by Andrew Jackson

This article is based on a presentation made to the Canadian Human Rights Commission's Forum on Racism, held March 21, 2001.

Poverty rates among visible minority persons in Canada, particularly recent visible minority immigrants, are unacceptably high - greater than 50% for some groups, such as recent black immigrants. The major causes of poverty include barriers to equal participation in the job market and lack of access to permanent, skilled, and reasonably well-paying jobs. Racism also seems to be a significant cause of poverty among these groups.

The growth in the number of precarious jobs and the cuts to Canada's social programs have resulted in higher poverty rates and deeper, longer-term poverty for many vulnerable groups of Canadians over the 1990s. However, recent visible minority immigrants have faced some specific barriers that are attributable, in part, to racism.

This problem must be addressed as a separate and distinct policy issue. If Canadians fail to confront the reality of poverty that is linked to racism, there is a clear danger of producing a U.S.-style urban underclass that is marginalized and racially defined.

Poverty and immigration

The 1996 Census revealed that the overall poverty rate in Canada was 21% (using the pre-tax LICO measure). For visible minority persons - about seven in 10 of whom were foreign born - the poverty rate was 38%. For people who immigrated prior to 1986, the poverty rate was less than 20%; it was 35% for those who arrived between 1986 and 1990, and it rose to 52% for immigrants who arrived from 1991 to 1996. The great majority of the most recent immigrants are visible minority persons, with increasing numbers of blacks, South Asians and East Asians making up each successive cohort of immigrants.

Poverty among visible minorities is highly concentrated in Toronto, Montreal and Vancouver, and about one in three poor persons in urban Canada belong to a visible minority group. While we have not yet reproduced U.S.-style ghettoes and barrios, poverty in urban Canada is becoming increasingly concentrated in distressed neighbourhoods.

Persistent gaps in employment & income

Historically, immigrants caught up to the average Canadian income within 10 to 15 years of their arrival in Canada, but there was a sharp break in this trend in the late 1980s. Immigrants selected for their economic skills used to quickly earn the average income or higher, but even for this group, earnings fell to 15% below average in the 1990s. Family class immigrants, refugees and other types of immigrants now earn less than half the Canadian average one year after landing, thus slipping further below their already low position in the 1980s.

Research by Michael Ornstein has shown that low average earnings among recent immigrants in Toronto are affected by the very low earnings among some particularly disadvantaged racial groups - notably blacks and South Asians.

The vast majority of working-age immigrants are actively seeking jobs, and the major reasons for their very high poverty rates are the barriers they face in finding employment in stable, reasonably well-paying jobs. The fundamental problem is not a lack of skills. As a group, foreign-born visible minorities are more highly educated than the Canadian average across all age groups. For example, 35% of immigrants aged 25 to 34 have a university degree, compared to the Canadian average of 26%, and high school completion rates are the same.

However, unemployment rates for visible minority immigrants were significantly higher than the average in 1995, and the gaps were largest among the most highly educated groups. The visible minority immigrants who were able to find jobs were over-represented in low-paying, manual, sales or services jobs - 30% vs. 21% - and they were significantly under-represented, not in professional or managerial jobs, but rather in intermediate-skilled manual and technical jobs.

This occupational segregation results in very large earnings differentials. In 1995, visible minority immigrants who were employed full-time for a full year earned just $32,000, compared to the comparable Canadian average of $38,000. And this comparison does not take into account the much higher levels of employment in precarious jobs and periods of unemployment over the year.

Almost four in 10 visible minority immigrants who had less than a high school education were among the poorest 20% of Canadians. That might be expected. What is surprising, however, is that more than one of every five visible minority immigrants with a university education were also found in this bottom and poorest 20% of Canadians.

A number of theories

How do we explain these high poverty rates and the large and growing income gaps among visible minority immigrants who have come to Canada since the mid-1980s? Part of the answer undoubtedly lies in so-called "cyclical factors." For example, because of high unemployment, the 1990s were a bad period for all new entrants to the job market. The situation probably improved somewhat in the late 1990s.

That being said, however, it is difficult to dismiss almost a decade of bad news as simply "cyclical." It is probably more accurate to say that some important and negative structural changes - such as the rising number of precarious jobs - have disproportionately had an impact on racial minorities.

Some economists have attempted to argue that there are no income differences based on race, once you account for the so-called quality of "human capital." Their argument is often circular, however, since pay gaps are assumed - but not demonstrated - to be the result of real differences in education and skill levels.

Of course it is true that there are differences in education and skills, and these have an impact on pay and poverty. But more sophisticated methodology that controls for these differences reveals a significant and unexplained income differential which can reasonably be attributed to the effects of racism. The visible minority poor in Canada have no doubts that racism is a factor in the job market and in society as a whole.

Racism can be defined as attitudes and the resulting actions that serve to marginalize some groups of people. Such actions can be overt - or more frequently, covert - and they are likely to be more common when public commitments to such things as employment equity in the fairness of hiring procedures and promotions are in retreat.

Recognition of foreign credentials is an important technical issue, but the more important underlying issue is whether or not employers are prepared to undertake a fair and unbiased appraisal of the skills and experience of visible minority applicants when hiring staff or considering promotions. Lack of procedural fairness is undoubtedly an important factor in the over-representation of visible minorities in low-skilled jobs, and workplace barriers of many kinds help explain their limited progress up career ladders.

Policy prescriptions

What can be done about poverty that is driven by racism? The best single policy prescription for equality is to achieve and maintain full employment and a tight job market. In such a context, employers are forced to acknowledge and recognize skills and to invest in training. Evidence from the U.S. indicates that the benefits of their very low unemployment rates in the late 1990s did begin to trickle down, eventually reaching even those minorities who were living in deep poverty, and thus significantly reducing the income gap between the bottom and the middle-income groups.

But beyond just macro-economic policy changes, we also need policies to raise the floor of the job market, such as higher minimum wages and more widespread access to collective bargaining protections. There is no legitimate reason why families should be living in poverty despite working full-time, even if the job is relatively unskilled.

Policies to promote procedural fairness in hiring practices and promotions are also needed - now more than ever. Given the legislative impasse in many provinces, the best way forward may be for employers and unions to develop and implement their own workplace employment equity plans. There are many progressive examples that can be used to build upon, although voluntary action alone will not solve this problem.

The point must be made that racial exclusion is not only unjust and a violation of human rights, it is also economically destructive. Racial discrimination results in the under-utilization of people's skills, talents and capacities, and this waste gets compounded over many working lifetimes of blocked opportunities. We cannot afford this, particularly when new immigration to Canada will soon account for virtually all the growth in our labour force.

Andrew Jackson is Director of Research at the CCSD.

Canadian Council on Social Development, 190 O'Connor Street, Suite 100, Ottawa, Ontario, K2P 2R3