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Yukonomist: The future of the Yukon’s low-wage immigration program

The give and take of welcoming low-wage earners from abroad into the Yukon
Keith Halliday

Last month’s pause in the Yukon Nominee Program highlights a classic trade-off. 

On one hand, the Yukon government wants to help Yukon businesses import workers to fill labour shortages. Without fresh workers, businesses would have to jack up wages — digging sharply into profits — to lure workers away from government or other employers. Some businesses would have to shrink or close.

On the other hand, the government also wants to help Yukon workers get higher wages as housing and food prices spiral.

The Yukon Nominee Program brings fresh labour to the Yukon as follows. The feds tell the Yukon they will give us so many spots for foreign workers to come to the Yukon under certain conditions. The Yukon government then takes applications from local employers.

This year we get 430 spots. Remarkably, that’s about seven times more than Ontario on a per-resident basis.

There are four streams: critical impact workers, skilled workers, Express Entry and Yukon Community Program. There are complicated rules categorizing workers and eligibility. For example, “skilled workers” requires the job to be in National Occupation Classification category TEER 0-3; bakers are an example. “Critical impact workers” are in categories TEER 4-5, such as landscapers and retail sales people.

There are also wage restrictions, but they are limited. Employers must pay at least the Yukon minimum wage, and the job’s annual income must exceed Statistics Canada’s Low Income Cut Off. For a single person in 2022, this was $20,333 per year.

The program hit the news recently when the premier put a pause on accepting new applications from employers in Whitehorse, since the territory has already received 590 applications for this year’s 430 spots. 

The Yukon government will prioritize existing applications in four waves: work permit holders with approaching expirations, visitor visa holders already in Canada, work permit holders with expirations within a year and workers outside Canada.

An economist would note that these criteria have nothing to do with economic value. A skilled mining engineer in India who would make big bucks and pay lots of taxes would be at the bottom of the list. 

Where you stand on all this depends, as the cliché says, on where you sit.

Suppose you own a labour-intensive small business. In this case, the nominee program is critical to keeping wage costs down and finding staff to keep the operation humming. Otherwise, with our labour shortage, wages might have to rise dramatically to attract Canadians already working to leave other jobs and come work for you.

This would eat into profits, and probably require closing some unprofitable locations.

At the other end of the spectrum, workers do not want to be competing with imported labour in the job market.

If you are neither an owner nor a low-wage worker, you probably enjoy the lower prices that low-wage workers enable at shops and restaurants.

In the old days, before left-versus-right economic issues were overshadowed in our politics by culture war conflicts, you might have expected all of this to be a big political issue pitting unions and social justice groups against chambers of commerce.

However, we have a centre-left government in the Yukon, backed by the NDP, running the nominee program. It seems strange to write this, but if a Martian political economist beamed down they would say there appears to be a broad political consensus in the Yukon behind importing hundreds of low-wage workers each year to keep wages at the bottom end of the wage spectrum lower than they would be otherwise, even during a housing shortage.

One reason for this is that the nominee program was overshadowed for many years by Canada’s traditional immigration program. This “points-based” system has broad support and has served the country well. In this system, foreign applicants earn points based on their youth, education, job experience and language skills. It serves to admit immigrants who can contribute quickly and substantially to the economy, even though there are ongoing issues with immigrants getting their skills recognized here.

The use of the nominee program for workers at or just above the minimum-wage level contradicts this logic. People used to talk about it as a temporary fix for episodic labour shortages, but now it is an ongoing feature of our labour market.

Some economists debating Canada’s poor productivity performance have hypothesized that such programs — by boosting the supply of low-wage workers — have disincentivized business investment in labour-saving technology.

I have seen this framed best by Harald Eia, the Norwegian equivalent of comedian-pundit John Oliver. In his segment “Rich and Equal,” Eia compares car washes in Norway and the United States. In Florida, he says, your car is washed by a team of people who are not paid very much. In Norway, you don’t see a human as you tap your card and drive through an automated car wash.

Union agreements cover much more of the economy in Norway than in Canada. Eia says these tend to have high minimum-wage floors, and have for years been pushing Norwegian employers to invest in automation.

Despite this, Norway currently has a lower unemployment rate than the Yukon.

Meanwhile, Germany has made a major revamp of its immigration policy to attract more skilled workers. If your job pays at least $60,300 (Canadian), then a wide range of occupations such as nurses, tech workers, teachers and engineers can be fast tracked. This also applies to recent university graduates who have a job offer above that amount.

If the Yukon Nominee Program switched to this system, the impact would be dramatic. Tax revenues would go up as higher-paid immigrants paid more income tax. Wages would rise at the lower end of the scale, forcing business owners to raise their prices and close some locations. 

That kind of change would be too shocking to do all at once. But the Yukon government could raise the floor wages for the program and prioritize applications by economic contribution rather than freezing out nurses and engineers stuck in the government’s low-priority bucket for the rest of the year.

Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.