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The Return of Brain Drain? We Haven’t Seen It Yet

8/25/2021
There’s been renewed discussion of the issue of “brain drain” – skilled workers leaving Canada for the U.S.

Brain-Drain-Banner

A recent article from the Financial Post provides a good rundown of the issues. While immigration drives population growth in Canada, a significant number of people also migrate from the country during normal pre-COVID-19 conditions. With political changes, it became more difficult to immigrate to the U.S. after 2016, for Canadians and everyone else.

Brain-Drain-Graph

The US is the main destination for Canadians, and by 2018 emigration out of Canada had dropped almost 30%. COVID-19 of course further tightened borders and migration, with record low numbers of both immigrants and emigrants.

Now that there’s a new administration in the U.S., what will this mean for emigration and the labour market? One of the reasons for the Canadian population boom of the last five years, was the combination of increased immigration AND decreased emigration. While immigration looks likely to stay high – the federal government has set targets that way until at least 2023 – will we see a large cohort leaving Canada?

The cause of brain drain has been consistent for decades: the appeal of a higher wages and a larger market of employers in the United States. Currently, the unprecedented cost of housing in Canada – both rental and ownership – is also contributing to the attraction to the U.S. Moreover, the COVID-19 remote work experiment has introduced a new paradigm for global skilled work.

The post-COVID-19 labour market could go in either direction. If there’s no need to relocate, skilled workers can live in Canada while earning a U.S. salary, in USD. At the same time, if there is no need to reside close to your job, will people migrate to lower-cost destinations, or pursue better weather and lifestyle? We’ve already seen the emergence of “digital nomad” work visas in European and Caribbean nations aimed at capturing a remote workforce.

There’s little doubt that Canadian office leasing benefitted from record high immigration, combined with record low emigration. Thus far, “brain drain” has been anecdotal, and until borders are fully re-opened post-COVID-19, it’s unlikely it will be a factor. More importantly than brain drain, Canada continues to receive a “brain gain”; most immigrants to Canada are in the professional and business services category, with skilled workers comprising >25% of immigration. Admittance as a skilled worker weights heavily towards young, educated people, which drives professional employment and downtown leasing. The end of COVID-19 will likely be a net benefit for Canadian real estate, as new immigration more than replaces whatever emigration emerges.

Data sourced from Statistics Canada. © 2021 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

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