||Income in Canada
2002 income: an overview
- After five consecutive years of growth, after-tax
family income remained virtually unchanged between 2001 and 2002,
as the three main components — market income, government transfers and
personal income taxes — each remained more or less stable.
- After-tax income for families of two people or more amounted to an estimated $60,500,
virtually unchanged from $60,300 in 2001, after adjusting for
- This lack of growth was in contrast to the increase of 3.2% in
annual average after-tax income for
these families between 1996 and 2001.
- Family income is correlated with economic conditions. After reaching
a peak at $53,900 in 1989, average family income declined through
the recession of the early 1990s and stayed below $52,000 up
to and including 1996. Since then, it has rebounded in step with the
- The low-income rate among families
of two people or more edged up slightly in 2002 after five consecutive
years of declines. A small increase in the low income rate was experienced
by those aged 18 and over. However, the proportion of children aged
under 18 and living in low income was marginally lower, continuing
its long-term decline.
- Unlike most other family types, average after-tax
income declined in 2002 for single-parent
families headed by women. However, their income gains were among the strongest
between 1996 and 2002 because of the increase in labour
force participation by single mothers.
- For unattached individuals, after-tax
income amounted to $25,900 in 2002, up 2.4% from 2001 and 17%
from 1996. An estimated 1 million of these individuals lived
in low income in 2002, about 25% of the total, down from 34%
Main components all hold relatively steady
- The three main components of after-tax
income - market income, transfers from governments and personal income taxes
- were all relatively unchanged from 2001.
- Market income is the sum of paid employment and self-employment
earnings, and income from investments and pensions, and represents the lion's
share of family income, particularly for non-elderly
families. In 2002, it remained at the same average level as in 2001 (approximately $66,000)
for families of two or more people. This compares with an annual average gain
of 2.7% during the previous five years.
- Families of two or more people paid an estimated $12,800 on
average in personal income taxes in 2002, about $300 less than
in 2001 after adjusting for inflation.
- This decline, equal to about 2.3%, came on the heels of a 7.1%
decrease in 2001 when federal and provincial tax changes included
increases in exemption and income threshold levels, and cuts in tax rates.
The implicit tax rate for families was 17.4% in 2002, down from 17.8%
- Government transfers cover a range of programs such as Employment Insurance, old-age
security, child tax benefits and so on. They remained virtually unchanged
from 2001 at an estimated $7,300. In 1996, transfers amounted
to $7,900 on average.
- The number of families receiving Employment Insurance benefits rose 8.4%
in 2002, following an 11.2% gain in 2001. Average EI benefits
rose from $5,500 in 2001 to $5,900 in 2002.
These increases are attributed mainly to the program changes that expanded
After-tax income down for female single-parents
- On average, the after-tax income
for the estimated 500,000 single-parent
families headed by women declined from $32,500 in 2001 to $30,800 in 2002 mainly
due to a drop in their market income from $27,300 to $25,600.
- Even when including the decline in 2002, the annual average rate
of increase of market income for female lone-parent
families was 5.5% between 1996 and 2002. This was one
of the largest increases among the different family types. As a result the 2002 after-tax
income of female single parents was still much higher than in 1996 ($25,300).
Continuous growth of after-tax
income for senior families
- Among senior families — those in which the major income recipient
was aged 65 and over – after-tax
income was estimated $43,400, up from $39,000 in 1996.
- After-tax income of senior families steadily grew for the past five
years, primarily due to the increase of their market income. Between 1996 and 2002, after-tax
income for senior families has increased 11%, compared with 18%
for all younger families.
- In 2002, senior families received on average an estimated $20,200 in
government transfers, accounting for 41% of their total income before
Low-income rate among children down for sixth straight year
- Although the change is not significant the low-income
rate among children under 18 based on after-tax
income, declined for the sixth consecutive year in 2002.
- An estimated 702,000 young people, or 10.2% of the total,
were living in low-income families.
This level was down from 713,000 children in 2001 (10.4%).
- The proportion of children living in low-income
families has been declining since 1996, when it peaked at 16.7%.
This decline follows overall improvements in the Canadian economy during the
Slight rise in low-income rate
- After five consecutive years of declines, the proportion of families
living in low income rose slightly to 7.0% in 2002 from 6.6%
the year before. The 6.6% level in 2001 was the lowest rate
for families since 1980.
- An estimated 605,000 families were in low income in 2002,
compared with 564,000 in 2001 and 870,000 in 1996.
- The long-term downward trend
in the low-income rate reflected a
healthy labour market in the latter part of the 1990s, as well as recent
increases in transfers and cuts in income taxes.
- Of the estimated 500,000 lone-parent
families headed by women, 34.8% were in low income in 2002, up from 30.1%
in 2001. This was the first increase in the low-income
rate for these families in five years. Their low-income
rate peaked at 49.0% in 1996.
- For the population as a whole in the 10 provinces, about 2.9 million
people, or 9.5%, were living in low income in 2002.
Income inequality among families remained stable
- One measure of income inequality is the ratio of average market income
received by the 20% of families with the highest income compared with
the 20% of families with the lowest income.
- In 2002, this ratio was about 11.7 to one. That is, the 20%
of families with the highest income received about $11.70 in market
income for every $1 received by the 20% with the lowest.
- However, taxes and transfers moderate the differences between the quintiles
of the income distribution.
- In 2002, after taxes and transfers, the one-fifth
of families with the highest income received $5.20 in market income
for every $1 received by the one-fifth
with the lowest. Historically, this ratio remained stable at about 4.8 to 1 for
several years up to 1995. It then rose in 1996 and 1997 to 5.3 and,
since then has remained at 5.2 to 5.3.
Provinces: After-tax income remained
stable in most cases
- Families of two people or more recorded at least marginal increases
in after-tax income in most provinces
in 2002, but there was the occasional exception.
- In Alberta, after-tax income
declined from $65,600 in 2001 to $64,300 in 2002.
On the other hand, the proportion of these families living in low income in
Alberta fell from 5.9% to 4.8%.
- The biggest gain was in Nova Scotia where after-tax
income for families of two or more people rose from $49,800 to $51,500.
- Families of two or more people in Newfoundland and Labrador received
government transfers estimated at $11,300 on average in 2002,
highest in Canada and well above the national average of $7,300.