A new study from a University of Windsor sociology researcher has revealed visible minority immigrants almost always earn less through self-employment than wage or salary work.
The research from Prof. Reza Nakhaie, published in the Canadian Review of Sociology, also shows ethno-racial immigrants typically earn less than their white counterparts.
Nakhaie used the data collected in the 2006 census, which is the last year this type of information is available. He said all of the 12 groups studied, except for Arabs and Southeast Asians, make less through self-employment than paid work.
“Some groups, like Koreans, make about $10,800 less,” he said. “It depends.”
Arabs make over $26,600 more self-employed, while Southeast Asians make approximately $24,800 more as entrepreneurs than through paid work, he said.
According to Nakhaie’s research, Canada’s white population makes an average annual income of $46,900 when self-employed. All visible minorities make $35,000 on average, he said.
However, self-employed income differs by group. For example, Southeast Asians make $34,000, while Filipinos make about $28,000, said Nakhaie.
There are also differences between the blue-collar and white-collar sectors. Nakhaie said all groups, including the dominant white population, make less in self-employed blue-collar work than wage and salary work.
With white-collar work, he said there is little difference between self-employment and paid employment earnings for visible minorities.
While the data does not provide reasons for these differences, Nakhaie said contributing factors may include limited access to capital, difficulty securing credit or a loan at a bank and low education of Canadian business laws.
In the service industry in particular, he said a saturated market could sometimes be a factor.
“If you’re providing a specific type of food or specific type of services, or grocery products for the specific ethno group you’re apart of, and if there are a lot of those grocery stores, as an example, you’re not going to compete well,” he said.
However, with white-collar work, such as medicine and law, he said the success of these individuals could be attributed a higher demand of these services amongst people of the same ethno group.
“Usually the more educated, generally speaking, are generally more culturally similar to the dominant group,” he said. “It’s easier for them to decipher those cultural issues and act accordingly and that diminishes the chance of not succeeding. That applies to white collar population.”
Nakhaie said there’s a “myth” of self-employment being a better option for immigrants to developed countries, and this comes down to pull and push factors.
“The pull factor is people perceive there is a profit to be made, success to be made, so you enter those businesses,” he said.
“The push factor is when you don’t do well in other areas. You start looking to work for somebody else and you don’t get a job. You do get the job, but you don’t get a promotion and you don’t make much money.”
Nakhaie said some immigrants may also see self-employment as a better opportunity because it allows them to work for themselves and choose their own hours.