February 2023
Labour Market Outcomes of Immigrant Youth:
Impact of the COVID-19 Pandemic
How are young immigrants faring in Canada’s labour market?
This report from LMIC and CCYP is part of a series in collaboration with World Education Services (WES). Read the corresponding report from WES — Going the Distance: Immigrant Youth in Canada’s Labour Market — which examines the systemic barriers immigrant and refugee youth face in securing work.
Illustration by Dorothy Leung for LMIC.
Key Findings
More than half of immigrant youth are in the labour force, and the share of immigrant youth in the labour force is growing.
The employment rate for immigrant youth is lower than for Canadian-born youth, but this gap is closing.
For immigrant youth, increased employment rates were accompanied by a drop in school attendance; this drop was larger for established immigrant youth, while newcomer youth opted for a combination of work and school.
The employment rate for newcomer youth is lower than for established immigrant youth. This may be because of cultural or language barriers to employment.
The employment rate for newcomer youth was less impacted by the pandemic and recovered rapidly compared to established immigrant youth. This accounts for the faster recovery in employment for immigrant youth in general and a narrowing employment gap between immigrant youth and Canadian-born youth.
Immigrant youth worked fewer hours on average than Canadian-born youth during the pandemic. Working hours rose for both groups over the summer months in keeping with seasonality. During off-peak seasons, immigrant youth worked more hours per week than Canadian-born youth. The reverse is observed during peak summer season, but their differences in working hours have diminished over the years since 2020.
The hourly wages of immigrant youth fluctuated more than those of Canadian-born youth throughout the pandemic. Canadian-born youth saw higher wage growth than immigrant youth. Compared to pre-pandemic, however, both groups have experienced an hourly wage increase.
Despite rising wages for both newcomer and established immigrant youth, newcomers earned less per hour than established immigrants throughout the pandemic. This wage gap narrowed during the third quarter of 2022.
Table of contents
Introduction
In the context of Canada’s persistently low birth rates and ageing population, immigration is often regarded as a key solution for sustaining and raising labour force growth. Now, amidst record low unemployment and over one million unfilled jobs, immigration continues to be a central discussion point among policy makers and labour market experts.
In the 2010s, 84% of labour force growth came from immigration. Research consistently demonstrates that successful integration and positive labour market outcomes are strongly correlated with how long immigrants have been in the country and how young they were when they arrived.
This report assesses how immigrant youth — aged 15–24 years, referred to in this report interchangeably as young immigrants and immigrant youth — are faring in Canada’s labour market and how they have recovered from the pandemic.
We find that key indicators, including labour force participation, employment and wages, were initially lower but have improved post-pandemic and are getting closer to those of Canadian-born youth.
However, young immigrants were significantly more impacted by job loss at the height of the pandemic. Additionally, in general, young workers typically face greater barriers to employment. This is likely to be exacerbated for immigrant youth, especially among visible minority communities.
Education
Many young immigrants came to Canada as children, were raised and educated in Canada, and are more likely to be enrolled in school.
In January 2020, there were over 8.3 million landed immigrants in Canada, of whom 686,000 (8.3%) were between ages 15 and 24.1 In 2020, about half (335,000) of this cohort of young immigrants had landed more than 10 years ago, while the other half (351,000) had landed within the previous 10 years.
While some youth may have immigrated alone as young adults, many immigrated as part of a family (see Box 1).
In January 2020, before the pandemic, there were a high share of immigrant youth in school: 69.1% compared to 61.3% of Canadian-born youth. It should come as no surprise, then, that Canada’s young immigrant population is, on average, more educated than Canadian-born youth.
It has been established that school attendance in Canada leads to better outcomes for young immigrants due to higher labour market integration and improved language proficiency. As well, children whose parents have a higher level of education also tend to have a high education level.
Box 1: Data Challenges
We used the Public Use Microdata File of the Labour Force Survey to conduct our analysis. Several limitations arise from using this data.
First, very recent immigrants, also referred to as ‘newcomers’ (i.e., who have landed in the past 5 years) and recent immigrants (i.e., who have landed between 5 and 10 years ago) cannot be distinguished using this data. Therefore, we separated immigrants into two categories: those who landed in the past 10 years (“recent immigrants” or “newcomers”) and those who landed over 10 years ago (“established immigrants”).
While “years since landing” is one way of distinguishing between immigrants, additional indicators would be useful to understand the labour market outcomes of diverse groups. For example, second generation immigrants (those born in Canada but who have parents who immigrated to Canada) may have outcomes similar to established immigrants.
