A Perspective on America

Although different countries and systems, there are nevertheless many similarities between Canada and the United States. For example, while our respective economies are different, many of the core indicators mirror each other such as the labour market. We see that picture in the immigrants who come to Canada and the U.S. In both countries, they are being hired more quickly, at higher pay and under better working conditions than at any time in recent memory.

Job vacancies in the U.S. increased to 11 million at the end of December according to the U.S. Labor Department. Like Canada, employers are finding it tough to attract hourly wage workers. The unemployment rate in the U.S. hit 3.4% in January, the lowest rate in 53 years.

In Canada, the patterns are similar: According to Statistics Canada, employment rose by 104,000 in December, and the unemployment rate declined 0.1 percentage points to 5.0%, just above the record low of 4.9% reached in June and July. Employment growth was led by an increase among youth aged 15 to 24, which recouped cumulative losses observed for this group from July to September. The number of employees increased in the private sector, while it held steady in the public sector. There were broad-based employment gains across several industries, including construction, as well as transportation and warehousing.

In an article published in The Wall Street Journal this week, they report that many small businesses say they are unable to hire enough native-born and naturalized workers and are paying a premium for migrant workers. It’s another aspect of the hot labor market that is pushing up wages and prices for consumers, keeping the pressure on the Bank of Canada and U.S. Federal Reserve to continue raising interest rates to fight inflation. 

The Journal story highlighted the pool of migrants seeking employment in the U.S. which includes those with and without valid work permits. Some migrants have crossed the border illegally and evaded capture, relying on underground networks of friends and relatives to find work. Many others have asked for asylum upon entering the country, triggering a multiyear court process that eventually allows them to get work permits—which result in higher wages—while they wait. Still others have been granted seasonal work visas, but employers say there aren’t nearly enough of these visas to meet the demand from businesses who desperately need workers.

For example, according to the Journal, migrant construction labourers in the Washington, D.C. area made on average $120 a day before the pandemic. That has since risen more than 60% to about $200 a day. Hourly pay for all U.S. construction workers has risen about 15% since late 2019, according to the Labour Department.

The Biden administration has vastly expanded a program known as Temporary Protected Status, which protects people from countries destabilized by wars or natural disasters from being deported and gives them work permits. The U.S. Government has granted such protection to more than 700,000 immigrants already in the country illegally, primarily from Venezuela and Haiti, according to an analysis by the Migration Policy Institute.

The Federal Reserve has raised interest rates sharply to cool the economy and push down inflation, which last year reached a four-decade high. Many economists predict that the move in interest rates will push up unemployment and trigger a recession, cooling demand for labour in sectors such as construction, which relies heavily on migrant workers. Employers know that given the heightened risk of recession, the workers they hire today may not be needed tomorrow. But for now, many are more preoccupied with the opposite problem: labour shortages that hurt sales, investment and growth.

The U.S. has increased the number of H-2B visas, which allow employers to hire low-wage foreign workers for seasonal positions, in recent years because of the shortage of workers, but the numbers are still vastly below the demand by employers. The visas are often used by landscapers, fisheries, holiday resorts or county fairs to fill seasonal positions that Americans won’t take at the salaries being offered. Demand by employers for the visas in the program routinely outstrips supply, an indication that businesses are desperate for labour. The H-2B visas are granted through a lottery system.