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Racism in the labour market is costing us all

December 18, 2019

3-minute read

There has been no shortage of talk about race and racism in Canada of late.

In September, revelations about the Prime Minister’s past penchant for wearing blackface triggered a national conversation about the mockery, insults, bullying, and disrespect that racialized Canadians routinely face. But in discussing racism in social interactions, the conversation ignored an equally important aspect of the problem: racism in the labour market.

Racism shows its ugly face when, even in a strong labour market, qualified racialized candidates can’t find work to match their education and experience. It shows its face when these workers face barriers to promotion, or when they can only find work in lower-paying sectors of the economy, often with fewer hours, no benefits and no job security.

The mounting evidence that inequality in the labour market is racialized cannot be ignored. A recent report by the Metcalf Foundation found that, while racialized people make up 46 per cent of Toronto’s workforce, they account for more than 63 per cent of the working poor.

Our recent study, Canada's Colour Coded Income Inequality, used 2016 Census data to look at multiple dimensions of racial discrimination in the economy – and its interaction with gender discrimination – right across Canada.

We found that while racialized workers have higher labour force participation rates than non-racialized workers, employers are less likely to hire them. In 2016, the unemployment rate for the non-racialized (white) population was 7.3 per cent; for racialized workers, it was 9.2 per cent on average – 9.6 per cent for women and 8.8 per cent for men.

We also looked at income gaps between racialized and non-racialized individuals to see if they had narrowed between 2006 and 2016. They didn't for men. They barely budged for women.

On the earnings front, for every dollar non-racialized men earned, racialized men earned 78 cents. Non-racialized women earned 67 cents. And racialized women earned just 59 cents.

With respect to income from wealth, racialized Canadians were much less likely to have income from capital gains or investments. When they did, that income was, on average, substantially lower.

One familiar Canadian narrative says labour market outcomes have little to do with race and much to do with immigration status. New Canadians face barriers like learning the language and having credentials recognized, the story goes, but their children do not.

However, the data do not support this narrative. Non-racialized immigrants have higher earnings in the Canadian labour market than racialized immigrants do. What’s more, income inequality between racialized and non-racialized Canadians continues into the second and third generations—and beyond. Clearly, immigration is not the only issue.

Not all racialized workers face the same barriers in the job market. For example, both men and women who identified as Black had higher labour force participation rates (working or actively trying to find work) than their non-racialized counterparts. However, they also had higher unemployment rates and bigger wage gaps than the average for all racialized workers. Men who identified as Filipino had much lower unemployment rates than the average for racialized workers but a larger earnings gap; women who identified as Filipino had lower unemployment rates and a smaller earnings gap than the racialized average.

Racism in the job market takes many forms, and it is reducing Canada’s productivity. Failing to fully use the skills and talents of all Canadians comes at a high cost, not only to those who are discriminated against, but to everyone in Canada.

The need to address this situation is urgent. In 2006, 16 per cent of Canadians identified as racialized. In 2016, that number was 22 per cent of the population, representing 7.7 million individuals. As this number grows, the economic cost of racism will grow with it – unless we act now.

Governments and employers must help end racism in the labour market, boost productivity, and allow everyone to reach their potential. One strategy is to target racism with policies that tear down the systemic barriers that hinder hiring and promotion of racialized workers. The other is to improve basic employment standards, like the minimum wage, which would help all groups that are over-represented in low-income work. We should do both.

It’s time have that conversation about race and racism.

Sheila Block is a Senior Economist with the Canadian Centre for Policy Alternatives (Ontario). Grace-Edward Galabuzi is an Associate Professor in the Department of Politics and Public Administration at Ryerson University. They authored Canada's Colour Coded Income Inequality, together with CCPA-Ontario Senior Researcher Ricardo Tranjan.

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