Second, the data provide age groups in 2- to 3-year intervals rather than exact ages. There is also no information on the exact age at landing so we must infer this information from the age group and years since landing, which is not entirely accurate. Both indicators, however, are potentially highly predictive of labour outcomes.
Finally, the lack of racialized immigrant data in the Labour Force Survey makes it difficult to understand the labour market outcomes of diverse groups of immigrants.
More than half of immigrant youth are in the labour force and they represent a growing share of the total labour force.
Young immigrants are key to the growth of a vital and vibrant Canadian labour force. In January 2017, immigrant youth represented about 12.7% of the total labour force aged 15–24; this share increased to 14.4% by January 2022 (see Figure 1). In January 2020, over half of immigrant youth were in the labour force (55.3%), either employed or unemployed. About half (51.5%) of immigrant youth in the labour force were also enrolled in school.
The share of Canadian-born youth in the labour force is higher. Approximately six out of ten Canadian-born youth are in the labour force (60.8%), either employed or unemployed, and 45.6% are enrolled in school. There are also fewer Canadian-born youth not in the labour force but attending school (33.6% vs. 40.6% of immigrant youth).
Figure 1: The share of immigrant youth in the labour force is growing.
Labour force by immigration status, ages 15 to 24
Employment rate
The employment rate for immigrant youth is lower compared to Canadian-born youth, but this gap is closing.
In January 2020, prior to the COVID-19 pandemic, 49% of immigrant youth were employed compared to 54.5% of Canadian-born youth, a gap of 5.5% (see Figure 2). There are many possible explanations for this gap: higher barriers to employment created by discrimination or language skills, labour market entry delayed by integration issues, or emphasis on education rather than employment among immigrant households, among others.
During the peak of the pandemic between February and April 2020, more than 800,000 young workers lost their jobs. The employment rate for immigrant youth dropped by 19.8% compared to 18.8% for Canadian-born youth, widening the employment gap between them.
This difference in the impact of COVID-19 on employment might be explained by differences in employment sectors, with immigrant youth being overrepresented in Accommodation and Food Services (see Box 2).
By January 2022, employment had improved for both groups: 48.3% of immigrant youth were employed compared to 51.9% of Canadian-born youth. Employment recovered faster for immigrant youth compared to Canadian-born youth, leading to a narrowing employment gap of just 3.6 percentage points.
Although this trend is encouraging, entering the labour market during a period of economic crisis could have deep impact on immigrant youth, leading to lower earning prospects and a lower probability of obtaining a decent job in the future.
Interestingly, we also see a decline of 4.8% in school attendance for immigrant youth between January 2020 and January 2022. This decrease was caused by immigrant students who left school to enter the labour force, alongside those who were combining school and work who also left school during this period.
In comparison, the share of Canadian-born youth enrolled in school remained stable. While it is often the case that, in times of economic downturn, school attendance falls at the expense of employment, this contrast between immigrant and Canadian-born youth is puzzling. If confirmed by further analysis, this change in school attendance could be detrimental for immigrant youth since education is associated with better long-term labour outcomes.
Figure 2: The employment gap between immigrant and Canadian-born youth is starting to close.
Employment rate by immigration status, ages 15 to 24
Box 2: Immigrant youth by sector of activity
In January 2020, immigrant youth were overrepresented in Accommodation and Food Services (25.6% of immigrant youth vs. 19.6% of Canadian-born youth), in Professional, Scientific and Technical Services (6.1% vs. 3.2%) and in Business, Building and Other Support Services (4.9% vs. 2.5%).
On the other hand, immigrant youth were underrepresented in Construction (2% vs. 5.8%), Information, Culture, and Recreation (2.5% vs. 7.1%) and Retail Trade (24.5% vs. 27%).
Interestingly, there is an important difference between the shares of newcomer and established immigrant youth working in Accommodation and Food Services (32.5% newcomer vs. 19.8% established), Professional, Scientific and Technical Services (3.2% newcomer vs. 8.5% established) and Transport and Warehousing (6.3% newcomer vs. 0.9% established).
In January 2022, after the brunt of the pandemic, two important sectoral changes occurred. First, the share of immigrant youth working in Accommodation and Food Services decreased significantly, reaching a similar level to Canadian-born youth (16.9% vs. 15.2%, respectively). Second, the share of immigrant youth working in Retail Trade increased to a level almost identical to that of Canadian-born youth (29% vs. 29.5%, respectively). These trends were observed for both newcomer and established immigrant youth, and in similar magnitudes.
