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| Sergio R. Karas |
According to a recent study by the Fraser Institute, highly educated immigrants in Canada experience lower employment rates, greater underemployment and significantly lower earnings than their counterparts in the U.S. This persistent disparity has become a pressing challenge, especially as both nations compete to attract top global talent in STEM and other high-skill fields.
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These figures underscore the disproportionate yet vital contributions of immigrants to high-skill labour in both Canada and the U.S. However, the outcomes differ sharply; while Canada succeeds in recruiting highly qualified individuals, the study shows that many of these skills remain under-leveraged compared to the U.S. experience.
In a September 2024 report by the Migration Policy Institute, “College-Educated Immigrants in the United States,” labour-force participation among college-educated immigrants in the U.S. stood at 75 per cent, slightly higher than that of their U.S.-born peers at 73 per cent. This near parity indicates that highly educated immigrants in the U.S. integrate rapidly and can secure jobs that match their qualifications. In contrast, Canada’s experience reveals a persistent gap between immigrant education and employment outcomes. According to the Economic and Social Reports 2024 by Statistics Canada, the 2021 employment rate for recent university-educated immigrants was 79.1 per cent, compared with 87.4 per cent among highly educated native-born Canadians. Despite having a greater share of degree holders among newcomers, Canada’s skilled immigrants are less likely to be employed and more likely to be working below their qualification level.
The divergence becomes even more striking when examining income outcomes. Statistics Canada’s Economic and Social Reports (2022) shows that visible-minority immigrants with a bachelor’s degree in 2021 earned a median income of $57,200, compared to $68,300 for Canadian-born graduates, while those holding master’s or doctoral degrees also reported significantly lower earnings relative to their native-born counterparts. Meanwhile, the Migration Policy Institute’s September 2024 report shows that college-educated immigrants in the U.S. outperform their native-born peers economically: their median household income reached US$122,000 in 2022, surpassing the US$113,000 earned by U.S.-born college graduates. This contrast highlights how the U.S. labour market provides higher returns on education for immigrants compared to Canada, where structural barriers continue to limit income mobility among highly educated newcomers.
A principal reason for this disparity lies in overqualification and credential under-recognition. A recent study by the C.D. Howe Institute, “2024 Labour Market Review: Challenges, Trends, and Policy Solutions for Canada,” reports that 26.7 per cent of recent immigrants with university degrees work in jobs requiring only high-school education, which is three times the rate for native-born Canadians. These mismatches, often called “brain waste,” have persisted for decades, stemming from inconsistent recognition of foreign credentials, lack of Canadian experience, and regulatory barriers in professions such as engineering and health care. According to the 2016 report by Batalova, Fix and Bachmeier, “Untapped Talent: The Costs of Brain Waste Among Highly Skilled Immigrants in the United States,” underemployment among college-educated immigrants is significantly lower in the U.S., where market-driven hiring allows their skills to be better aligned with labour-market demand.
Another major differentiator is how each country structures its immigration pathways. Canada relies primarily on a points-based system that awards permanent residency based primarily on academic qualifications, age, experience and language proficiency. The U.S., in contrast, employs a two-step, employer-driven system that starts with temporary work authorization, most notably through the H-1B visa program. The H-1B allows U.S. companies to recruit foreign professionals in specialized fields, effectively “testing the waters” before sponsorship for permanent residency. Economist Mikal Skuterud argues that this approach leads to superior labour-market matching because only proven performers transition to long-term residence.
On Sept. 19, 2025, the White House announced significant changes to the H-1B program, including a one-time processing fee of US$100,000, applicable to employers hiring applicants seeking initial entry or change of status after Sept. 21, 2025. These changes are expected to reduce the number of new H-1B authorizations and may lead U.S. immigrants, particularly in STEM fields, to consider alternative destinations such as Canada. As a result, Canada could benefit from increased interest from highly skilled workers seeking stable immigration paths and favourable employment outcomes.
By positioning itself as an alternative destination for global talent, Canada has an opportunity but also the challenge of ensuring that its own system aligns immigrant skills with employer demand and fosters strong integration. There is no need to bring candidates if there is no suitable employment for them. Canada must also ensure that the newcomers do not compete against local talent in entry-level positions. The reality is that the U.S. will continue to attract the best and brightest candidates because salaries are much higher and the cost of living is lower in that country.
Education quality and innovation ecosystems also contribute to the divide. According to the World University Rankings (2023) by Times Higher Education, the U.S. dominates global university rankings, hosting nearly half of the world’s top 50 institutions, while only four Canadian universities appear in the top 100 in the list. These elite American universities not only draw the best global students but also often retain them as long-term residents contributing to the country’s innovation capacity. By comparison, Canada’s international-student expansion has increasingly leaned on low-tier private colleges, many of which offer short-term or low-value diploma programs and courses with little connection to labour-market demand.
To close this widening gap in labour market performance, the Fraser Institute study proposes several policy reforms. First, Canada should streamline its immigration processes for high-skill applicants, incorporating direct employer feedback and creating a specialized work-visa stream modelled after the H-1B program. Such a mechanism would allow employers to fill urgent skill shortages quickly and transition successful temporary workers to permanent residence. Second, international-student admissions should prioritize STEM fields while restricting low-return “degree-mill” institutions. Third, policymakers must strengthen Canada’s business and innovation environment, encouraging higher capital investment, lowering productivity-penalizing taxes, and simplifying regulations that inhibit company growth.
Canada’s long-term prosperity depends not on how many skilled immigrants it admits but on how effectively it integrates, employs and rewards them. The country’s challenge is to ensure that credentials translate into careers and education into earnings. Aligning immigration pathways with employer demand, nurturing high-growth industries, and modernizing its economic framework will determine whether Canada can finally close the gap and unlock the full potential of its highly educated immigrant population.
Sergio R. Karas, principal of Karas Immigration Law Professional Corporation, is a certified specialist in Canadian Citizenship and Immigration Law by the Law Society of Ontario. He is Division Chair of the ABA International Law Section, past chair of the Ontario Bar Association Citizenship and Immigration Section, past chair of the International Bar Association Immigration and Nationality Committee, and a fellow of the American Bar Foundation. He can be reached at karas@karas.ca. The author is grateful for the contribution to this article by Jhanvi Katariya, student-at-law.
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