not all visible minorities face labour market discrimination

NOT ALL VISIBLE MINORITIES
FACE LABOUR MARKET
DISCRIMINATION
Derek Hum
and Wayne Simpson
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
unexplained wage gap is common. This suggests policy should focus less on
employment or wage equity and more on helping immigrants integrate into
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.
C
anada’s image of itself as a multicultural country
reflects its proud history of welcoming immigrants
and its more recent record of tolerance for peoples
of different colour. Rich in resources but sparse in population, Canada has traditionally encouraged people from
other lands to farm its West, construct its railroads, settle its
North and live in its cities. In time, Canada’s population
would both prosper and grow, and its economy would move
from its reliance on staples and become an industrialized
one. Despite this history and despite today’s hearty economic performance and low unemployment, Canadians are
ambivalent about immigrants. Some of us want more; others believe we attract too many. Those who would put
stricter limits on immigration may fear that Canada’s economy cannot absorb more people, or that our labour market
cannot provide lesser-qualified workers with jobs. It may
even be worrisome to many that two-thirds of Canada’s
immigrants of late have been visible minorities—that is,
“persons, other than Aboriginal peoples, who are nonCaucasian in race or non-white in colour” (as the federal
Employment Equity Act puts it). If visible minorities do face
narrower economic opportunities than whites, then it may
well be true that the most recent waves of immigrants may
not fare as well in the labour market as their predecessors
have. In the United States, blacks and hispanics earn less
than whites, while Japanese- Americans earn more. Is the
same true for Canada? And if there are differences in economic outcomes across ethnic groups, what explains them?
Differences in education? In skills and work experience?
Cultural or language factors? Or simply discrimination? In
this short article, we can’t hope to answer all these questions. But we will try to shed light on one important question by investigating the wages offered to different visible
minority groups.
POLICY OPTIONS
DECEMBER 2000
45
Derek Hum and Wayne Simpson
Table 1
Economic outcomes by visible minority (VM) group
Only 6.3 per
cent of the nonvisible minority
sample are
immigrants
while between
Group
Not VM
VM
Black
Indo-Pakistani
Chinese
Non-Chinese
orientals
Arab
Latin American
Annual
earnings
Hourly
wage
Annual
hours
Average
age
Per cent
male
Per cent
immigrant
$26,328
23,133
24,880
21,461
22,424
25,411
$14.99
12.75
12.94
11.83
13.47
12.70
1623.6
1621.7
1558.7
1657.7
1480.2
1739.3
36.5
35.3
35.5
33.1
35.9
36.4
52.4
51.4
39.2
60.4
47.2
45.0
6.3
78.0
63.9
86.1
72.5
83.1
22,711
19,085
14.11
11.52
1915.1
1470.5
35.2
35.1
68.9
60.6
82.0
85.8
64 and 86 per
cent of each
visible-minority
group consists
of immigrants.
Thus, if being an
immigrant
means facing
disadvantages in
the labour
market, this
could be more
responsible for
the wage
differentials
observed across
groups than
being a visible
minority per se.
46
OPTIONS POLITIQUES
DÉCEMBRE 2000
Note: Non-Chinese Orientals comprise Korean, Japanese, South East Asians, Filipinos, and Oceanics. Because the sample size for each of
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.
T
he kind of information reported by the
media concerning earnings of visible
minorities is typically very aggregated and conceals important relationships. Consider Table 1,
for example. It presents annual earnings and
hourly wage rates, as well as selected characteristics, for whites and various visible minority
groups. The figures are calculated from Statistics
Canada’s Survey of Labour and Income
Dynamics (SLID) master file. It provides finer
distinctions among groups than the publicrelease data, which only report whether a
respondent is, or is not, a visible minority member. Accordingly, most commentators simply
report comparisons between whites and all visible minorities combined together as a group.
The first two rows of Table 1 indicate that,
grouped together in this way, visible minorities
in Canada had annual earnings of $23,133 in
1993 and an hourly wage rate of $12.75, compared to $26,328 and $14.99, respectively, for
whites. It looks very much as if “colour” is a discriminating factor in Canadian labour markets.
Although each of the visible-minority groups
in Table 1 has less earnings and a lower wage rate
than white Canadians do, there is evident variation among the different visible-minority groups.
They are roughly the same age on average, but
the proportion of males differs considerably
across groups. It therefore seems possible that the
hourly wage rates and annual earnings of visible
minorities are driven down, not so much because
they are visible minorities but because they are
disproportionately women, who are well known
to earn lower wages than men. In the same way,
there is extremely wide variation in immigration
status: Only 6.3 per cent of the non-visible
minority sample are immigrants while between
64 and 86 per cent of each visible-minority group
consists of immigrants. Thus, if being an immigrant means facing disadvantages in the labour
market, this could be more responsible for the
wage differentials observed across groups than
being a visible minority per se.