Established immigrant youth have a higher employment rate than newcomer youth and likely face fewer employment barriers.
An important factor in determining the labour outcomes of immigrant youth is the time since landing. The earlier the landing, the higher the likelihood of attending school in the Canadian school system and the lower the employment barriers due to integration and language.
Most established immigrant youth immigrated at a very young age, at a maximum age of 14 years, and were schooled in Canada. They are more likely to be well-integrated and to face lower employment barriers. In contrast, newcomers (those who landed within in the past 10 years) were less likely to be schooled in Canada and have a higher likelihood of facing integration issues, with cultural or language barriers possibly causing lower employment rates.
In January 2020, newcomer youth had a lower employment rate (46%) compared to established immigrant youth (52%). However, unlike the difference observed for the groups of Canadian-born and immigrant youth, the school attendance rate of both groups was approximately the same.
While the higher education rates for immigrant youth may partially explain the employment gap compared to Canadian-born youth, such a gap is significantly lower between newcomer and established immigrant youth, meaning that immigrant youth could, indeed, be facing integration and language barriers to employment or discrimination.
The employment of newcomer youth was less impacted by the pandemic. From February to April 2020, their employment rate decreased by 17% compared to 20.5% for established immigrant youth (see Figure 3). Between January 2020 and January 2022, employment of newcomer youth increased (by 2.8%), while employment of established immigrant youth decreased by 4.2%. It appears, therefore, that newcomer youth are the driving force behind the faster labour market recovery of immigrant youth compared to Canadian-born youth.
A combination of several factors could be at play, including sectoral changes (see Box 2) and decreased employment barriers because of labour shortages. Indeed, labour shortages have created more employment opportunities for traditionally underrepresented groups in the labour market, including young workers, visible minorities and women.
Finally, while the school attendance rate decreased for both groups, there was a greater decrease for established immigrant youth. In fact, while the employment rate of newcomers increased, a higher share of newcomer youth opted to combine work and school.
Figure 3: The employment rate for newcomer youth was lower than for established immigrant youth or Canadian-born youth but is starting to rise.
Employment rate by immigration status, ages 15 to 24
Working hours
Immigrant youth work fewer hours, on average, than Canadian-born youth.
For this study, we used the Labour Force Survey indicator average actual hours worked per week. This indicator includes temporary changes to the number of actual weekly work hours arising from, for example, illness or overtime. In the case of COVID-19 related shutdowns and/or slowdowns, this measure is particularly relevant.
In January 2020, prior to the pandemic shutdowns, Canadian-born youth worked almost the same number of hours, but marginally more per week, than immigrant youth (see Figure 4). The former group worked on average 24 hours per week, while the latter worked half an hour less (23.5 hours). By April 2020, both groups saw their average weekly work hours decrease to about 21.5 hours due to mandatory pandemic lockdowns.
Beginning in May 2020, average weekly hours worked rose for both Canadian-born and immigrant youth in keeping with seasonal youth hiring patterns, especially over the summer months (May–September) of 2020. However, both groups worked fewer hours (a little over 25.5 hours weekly) than they typically worked during the summer in every pre-pandemic year.
For example, during the peak youth-employment months of summer 2019, youth aged 15–24 typically worked an average of 27 hours weekly. In 2018 during that same period, it was 28 hours weekly. Nonetheless, while both groups worked fewer hours weekly over summer 2020 due to the pandemic, immigrant youth worked fewer hours than Canadian-born youth.
In addition, the same pattern carried into 2021’s peak hiring season. Average hours worked in summer 2021 for both groups rose over that of summer 2020. Canadian-born youth continued to work more hours than immigrant youth, but the difference between the two groups was lower than in summer 2020.
Since the start of summer 2022, it appears that the differences in average weekly hours worked between immigrant youth and Canadian-born youth have diminished further. This is likely due to pandemic recovery and the re-openings that commenced in spring 2022, leading to a tight labour market.
The monthly plots in Figure 4 also suggest that in the off-peak seasons of 2021–22, immigrant youth worked more hours per week than Canadian-born youth did, while during the peak seasons, the reverse held in 2020 and 2021. In September 2022, at the end of the peak season, immigrant youth worked almost 26 hours per week while Canadian-born youth worked slightly less (25.3 hours per week). This appears to conform to the pattern for average weekly hours of work performed by each group during the off-peak season since the start of the pandemic.
Figure 4: Immigrant youth worked fewer hours per week than Canadian-born youth in most months between March 2020 and September 2022.
