in larger firms because of factors such as formalized human resources management, unionization and sensitivity to issues of diversity and equity.

The study "The relative earnings of individuals in designated visible minority categories in Canada across four workplace sectors" shows that, in small commercial firms, the weekly earnings of White men were significantly higher than the weekly earnings of men in seven of the nine designated visible minority categories considered in the study. In large commercial firms, the weekly earnings of White men were significantly higher than those of men in four of the nine categories. The earnings gap was consistently largest among Black men.

When comparing the weekly earnings of White women with those of women in visible minority categories in the commercial sector, significantly lower weekly earnings were consistently observed among Black women.

In the non-commercial sector, weekly earnings of both visible minority men and women were either higher or not significantly different than the weekly earnings of White men and women.

More teleworkers might work outside their employer's province or territory

Following the COVID-19 pandemic, some Canadian businesses are moving towards more flexible work arrangements, including allowing employees to telework from another province or territory. The article "Working from home for an employer located in another province or territory" estimates that 113,000 employees might telework exclusively from a different province or territory in the near future, compared with 12,600 in 2016.

These teleworkers represent about 4% of all employees expected to do some telework in the near future. The ability to telework in another jurisdiction is still confined to a fairly narrow segment of the workforce that is highly educated and earns substantially higher wages on average than other teleworkers.

Comparing immigrant labour market outcomes between some recessions

Recessions often have a more severe impact on labour market outcomes of recent immigrants than of the Canadian born. The article "Immigrant labour market outcomes during recessions: Comparing the early 1990s, late 2000s and COVID-19 recessions" by researchers from Statistics Canada (StatCan) and Immigration, Refugees and Citizenship Canada (IRCC), shows that this was more apparent during the recession of the early 1990s compared with that of 2008/2009.

While there was a marginal difference between recent immigrant and Canadian-born men in their employment and unemployment rates over the recession tied to COVID-19, recent immigrant women experienced a greater increase in unemployment than Canadian-born women. This is due in part to their overrepresentation in the hardest hit sectors of the economy—accommodation and food services and retail trade.

Recessions can have a "scarring" effect on future earnings. This was evident for immigrants entering Canada during the early 1990s recession, although there was little evidence of such an effect during the 2008/2009 recession. It is too early to tell whether the recession tied to COVID-19 will have scarring effects on immigrants' labour market outcomes.

Immigrants who studied in Canada earn more than those who did not

Immigrants who studied in Canada before immigrating earned more in the first two years after immigration than those who did not study in Canada. This advantage was due entirely to their better official language ability and much higher shares with pre-immigration Canadian work experience.

As part of a StatCan-IRCC series that provides a broad overview of international students as a source of labour, the article "International students as a source of labour supply: Pre-immigration study in Canada and post-immigration earnings," also found that this earnings advantage increased over time. More specifically, 10 to 11 years after immigration, economic immigrants with two to five years of pre-immigration Canadian study experience earned 9% to 12% more than those who did not.

From 2000 to 2019, the share of new economic immigrants with Canadian study experience increased from 6% to 38%. This trend occurred alongside increasing numbers of international students and the implementation of immigration programs designed to admit economic principal applicants with Canadian study experience.

Those with high financial literacy benefit more from Registered Retirement Savings Plans

Canadians with less financial literacy are more likely to use Registered Retirement Savings Plans (RRSPs) to reduce their annual taxes in the short term rather than optimize the benefits of RRSPs for long-term retirement planning.

The article "Understanding the tax implications of Registered Retirement Savings Plans," by researchers at Statistics Canada and the Retirement and Savings Institute at HEC Montréal, uses a new dataset that is the first in Canada to combine longitudinal information from tax records with a direct measure of financial competence. It also shows that tax filers with high financial literacy were more likely to understand the tax implications of withdrawing money from their RRSPs, thereby benefitting more from the wealth accumulation in these plans.

Using the Canada Emergency Wage Subsidy program was associated with a lower probability of business closure

Between March and September 2020, the Canada Emergency Wage Subsidy program was used at least once by 41.6% of the employer businesses that were active in February 2020. Among those businesses, the use of the CEWS program between March and September 2020 was associated with a 6.9 percentage point lower probability of business closure compared with businesses that did not use the program. For more information on the article "The Canada emergency wage subsidy program and business survival and growth during the COVID-19 pandemic in Canada," please see the Daily article "The role of the Canada Emergency Wage Subsidy program in assisting businesses through the pandemic."