B.C. Business Matters:
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BC's Net Inflow of Interprovincial Migrants Slows Sharply
By Ken Peacock
Halfway through last year, the net inflow of people moving to BC from other provinces dropped sharply, and the slowing persisted over the rest of 2017. The shift is surprising because it breaks with past migration patterns that usually reflect differing labour market conditions across the country. Looking ahead, BC may well receive fewer interprovincial migrants over the next few years than pundits and policy makers have been counting on, heralding more serious hiring challenges and skill shortages for BC employers.
The figure below shows net interprovincial migration to BC – the number of people who moved here from other provinces less the number of British Columbians who relocated to other parts of Canada in the same quarter. Over the past three years, net interprovincial migration was running around 4,000 per quarter, with some seasonal variability. But in the third and fourth quarters of last year, net inflows of interprovincial migrants dropped to just 500 and then 800.
The main source and destination provinces for migration to and from BC are Alberta and Ontario. The flows of people between these provinces essentially determine overall interprovincial migration. (Alberta accounts for nearly half of all BC’s interprovincial migration and Ontario for around one-third.)
The next graph shows net interprovincial migration between BC and Alberta, as well as the difference in unemployment rates between the two provinces. Historically, Alberta’s unemployment rate has been lower than BC’s, at least until late 2015 when the oil price collapse caused Alberta’s unemployment to spike. Even though labour market conditions are almost always stronger in Alberta, net migration ebbs and flows between the two provinces. Based upon a visual assessment of patterns over the past two and half decades, when Alberta’s unemployment rate is less than 1.3 percentage points lower than BC’s, net bilateral migration to BC is positive (in the graph, this is when the yellow line is above the dark blue line and the bars show people moving to BC). Alternatively, migration tilts towards Alberta when the gap in unemployment rates widens and Alberta’s rate is more than 1.3 percentage points below BC’s.
As Alberta’s unemployment climbed in the wake of the 2014-16 oil price collapse, the differential between the BC and Alberta unemployment rates narrowed. As in the past, when the gap shrunk to ~1.3 percentage points, net migration flows tipped back towards BC. By early 2015, Alberta’s unemployment rate had climbed above BC’s (the first time in the history of the Labour Force Survey), which further reinforced the positive net inflow of people moving from Alberta. With Alberta’s unemployment rate currently well above BC’s, it would be reasonable to expect the strong inflow of Albertans relocating to BC to continue. But, in mid-2017, the inflow from Alberta tumbled.
A similar break with historic norms is evident with migration between BC and Ontario. As with Alberta, bilateral migration between Canada’s most populous province and BC is correlated with relative job market conditions. In Ontario’s case, net migration flows are more symmetric: when BC’s unemployment rate is lower, more people migrate from Ontario to BC, and when Ontario’s jobless rate is lower the flow reverses (when the green line in the graph is above zero, BC’s unemployment rate is lower). In mid-2016, however, despite BC having a stronger job market, bilateral migration tilted back towards Ontario.
So what explains these changes in historic patterns?
One factor is that labour markets are tightening in other provinces. Alberta’s jobless rate has dropped from 8.7% at the beginning of 2017 to 6.3% in early 2018, making it easier for would-be migrants to find gainful employment in their home province compared to a year ago. Even if job prospects are still somewhat better in BC, job seekers may not perceive them to be sufficiently better to justify the cost and disruption of moving.
Ontario’s 5.5% unemployment rate is also still higher than BC’s 4.7% rate, but it is low enough that job opportunities are plentiful. Indeed, Ontario’s buoyant labour market has resulted in a rising number of job openings: British Columbia continues to have the highest job vacancy rate of any province, but the number of job openings has climbed substantially in both Alberta and Ontario over the past year.
The other side of the interprovincial migration ledger is British Columbians moving to other jurisdictions. In fact, out-migration to both Alberta and Ontario is up over the past year. Improved job prospects in these provinces might be one reason. But “push” factors, such as the high cost of housing in BC’s large urban centres, are probably more important. Perhaps the combination of steep BC housing costs and brightening job prospects in other provinces is prompting more British Columbians to look fondly on other jurisdictions.
What are the implications of these migration developments?
The sudden drop in net interprovincial migration, if it persists, suggests tighter labour markets across the country might be reducing labour mobility. This is not fully reflected in the economic forecasts underpinning the 2018 BC Budget, nor in the province’s most recent labour force growth projections. The BC government, in common with many private sector analysts, assumes net interprovincial migration will run between 10,000 and 15,000 people annually over the next decade. However, the sudden decline in net in-migration that materialized in the second half of 2017 casts doubt on this scenario. Put simply, when job opportunities are plentiful (and improving) across the country, employers in BC may not be able to count on workers moving from other provinces, even when BC’s job market is comparatively healthy. If so, employers in British Columbia are likely to find themselves even more reliant on international immigration to meet future labour needs.