The Math Behind the Immigration – Go Figure

May 14, 2019
Posted in News
May 14, 2019 Howard Lichtman

The Math Behind the Immigration – Go Figure

The Conference Board of Canada just released its latest analysis of Canada’s macro demographics.  They’ve taken the heavy lifting behind the mathematics out of the equation.  They tell us that one in four people are going to be 65 years or older in 2040.  You marry that with the continuing Canadian low birth rate, and it’s a formula for disaster.  The solution is immigration.  If we want to keep up Canada’s famous social infrastructure, and enjoy the life that we do, there are no options.  We simply need more people.

But of course there are other solutions, aren’t there?  What about all of those kids who are going to be graduating from the schools and entering the workforce?  The Conference Board of Canada fed those statistics into their model.  Between 2018 and 2040, there’s going to be 11.8 million Canadians finishing school and entering the workforce.  But, 11.4 million workers will be retiring.  By the year 2030, the 9.2 million Baby Boomers, which has been the dominant work co-hort for decades now, will be retiring.  You need a workforce to stimulate the economy and feed those tax revenues that makes all of our lives possible.  The numbers don’t lie.  People age 65 or over are going to become 25% of our country’s population, as compared to being only 17% today.  There is no reason to anticipate that our low birth rates will change.  We’ve been stuck at 1.5 average kids per household for years.

They even tried to brainstorm other Canadian alternatives.  What if we had more females, more Indigenous, and people with disabilities join the workforce?  Their math said that would add only 2.2 million people to the workforce.  Simply not enough.

These numbers support what we’ve been hearing from all flavours of Government for years.  Our Government’s economic growth strategy is immigration.  The only thing the various parties, and others, argue about is how many, and what kind of immigrants.  The great debates have been about whether immigration should remain at or about the 300,000 person level, or as others have argued, should be increased to as high as 450,000 new immigrants per year.  Currently, we are onboarding between 300,000 and 320,000 new immigrants per year.  That is scheduled to rise to 350,000 by 2021.

group of student from different ethnicities

I won’t get into the analysis of who is coming and who should be coming from the type of immigrants.  I will only quote the statistic, that according to Stats Canada, 52.1% of recent immigrants have at least a Bachelor’s Degree.  Compare that with only 24% of the Canadian-born population.

All interesting reading, but what does all of this have to do with the business person?  Lots to be said about that, but the primary lesson to be learned from the Conference Board of Canada’s analysis, is that immigration is an economic/revenue growth strategy for the government.  So should it be for businesses.  For the foreseeable future, there will be 320,000 immigrants (and growing) arriving every year.  Add to that the 495,000 international students who are adding additional new revenue opportunities.  And for those of you who are thinking, “Oh, they’re international students – they’re going to leave”, that’s not what the research tells us.  Currently, 60% of foreign international students stay in Canada, so you’ve got your lifetime value.  By the way, we even know which students are staying – it’s the South Asians and the Chinese.  So if you happen to have a product or service that is targeting them, they’ve got lifetime value pretty close to what a mainstream Canadian consumer would afford you – as over 90% of them are staying.

I don’t know a lot of businesses that can afford to ignore 320,000 potential new customers each year, let alone the 495,000 international students who are gracing our communities.  I guess that’s why the Conference Board’s report is called “Can’t Go It Alone – Immigration Is Key To Canada’s Growth Strategy”.  I would argue that Canadian corporations can’t go it alone, targeting just mainstream Canadians.  Immigration should be key to their growth strategy as well.

Howard Lichtman

Partner & Co-Founder