Yet another complication is the variation in
hours worked by the various visible-minority
groups. For example, non-Chinese Orientals and
Arabs apparently compensate for their lower
wage rates by working longer hours. Accordingly,
hourly wage rate differentials are probably a better measure of labour market opportunity for
paid workers than annual earnings. In fact, there
may be more differences in economic opportunity than differences in annual earnings might suggest, and the minorities in question have to make
up for these differences by working longer. On
the whole, Table 1 is a useful warning against
hasty generalization about the structure of
opportunities or discrimination in the Canadian
labour market
W
ithin limits, the detailed nature of the
SLID data allows estimates of the relative
magnitudes of wage differentials for different visible minority groupings. Still, the need to build
up samples that are of a significant size statistically forces us to mask considerable variation
within sub-groups. For example, although
Japanese-Canadians have annual earnings well
above those for whites, their small numbers make
Visible minorities in the labour market
statistically reliable comparisons difficult. In fact,
small sample sizes for Koreans, Japanese,
Southeast Asians, Filipinos and people listed as
“Oceanic” force us to group them together as
“non-Chinese Orientals.”
As mentioned, many other factors beyond
colour and immigrant status may give rise to differences in wage offers to job seekers, among
them: gender, age, education, skill level, language
knowledge, Canadian work experience and the
like. Economists argue that a number of these
variables represent a person’s “human capital,”
since they are assumed to increase productivity
and are therefore likely to attract higher wages. In
our statistical work, we investigate whether the
wage gap between whites and these various nonwhite groups can be explained by the variables
we have mentioned.
Unfortunately, we don’t have data on people’s work experience in Canada But since the ease
with which persons born outside Canada are able
to access job opportunities and to learn the workings of the Canadian labour market probably
increases with years spent in Canada, we approximate this aspect of human capital by noting the
years since migration of immigrants to Canada.
Because employers are unlikely to pay exactly the same wages even to seemingly-identical
workers, a wage gap is not meaningful unless it is
statistically “significant” in the technical sense
that it is unlikely to result simply from chance. As
it turns out, several of the factors we look at have
an influence on the minority/non-minority wage
gap that is statistically significant at the “five per
cent level”—that is, if the variable in question
really weren’t related to the wage gap, we would
expect to be so unlucky as to draw a sample that
suggested it was only once in 20 draws.
Our results are summarized in Table 2. As the
first line of the Table shows, after accounting for
other factors, including how long it has been
since people immigrated and how old they were
when they did, the simple fact of being a member of a visible-minority group is significant in
explaining the wage gap with white Canadians
only for immigrant men. For Canadian-born
men, being a member of a visible minority has no
significant effect in explaining the wage gap. The
same is true for both immigrant and native-born
women.
As shown by Table 2’s other rows, however,
among the different visible minority groups,
there is a significant wage disadvantage for black
men: 16.6 per cent for immigrants and 25.6 per
cent for those born in Canada. There are also significant disadvantages for immigrant men who
are members of the Indo-Pakistani group (19.0
per cent), the Chinese group (17.3 per cent), and
the non-Chinese Oriental group (23.9 per cent),
as well as significant disadvantages for nonChinese Oriental immigrant women (11.5 per
cent). For all other groups, the difference is
insignificant. In particular, we note that among
native-born Canadians only black men appear to
suffer a significant disadvantage in the labour
market.
T he full import of our findings, should they
be confirmed by further research, is that visible
minorities who are native-born are for the most
part not disadvantaged; it is mainly among
immigrant males who are visible minorities that
a statistically significant unexplained wage gap
Membership in
a visibleminority group
is significant in
explaining the
wage gap
with white
Canadians only
for immigrant
men.
For Canadianborn men,
being a member
of a visible
minority has no
significant effect
in explaining
the wage gap.
Table 2
Estimated wage gap in per cent between Canadians
who are not members of visible minority groups and those who are
Visible minority
MEN
Immigrant
All
Black
Indo-Pakistani
Chinese
Non-Chinese Oriental
Arab
Latin American
14.6
16.6
19.0
17.3
23.9
11.2
-18.2
*
*
*
*
*
WOMEN
Native-born
Immigrant
3.1
25.6 *
-8.0
-4.7
1.6
-29.3
32.6
5.5
-1.1
2.3
9.9
11.5 *
-15.7
9.2
Native-born
2.7
-13.0
8.5
-2.4
17.2
23.4
9.3
* Denotes significance at the five per cent level. A negative sign indicates a wage difference in favour of the visible minority group.
Source: Calculations by authors from SLID (1993) master file.