Average weekly hours worked by immigrant status, ages 15 to 24
Hourly wages
Immigrant youth experience greater fluctuation in their hourly wages than Canadian-born youth.2
Both Canadian-born youth and immigrant youth saw wage growth between January 2020 and September 2022, but Canadian-born youth experienced growth of approximately 12.3%, while immigrant youth experienced only 10% growth. Moreover, immigrant youth experienced greater fluctuations in their monthly wages, more so than Canadian-born youth, who experienced more stable and consistent wage growth, especially after the initial pandemic shutdowns in 2020 (see Figure 5).
Immigrant youth also experienced lower lows but also higher highs in their wages than Canadian-born youth. Notably, during the height of the pandemic shutdowns (May–September 2020), average hourly wage movements for immigrant youth were similar to those for Canadian-born youth. In terms of wages, both groups moved in tandem through those pandemic months, which coincided with what were ordinarily peak summer employment months for youth.
After the peak of the pandemic in 2020, wage growth patterns diverged between the two groups. While Canadian-born youth experienced higher hourly wages during the off-peak months for the remainder of 2020, immigrant youth experienced higher hourly wages for most of 2021, until its third quarter.
In January 2022, average hourly wages for both groups converged again, followed by another reversal. Canadian-born youth began earning more than immigrant youth on an hourly basis and continued to do so for the first quarter of 2022. During the second quarter of 2022, hourly wages for the two groups converged and fluctuated. By the third quarter, Canadian-born youth received higher wages and greater wage growth than did immigrant youth.
Overall, immigrant youth have experienced greater fluctuation and instability of wages, leading to an unsteady pattern of wage growth, compared to Canadian-born youth.
Figure 5: Hourly wage increases for immigrant youth were lower than that for Canadian-born youth from January 2020 to September 2022.
Average hourly wage by immigrant status, ages 15 to 24
These wage fluctuations may be the result of employers passing the costs of volatile demand onto workers by varying the number of hours worked on a daily or weekly basis, especially for immigrant youth.
Another possible factor behind the differing patterns in wages could be the industries that employed immigrant youth in greater proportions than Canadian-born youth faced higher volatility than the industries that did not employ immigrant youth in relatively significant proportions. Moreover, immigrant youth could have been employed in industries that were more widely affected by the mandatory lockdowns. As Box 2 shows, in 2020, almost 26% of all employed immigrants aged 15–24 worked in Accommodation and Food Services compared to about 20% of Canadian-born youth. Accommodation and Food Services was the worst hit NAICS sector due to pandemic closures. It is possible that the volatility resulting from those closures had an outsized effect on the fluctuations we see with immigrant youth wages.
As an implication, some evidence shows that wage fluctuations affect worker well-being adversely, which may also be the case for immigrant youth.
Newcomer youth earn lower hourly wages than established immigrant youth.
Just as we found for employment rates, it is important to look at how recently a young person immigrated to describe monthly average hourly wages earned (see Figure 6).
Established immigrant youth earned more per hour than newcomer youth, both prior to and during the two years of the COVID-19 pandemic. Only in September 2020 and June 2021 did the wage gap between these two groups disappear before widening again. Interestingly, from January 2020 onwards there appears to have been an approximately 7–8% difference in hourly wages earned between newcomer and established immigrant youth.
Hourly wages diverged from July 2021 onwards: established immigrant youth continued to earn significantly more than newcomer youth. At the start of the peak summer employment season of May–September 2022, the wage gap between the two groups narrowed.
Figure 6: Newcomer (recent immigrant) youth earned lower hourly wages than established immigrant youth from January 2020 to September 2022.
Average hourly wage by landed immigration status, ages 15 to 24
While newcomer youth consistently earned below established immigrant youth, both groups have seen a rise in hourly wages since the start of the pandemic. In January 2020, newcomer youth earned around $17 per hour while the established cohort earned around $17.80 per hour, a wage gap above 4%.
In January 2022, despite the Omicron COVID-19 variant that emerged in December 2021, leading to additional restrictions and shut-downs, the average wage for newcomer youth was close to $17.40 hourly. For established immigrant youth, the figure was $19.80 per hour. The wage gap between the two groups, however, had increased to a high of 14% but has since declined to around 4% as of September 2022, as it was before the pandemic.
