2006 Canadian Census Snapshot: Earnings & Income

Statistics Canada released detailed analysis of data from the 2006 Census on earnings and income on May 1st. Here is a summary of some of the key findings:

Little change in earnings during past quarter century

Median earnings of Canadians employed on a full-time basis for a full year changed little during the past quarter century, edging up from $41,348 in 1980 to $41,401 in 2005 (in 2005 constant dollars).
Earnings of full-time full-year earners rose for those at the top of the earnings distribution, stagnated for those in the middle and declined for those at the bottom.
For the purpose of this analysis, full-time full-year earners were divided into five groups based on their employment income levels, each group representing one-fifth, or 20%, of the total number of workers.
Between 1980 and 2005, median earnings among the top 20% of full-time full-year earners increased by 16.4%. In contrast, median earnings among those in the bottom one-fifth of the distribution fell 20.6%. Median earnings among those in the middle 20% stagnated, increasing by only 0.1%.
The more rapid growth at the top of the earnings distribution has led to an increase in the proportion of high earners over the past quarter century.
In 1980, 3.4% of full-time full-year earners received $100,000 or more (in 2005 constant dollars). By 2005, this proportion had almost doubled to 6.5%. As a result, more than half a million individuals earned $100,000 or more in 2005.
During this 25-year period, recent immigrants lost ground relative to their Canadian-born counterparts.
In 1980, recent immigrant men who had some employment income earned 85 cents for each dollar received by Canadian-born men. By 2005, the ratio had dropped to 63 cents. The corresponding numbers for recent immigrant women were 85 cents and 56 cents, respectively.
Earning disparities between recent immigrants and Canadian-born workers increased not only during the two previous decades, but also between 2000 and 2005.

Family earnings: Working couples with children had highest median earnings of all family types

Between 1980 and 2005, median earnings of economic families in which at least one partner, or the parent, was aged between 15 and 64 years increased by 9.3% to $63,715. Earning increases were greater for families than for individuals, mainly due to the increasing participation of female partners in the labour market.
Working couples with children had the highest median earnings of all family types in 2005, an estimated $75,997, up 20.6% from 1980. For lone-parent families headed by women, median earnings rose 10.9% to $30,958. Their male counterparts had median earnings of $47,943, a drop of 8.5% since 1980.

Incomes of families: Couples with children on top rung of income ladder

Couples with children, once the dominant type of economic family, no longer make up the majority of families. In 1981, couples with children accounted for 56.3% of all families with two or more people; by 2006, this proportion had declined to 46.2%.
In contrast, couples with no children accounted for 30.3% of the total in 1981; by 2006, their proportion had increased to 37.0%.
Although their share has declined, couples with children still have a higher median income than any other type of economic family. In 2005, their median income amounted to $82,943, up 21.6% from 1980, mostly due to the increase in the number of dual-earner families.
The median income for couples without children at home was $59,834, up 14.6% from 1980.
It is also possible to examine families in terms of age structure. Of the 3,252,990 couples without children at home in Canada, 24.8% were senior couples; that is, both partners were aged 65 and over. The median income of these senior couples was $45,674 in 2005, up 55.8% from 1980.
In 2006, the number of lone-parent families headed by women surpassed the 1-million mark, hitting 1,037,425. The 2006 Census also showed that 248,900 lone-parent families were headed by men, more than double the number in 1981.
Census data showed that the income gap between these two types of families narrowed slightly during the past 25 years.
The median income for lone-parent families headed by women in 2005 amounted to $36,765, still the lowest of all the major economic family types. However, this was 26.4% higher than it was in 1980. In contrast, the median income for lone-parent families headed by men declined 4.1% during this 25-year period, to $51,974.

Sources of income: Employment earnings account for four-fifths of income

For economic families as a whole, employment earnings represented the lion's share of income. Of every $100 of income received in 2005, employment earnings accounted for $78. Still, this was down from a quarter century earlier, when earnings accounted for almost $84.
In addition, government transfer payments, such as Old Age Security (OAS), Employment Insurance benefits, Child Benefits, and Goods and Services Tax credits, contributed $9.90 of every $100.00 in income in 2005.
Investment income represented $4.20 of every $100.00, while retirement income sources such as private pensions accounted for $5.90, more than double the level of only $2.30 in 1980.
This gain in the share of retirement income can be attributed to both an aging population, and increases in the average amount per recipient.

After-tax income: First-time data from the census

For the first time, the census collected information on the after-tax income of Canadians, that is, total income from all sources minus income tax. After-tax income depicts in a better fashion what families have available to spend.
The median after-tax income of all economic families in 2005 was $57,178, compared with the total or pre-tax median income of $66,343.
The after-tax income gap between different types of families is smaller than the total income gap because after-tax income reflects the fact that people with higher incomes generally have a higher tax rate. For example, on an after-tax basis, lone-parent families headed by women had a median after tax income that was 49.1% of that received by couples with children, compared with 44.3% based on pre-tax income.
Also for the first time, the census can calculate low-income rates based on after-tax income.
Census data showed that 11.4% of the total population, an estimated 3,484,625 people, lived in low income in 2005 using after-tax income.
Of these people, an estimated 879,955 young people aged 17 years and under were living in low-income families in 2005.
Low-income rates are highest among children and young people. In 2005, 14.5% of all children aged 5 and under were part of a low-income family. The rate dropped to 13.0% for children aged 6 to 14, and to 11.4% for teens aged 15 to 17.