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Income of Canadians

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The Daily

Monday, May 5, 2008

The Census release on May 1 showed an 11.1% increase in median family income (pre-tax) between 1980 and 2005. As a result of strong economic growth fostered by gains in employment, a further 2.1% increase was observed between 2005 and 2006, according to new data from the Survey of Labour and Income Dynamics. At the same time, government transfers also increased, leading to a similar increase in after-tax family income.

Families had an estimated median income after taxes of $58,300 in 2006, up 2.1% from 2005 in real terms. It was the third consecutive annual increase. In 2006, the increase was mainly the result of gains in both market income and government transfers.

The gain in after-tax income was shared by most family types, including senior families, those in which the main income earner was aged 65 and over, and younger, working-aged families. Senior families had a median after-tax income of $42,400, up 2.9%. Working-aged families had a median of $62,000, a 1.8% gain.

Both senior and working-aged family median after-tax income increased by roughly 18% in real terms since 1996.

Persons living alone or "unattached individuals" had a median after-tax income of $22,800 in 2006, up 4.6% from 2005.

Note to readers

This release examines the income of unattached individuals and families along with information related to low income. Analysis of income is presented separately for families and unattached individuals, focusing mainly on 2005 and 2006 comparisons.

Since families exclude unattached individuals, family income provides only a partial picture of the income situation. For distributional analysis, particularly for long-term trends, analysis should use income adjusted for family size. This allows one to take into account the growth of people living on their own and the fact that family size is on a long-term decline. This kind of analysis is not part of this report, but will be included in subsequent analyses.

Note that this report examines family income on the basis of medians. The median is the point at which half of all families have higher income than the rest, and half had less. All income estimates are expressed in constant 2006 dollars to factor in inflation and allow for comparisons across time in real terms.

Market income is the sum of earnings from employment and net self-employment income, investment income (excluding capital gains), and private retirement income. It is also called income before taxes and transfers. Analysis is not done separately for the various components of market income. After-tax income is the total of market income and government transfers, less income tax.

For definition purposes, a family is defined as a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common law or adoption. An unattached individual is a person living either alone or with others to whom he or she is unrelated, such as roommates or a lodger.

Statistics Canada's low-income rate measures the percentage of unattached individuals and families below the low-income cutoff (LICO). The LICO is the after-tax income below which most Canadians spend at least 20 percentage-points more than the average on food, shelter and clothing.

This report is based on the Survey of Labour and Income Dynamics. The survey includes individuals living in private households in the 10 provinces, excluding persons living on Indian reserves or in military barracks.

For further information, consult the article On Poverty and Low Income (13F0027XIE) available free online.

Two of the three main elements of after-tax income, market income and transfers from governments, increased in 2006, while median personal income taxes remained virtually unchanged.

For the third consecutive year, Alberta families had the highest median after-tax income, at $70,500. They were followed by families in Ontario and British Columbia.

The incidence of low income in Canada remained relatively stable in 2006. An estimated 633,000 families were below Statistics Canada's after-tax low-income cutoff, 7.0% of the total. About 760,000 children aged 18 and under, 11.3% of the total, lived in low-income families.

Market income: Gains for working-aged families

Working-aged families (whose main income earner was aged 64 or less) had a median market income of $66,800, up 1.8% from 2005.

Market income for both senior families and lone-parent families headed by women remained unchanged in 2006. However, during the past 10 years, both groups have experienced significant gains, reflecting increases in their employment levels and higher earnings.

Senior families had a median market income of $23,300 in 2006, up 40% from 1996 after adjusting for inflation. Single mothers had a median market income of $23,100, compared with a 30-year low of only $8,700 in 1996.

Families and unattached individuals earned the lion's share of their total income from market income. For every $100 in total income, working-aged families received $93 in market income, and the remaining $7 from government transfers. In comparison, senior families received $39 from government transfers and $61 from market income for every $100 of total income in 2006.

Increase in government transfers, while no change in taxes

Families as well as unattached individuals saw an increase in government transfers in 2006 with the introduction of new programs. At the same time, the personal taxes they paid remained virtually unchanged.