Starting at the beginning of the pandemic and the consequent economic shutdowns in mid-March 2020 and onwards, newcomer youth experienced a wage increase of 10% compared to 7.5% for established immigrant youth, which serves to highlight that newcomer youth earned less than established immigrant youth throughout the period, alongside their persistent wage gap. This gap likely arises from differences in industries and occupational categories they participate in. Box 2 illustrates the NAICS-based sectoral distribution of immigrant youth (both cohorts) and Canadian-born youth.
The narrowing of the wage gap in recent months may be due to labour shortages in those NAICS sectors with high participation by newcomer youth. The wage gap could also be the result of barriers and lack of networks experienced by newcomers, hampering their labour market integration and access to well-paying work.
Newcomer youth also worked more hours per week than established immigrant youth during this period, and thus may have earned a lower average hourly wage than established immigrant youth. We examined average weekly hours worked for both groups from January 2020 to September 2022 and found as much. While we have not reported those estimates here, we can provide them upon request.
In sum, newcomer youth had poorer wage outcomes compared to established immigrant youth. This is unsurprising: a wealth of empirical research in economics discusses wage gaps and wage assimilation amongst the newest immigrants to a country, who tend to experience large wage gaps initially. However, those wages tend to converge over the long-term with those of their non-immigrant peers. Of course, this general trend cannot be seen from such a short period of monthly, seasonally unadjusted data, but it is well-established in the literature.
Conclusion
This report examines the recent labour market outcomes of immigrant youth, an increasingly important group in the workforce. With the intent of providing timely, relevant information, we assessed four labour market variables: labour force participation, employment, hours worked weekly, and hourly wages.
Before the pandemic, the employment rate for immigrant youth was lower compared to that of Canadian-born youth, potentially because of integration, cultural or language barriers to employment or a higher emphasis on education.
The employment rate suggests that the labour market outcomes of immigrant youth have improved since the start of the COVID-19 pandemic, even though immigrant youth were more severely impacted in terms of job losses at the peak of the pandemic.
As of July 2022, the employment rate for immigrant and Canadian-born youth had surpassed the level of January 2020. However, the recovery for immigrant youth was accompanied by a decrease in school attendance, which was not the case for Canadian-born youth. Such a trend can be detrimental to immigrant youth overall since higher school attendance is associated with improved labour market outcomes.
Among all landed immigrant youth, the employment rate for newcomers was the least impacted during the peak of the pandemic, while the employment rate of established immigrants was the most impacted. Recovery was faster for newcomer youth, and they are the driving force behind improved labour market outcomes for all immigrant youth.
The figures for hours worked per week and hourly wages indicate that immigrant youth experienced poorer labour market outcomes than Canadian-born youth throughout the pandemic. Overall, the hourly wages of immigrant youth fluctuated more than those of Canadian-born youth. While both groups enjoyed hourly wage increases, average hourly wage growth was lower for immigrant youth than for Canadian-born youth over the last two years.
Further, starting at the beginning of the pandemic, newcomer youth earned less per hour than established immigrant youth. This gap in hourly wages widened over the course of the pandemic and has only recently narrowed under tight labour market conditions.
We encountered some research limitations in developing this report. Disaggregated labour market information on immigrant youth is needed in order to conduct a more comprehensive analysis. The Labour Market Information Council, the Canadian Council for Youth Prosperity, and World Education Services will continue to conduct research to monitor the socioeconomic and labour market outcomes of immigrant and Canadian-born youth.
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Acknowledgements
This report was prepared by Anne-Lore Fraikin and Bolanle Alake-Apata of LMIC and Shalini Sharma of the Canadian Council for Youth Prosperity.
We would like to thank Md. Mehedi Hasan Rasel (Canadian Council for Youth Prosperity), Michael Willcox (LMIC), Tony Bonen (Conference Board of Canada), Anthony Mantione (LMIC) and Behnoush Amery (LMIC) for their feedback and constructive comments.
For more information about this report, please contact research@lmic-cimt.ca.
How to cite this report
Canadian Council for Youth Prosperity and Labour Market Information Council. (2023). Labour Market Outcomes of Immigrant Youth: Impact of the COVID-19 Pandemic. Ottawa: LMIC.
1 There is a lack of consensus about key definitions of immigration status. In this report, LMIC and CCYP use Statistics Canada’s definition. The term ‘landed immigrants’ refers to people who are, or have been, landed immigrants in Canada. A landed immigrant is a person who has been granted the right to live in Canada permanently by immigration authorities. Canadian citizens by birth and non-permanent residents (work or study permit holders, refugees, as well as accompanying family members) are not landed immigrants.
2 We use average hourly wages to measure before-tax earnings, including wages, salaries and other earnings like tips and/or commissions.