The Broadbent Blog


Rising Economic Inequality Confirmed by 2016 Census Income Data

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The 2016 Census income data released today shows that family and individual incomes rose significantly for most of the population in the decade from 2005 to 2015, mainly due to the resource boom that extended through most of the period. The median total income of families adjusted for inflation rose by a healthy 10.8 per cent. But the gains were unequally shared, and some families and individuals fell behind.

Looking at the total income of families, the Census reports changes in income by decile, dividing all families into ten equally sized groups. The median or mid point incomes of the bottom 50 per cent of families rose from $19,319 in 2005 to $21,485 in 2015, an increase of 11.2 per cent over the decade when adjusted for inflation. The incomes of the middle class (decile 6) rose by 12.7 per cent.

Meanwhile, the median total incomes of the top 10 per cent of families rose from $80,356 to $93,739, an increase of $13,203 or 16.4 per cent. Over the decade we see a continued pattern of the top pulling further ahead of the middle (which matches the pattern during the Harper government’s term).

Looking at low incomes (defined as falling below 50 per cent of the income of comparable households, after tax), the overall poverty rate rose a bit from 14.0 per cent to 14.2 per cent. In a welcome development, the rate fell slightly for children, falling from 17.1 per cent to 17.0 per cent. But the poverty rate for lone parent families with children remained very high at 29.2 per cent. Hopefully the new Canada Child Benefit will further lower the high rate of child poverty moving forward, as promised by the Liberal government.

The low income rate for seniors rose significantly from 12.0 per cent to 14.5 per cent. This rising gap between the incomes of non affluent seniors and other families confirms the need for the recently agreed expansion of the Canada Pension Plan, maintaining the age of eligibility for Old Age Security at age 65, and improvements to the Guaranteed Income Supplement.

The Census numbers confirm that our income tax system is only very modestly progressive. In 2015, the effective tax rate on the top 10 per cent of families (income tax as a percentage of total income) was 21.8 per cent compared to 18.4 per cent for a median or mid point family. The effective income tax rate for the top 10 per cent was almost unchanged (up 0.1 percentage point) from 2005, while the tax rate for middle income families fell a bit from 19.0 per cent to 18.4 per cent. Contrary to the claims of the Fraser Institute, income taxes are relatively low and not rising as a share of the income of most families.

As detailed in the Statistics Canada release, there were significant differences in income trends by province and by urban centre due to the resource boom combined with major job losses in manufacturing in Ontario. Notably, median family income in Ontario rose by just 3.8 per cent over the decade compared to a Canada wide increase of 12.7 per cent. This trend has recently gone into reverse.

On a more positive note, the decade from 2005 to 2015 saw progress in closing the gender pay gap. Median employment income of women rose by 11.6 per cent compared to 2.2 per cent for men, likely reflecting the loss of male-dominated industrial jobs and job growth in public and social services where many women work. Nonetheless, the median employment income of women in 2015 was just 71.5 per cent that of men, or $28,474 compared to $39,836.

The restoration of a proper Census in 2016 was an important step, giving us the data for detailed research on income and employment trends among other important issues, and allowing us to measure social and economic progress. Tables now available from Statistics Canada provide a wealth of data on incomes by age, gender, family type, region and the means to track inequality, and will inform much more detailed analysis in the months to come.

 

Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University, and senior policy adviser to the Broadbent Institute.

More of the Broadbent Institute's work on income inequality can be found here.