On Friday, the Government of Canada announced its 2021-23 immigration targets. Despite the pandemic and the recent rise in unemployment, the Government has increased its immigration target for 2021 from 351,000 new permanent residents to 401,000. The target inflow in 2022 is 411,000 and in 2023 is 421,000. In effect, the Government is doubling down on immigration to help boost the aging Canadian labour force and create stronger economic growth, which will increase growth in income and provide more tax revenues for all levels of government. There is considerable evidence that the inflow of new residents acts more as a complement to domestic workers rather than a substitute for them. They also help to reduce skill shortages and boost productivity. While I am strongly supportive of this policy approach, it needs to be stressed that Canada needs to do a better job at integrating newcomers into the economy. Immigrants continue to experience a significant wage gap compared to Canadian workers that persists for many years. It is evident that foreign work experience and education is still not properly valued in the labour market.
Statistics Canada released a study today on the pandemic labour market impact on Indigenous Canadians. The report showed a similar drop in employment and spike in unemployment, but a much slower recovery in labour market conditions for Indigenous people. On a three-month moving average basis, the unemployment rate of Indigenous individuals living off reserve increased from 10% in February to 16.6% in May, while non-Indigenous unemployment rose from 5.5% to 11.7%. By August, the unemployment for the former had edged up to 16.8% while the latter had fallen to 11.2%. Similar to the national trend, Indigenous women have been more impacted by the labour market shock than Indigenous men. Indigenous youths are also struggling with sustained high unemployment.
Tomorrow is the US election, the outcome of which will have far reaching consequences. The polls put a very high probability, close to 90%, of a Biden victory. However, betting markets (where you have to put money up against your view) suggest odds closer to 64%. The New York Times has suggested that if the polls are wrong by as much as they were wrong last time, there would still be a Biden victory. Financial markets prefer a Biden win because of the increased likelihood of greater fiscal stimulus to support the economy and address the pandemic, even though Biden has a platform of eventually raising taxes and increasing regulation – potential events that could come after the current crisis. It is critical to watch what happens in the Senate. If the Democrats win the White House, but not the Senate, there will be less scope to implement the platform that Biden has run on. However, Biden had a long political career and he is a moderate that would likely try to work with Congress. Similarly, Biden is a known quantity in international circles and he is respected, suggesting that a Biden win could see the US engage more constructively with allies and international institutions. But, it must be stressed that US protectionism could persist, as the Democratic Party is not a pro-trade party, and US concerns over the rise of China go beyond US party politics. If President Trump surprises again and retains the White House, it is a status quo result. He did not provide a detailed platform during the election, so expectations are shaped on the basis of past performance. The big question is when we will know the outcome – and that is uncertain. As the results for key battleground States come in, we will have an idea, but there will be the large number of mail-in ballots due to the pandemic. The worst outcome is one where we don’t know who has won for some time.
Alexander Economic Views 
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