POLICY OPTIONS
DECEMBER 2000
47
Derek Hum and Wayne Simpson
Our findings
sound a note of
caution in
treating visible
minorities as a
homogeneous
group for public
policy purposes,
particularly
employment
equity strategies
exists. One possible interpretation of this result is
that Canada is not overtly discriminatory in
terms of visible minorities in general, but that
labour market disadvantages do exist for immigrants specifically. On the other hand, black
males, both foreign and native-born, appear to
suffer substantial wage disadvantage, a finding
that clearly demands further investigation.
W
hether visible minorities are full participants in the Canadian economy is obviously an important policy issue. As things stand,
together with women, aboriginal peoples and
persons with disabilities, visible minorities are a
designated disadvantaged group under federal
employment equity legislation.
Our research reveals the danger of simple
comparisons between the wage rates and earnings
of white and non-white Canadians. Such exercises
are incomplete and misleading, both because they
combine all visible-minority individuals without
distinguishing across groups whose experience
may in fact be quite different, and because they
ignore other determinants of wages and earnings,
such as an individual’s education, work experience
or degree of assimilation into the Canadian labour
stream. In our judgment, a more accurate picture
of reality is provided by our Table 2, which makes
clear that, with the exception of black men, there
is no significant wage gap between visible minorities and white Canadians who were born in
Canada. It is only among immigrants that wage
Que fera M. Rock ? Un jour, le Dr. Jacques
Lemire, un éminent ophtalmologiste de l’hôpital
Notre-Dame, en a eu assez des listes d’attente. La
sienne comptait des centaines de patients, en
attente depuis un an et demi, lorsque, désabusé, il
a remis son sarrau à l’hôpital et s’est “désinscrit” du
régime de l’assurance-maldie du Québec.
“J’ai vécu l’époque où on opérait rapidement.
Avec les années, plus j’opérais, plus la liste
s’allongeait. Quant j’ai cessé, je n’opérais plus
qu’une journée par semaine, et j’étais béni. Certains
collègues n’avaient qu’une demi-journée par deux
semaines à l’hôpital!” dit-il.
Aujourd’hui, ce vétéran de la profession opère
tranquillement ses patients dans une clinique privée
de Laval où l’on peut, en déboursant 2400 $,
obtenir sans délai une chirurgie de la cataracte pour
un oeil.
Oubliez les corridors bondés, les salles
d’attente, les 60 patients à examiner à la hâte en une
seule journée. À cette clinique bon chic bon genre,
48
OPTIONS POLITIQUES
DÉCEMBRE 2000
differentials are observed.
What implications do our findings have for
public policy? Ours is but a first attempt to disentangle the determinants of wages paid to
Canadians of colour, and we have focused purely
on an economic examination of wages and earnings. It does not address the unique histories of different visible groups; for example, the circumstances of black or Chinese Canadians, and why
the wage gap remains large and persistent for black
but not Chinese Canadians after generations in
Canada. But at the very least, our findings sound a
note of caution in treating visible minorities as a
homogeneous group for public policy purposes,
particularly employment equity strategies. More
ambitiously, it may now be time to rethink
Canada’s emphasis on achieving equal opportunity in the labour market. Our findings suggest that
the steps towards a colour-blind Canadian labour
market offering opportunities for all may have to
focus more on helping immigrants assimilate in
the economy and less on employment equity legislation.
Derek Hum ([email protected]) and Wayne
Simpson ([email protected]) are professors of
economics at the University of Manitoba and Research
Affiliates with the Prairie Centre of Excellence for
Research in Immigration and Integration (PCERII).
This paper follows on their recent work in “Wage
opportunities for visible minorities in Canada”
Canadian Public Policy (XXV: 3, 1999).
on vous octroie un rendez-vous le lundi, pour une
opération trois jours plus tard. Vite fait, bien fait, on
vous traite aux petits soins. “On dit que c’est une
médecine pour les riches, mais je vous jure que je
n’ai pas beaucoup de multimillionnaires qui viennent s’asseoir sur ma chaise. Attendre un an et demi
pour bien voir, c’est indécent” explique le Dr.
Lemire...
Au Québec, le glissement vers le privé n’est plus
une vague impression. Il fait subtilement éclosion ça
et là, incitant de plus en plus souvent les patients à
puiser dans leurs poches pour court-circuiter un système devenu trop lent à leur goùt.
Traitements de physiothérapie, chirurgie de la
cataracte ou du genou, tests en tout genre, allant de
la simple analyse sanguine au plus sophistiqué des
scanners: autant de services qu’un patient, devenu
impatient, peut désormais obtenir en déliant les
goussets de sa bourse.
Isabelle PARÉ, Le Devoir, 1er mai 2000