Families reported a median government transfer of $4,500 in 2006, up $500 from 2005, while they paid a median level of $9,000 in taxes, which remained the same as the previous year.

Government transfers to senior families remained virtually unchanged at $22,600, the largest amount of all family types.

Two-parent families with children saw an increase in the amount of government transfers received from $2,800 in 2005 to $3,300 in 2006, in part because of modifications to programs, such as the new Universal Child Care Benefit. In 2006, 3.6% more families received a child tax benefit than in the previous year.

For unattached individuals, median government transfers increased from roughly $500 to $600; they paid $2,100 in taxes.

According to the Survey of Labour and Income Dynamics, an estimated $78.2 billion was transferred to families in 2006, up 5.9% from 2005. An estimated $25.3 billion was distributed to people living alone, up 2.8%.

Improvements in after-tax income for almost all income classes

For the purpose of this analysis, families were equally divided into five groups according to their after-tax income, with each group representing 20% of all families.

After-tax income improved for families in all five income groups, except for those at the top, where it remained stable.

The one-fifth of families with the lowest income had an average after-tax income of $24,600 in 2006, up 5.6% from 2005. In contrast, average after-tax income in 2006 for the 20% of families with the highest incomes was virtually unchanged at $133,900 (in real terms).

Nevertheless, the dollar difference between the average after-tax income of the one-fifth of families with the highest and lowest incomes remained stable in 2006.

Low-income rates stable but family low income gap declines

The incidence of low income in Canada remained relatively stable in 2006. An estimated 3.4 million Canadians (or 10.5%) lived in low income (after-taxes) in 2006.

About 760,000 children under 18 years of age, or 11.3%, lived in low income families in 2006, also unchanged. About 307,000, or 40%, of these children lived in a lone-parent family headed by a woman. In fact, about one in three children living with a single mother were in low income.

An estimated 633,000 Canadian families, 7.0% of the total, were below the low-income cutoff, unchanged from 2005. Families in low income needed on average $7,000 to climb above the low-income cutoff. This is an improvement over the 2005 low income gap of $8,000.

Senior families, who had the lowest incidence of low income in 2006, saw their rate remain relatively stable at 2.3%.

About 29% of unattached individuals lived below the low-income threshold. This rate varied between age groups; 34% of non-seniors were in this situation compared with 16% of seniors.

The provinces: Median incomes for Alberta families far ahead of other provinces

For the third consecutive year, families living in Alberta had the highest median after-tax income ($70,500), followed by those in Ontario ($62,400) and British Columbia ($60,300).

Alberta and Saskatchewan were the only two provinces for which the yearly change in after-tax family income was statistically significant. The median rose 7.0% in Alberta and 6.3% in Saskatchewan.

Median government transfers for families increased in three provinces: New Brunswick, Ontario and Alberta.

In Alberta, median government transfers doubled to $3,000 in 2006 from $1,500 in 2005. This large increase was generated by a one-time Energy Rebate program. The Survey of Labour and Income Dynamics estimated that this $400 rebate per taxfiler was distributed to about 910,000 families, and amounted to roughly $1.1 billion. In addition, approximately 454,000 unattached individuals benefited from this rebate for which $182 million was distributed.

Available on CANSIM: tables 202-0101 to 202-0107, 202-0201 to 202-0203, 202-0301, 202-0401 to 202-0411, 202-0501, 202-0601 to 202-0605, 202-0701 to 202-0706 and 202-0801 to 202-0807.

Definitions, data sources and methods: survey numbers, including related surveys, 3502 and 3889.

For more information, or to enquire about concepts, methods or data quality of this release, contact Client Services (toll-free 1-888-297-7355 or 613-951-7355;, Income Statistics Division.

A more detailed report, Income in Canada, 2006 (75-202-XWE, free), is available today. This report contains analysis and 15 tables at the Canada and province level. Also available today, the 2006 Income Trends in Canada (13F0022XIE, free) provides 40 tables at the Canada and province level as well as some data at the census metropolitan area level.

Tables. Table(s).