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Housing costs put brakes on migration to B.C. from other provinces

Over the second half of last year, a surprising development occurred – the net inflow of people moving to B.C. from other provinces fell sharply. The drop showed up in the third quarter and persisted through the final months of 2017.

Over the second half of last year, a surprising development occurred – the net inflow of people moving to B.C. from other provinces fell sharply. The drop showed up in the third quarter and persisted through the final months of 2017. Looking ahead, we suspect that B.C. may receive fewer interprovincial migrants than pundits and policy-makers have been counting on – particularly working-age migrants, as opposed to retirees. If our hunch is correct, employers in B.C. are likely to face more widespread hiring challenges in the years ahead.

Within Canada, people are free to move and work where they choose. As a result, migration has long been shaped by variations in economic and employment conditions across the provinces. When jobs were plentiful during the pre-Olympic boom years, for example, large numbers of people migrated to British Columbia from other parts of Canada. In the post-Olympic period, the net inflow gradually waned and then switched to a net outflow, mainly because Alberta’s economy was growing at nearly twice the rate of ours, and lots of high-paying jobs were created in the oilpatch.

Then the 2014-15 oil price crash sent Alberta into a deep two-year tailspin. Over the same period, B.C.’s more diversified economy strengthened. Job growth surged in B.C., while many employers in Alberta were shedding staff. Moreover, employment growth remained anemic in most other parts of the country. With B.C. boasting Canada’s lowest unemployment rate, the net inflow of people from other provinces accelerated. By mid-2014, interprovincial migration was adding more than 5,000 people to B.C.’s population every quarter – upwards of 20,000 annually. Over the subsequent three years, net interprovincial migration ranged between 4,000 and 6,000 per quarter. But in the third quarter of 2017, the net inflow plummeted to 500, and it stayed low (at 800) in Q4.

So why the change in historical patterns?

One likely reason is that labour markets are tightening in other provinces, too, as more baby boomers exit the workforce and the effects of population aging are felt. Alberta’s jobless rate dropped from 8.7% at the beginning of 2017 to 6.3% in the first quarter of 2018, signalling to would-be migrants that it is easier to find gainful employment in their home province compared with a year or two ago. Similarly, Ontario’s unemployment rate now sits at 5.5%, down a full percentage point from last year. So even if employment prospects are still decent in B.C., job seekers may not perceive them to be sufficiently better to justify the cost and disruption of moving. As labour market slack disappears, the number of job vacancies continues to climb – according to Statistics Canada, B.C. continues to have the highest job vacancy rate in Canada – but vacancies have also jumped in both Alberta and Ontario, the two provinces that account for most of B.C.’s interprovincial migration flows.

The other side of the interprovincial migration ledger is British Columbians who leave home. Out-migration to both Alberta and Ontario has risen over the past year. A more buoyant job market in these provinces is one reason. But “push” factors, notably the high cost of housing in B.C.’s urban centres, are probably more important. The combination of unusually steep local housing costs and brighter job prospects in other regions may be prompting more British Columbians to pick up sticks. High housing costs are also discouraging some potential migrants from other provinces from relocating to B.C.

What are the implications of these migration developments?

The sudden drop in net interprovincial migration, if it persists, is a sign that the tight Canadian labour market may dampen overall labour mobility.

Why move to another province if jobs are available at home? Because this shift breaks with long-standing patterns, it is not fully reflected in the economic forecasts underpinning the 2018 B.C. budget and the province’s latest labour force growth projections. The B.C. government, like many private-sector analysts, assumes that net interprovincial migration will run between 10,000 and 15,000 annually over the next decade. However, the abrupt decline in net migration in the second half of 2017 casts doubt on this scenario. When job opportunities are plentiful nationally, employers in B.C. may not be able to count on workers moving from other provinces, even if our own job market is comparatively healthy.

In a world where workers are in short supply across the country, B.C. is poised to become even more reliant on international immigration to meet its future labour needs. •

Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.