Trump’s stand on immigration could work in Canada’s favour

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Donald Trump's war on immigration, even more than his war on trade, could prove to be his biggest economic miscalculation . Thankfully, Canada is moving in the opposite direction; in an era when demographics will increasingly shape economic success and failure, immigration could be Canada's greatest competitive advantage.

On the same day that the U.S. President prepared to sign orders to build a border wall to keep out the Mexicans, to temporarily ban refugees and to block visas to citizens from countries linked to terrorism, Statistics Canada published two reports highlighting how immigrants will play an expanding role in Canadian society over the next two decades.

Statscan projected that, assuming a continuation of immigration rates at roughly their current levels, 25 to 30 per cent of all Canadians will be immigrants by 2036, up from 21 per cent in 2011. Nearly half the population will be either immigrants or children of immigrants, up from 38 per cent in 2011.

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Canada brought in about 300,000 immigrants last year, and plans on about the same number this year. That works out to about 8.3 immigrants per 1,000 population. By contrast, the United States takes in a little over a million immigrants a year – or about 3.1 per 1,000 population. Immigrants account for about 13 per cent of the U.S. population – far below Canada's share. And given Mr. Trump's policy direction, those numbers don't look likely to grow.

In the United States, immigration has increasingly become a question of national security. In Canada, it has become intertwined with our economic strategy (with a healthy dose of humanitarianism on top). In last fall's U.S. presidential debates, both Mr. Trump and his opponent, Hillary Clinton, talked in varying degrees about immigration in terms of a problem needing to be solved (primarily what to do about illegal migrants from Mexico). Immigration as a part of the economic solution was nowhere in their talking points.

But what they are missing, what Canadian policy makers have embraced, is that immigration will become an increasingly vital pillar of economic growth for advanced economies over the next decade or more. The undeniable laws of demographics have made it so.

Throughout the advanced world, the huge bubble of population known as the baby boomers is rolling over into retirement. This massive source of labour is, increasingly, leaving the work force. That means that the growth rate in the labour force in these countries has slowed dramatically. In the United States, where labour force growth was nearly 3 per cent annually in the 1970s, the U.S. Bureau of Labor Statistics projects a growth rate of a thin 0.5 per cent a year over the next decade.

Labour growth is the biggest component of an economy's productivity growth and, by extension, its economic growth potential. The slowdown in labour growth is a major reason why the U.S. economy has had trouble achieving more than tepid growth over the past few years.

In some ways, Canada's situation is even more dire: The average age in Canada is higher than that of the U.S., and Canada's birth rate is significantly lower. Canada's annual labour force growth rate has slowed from 4 per cent in the 1970s to less than 1 per cent last year, and a projected 0.5 per cent in the 2020s.

But while the new U.S. administration looks determined to slow its immigration, and even reduce it through possible increased deportations of undocumented workers from Mexico, the Canadian government is leaning the other way. Last fall, a high-powered advisory council commissioned by Prime Minister Justin Trudeau to address Canada's economic growth recommended, among other things, that Canada ramp up its immigration intake to 450,000 a year over the next five years, a 50-per-cent increase.

The Canadian government has been foggy on the timetable, but directionally, Canada is looking to expand immigration, and economics are the driving force. Economists widely agree that an open-for-business immigration policy, focused considerably on attracting well-trained workers to fill current and future skills shortages, will be critical to filling the labour gap left by the baby boomers and contribute to propelling Canada's economic growth.

Indeed, the more Canada pursues immigration growth, the more it gains a competitive leg up on its foreign competitors who fear immigration and resist it. Every day, month and year Mr. Trump starves the U.S. economy of a progressive immigration policy, the more ground he cedes to Canada in competing for skills and economic prosperity. A decade from now, we may look back on these divergent immigration paths as a turning point in the economic fortunes of the two countries.