CIBC Economics observed in a recent report that real disposable income per person rose by roughly $13,000 in Canada between 1980 and last year. At first glance that might seem impressive. But over a span of almost 40 years, it represents a very modest advance, equating to an average annual growth rate of 1.3%. And compared to the United States, Canada’s performance seems disappointing. Stateside, real disposable income per person has climbed by US$25,000 since 1990, which is more than twice the gain that Canada managed to crank out measured in Canadian-dollar terms. The much faster productivity growth achieved in the U.S. compared to Canada likely explains most of the difference.
One way to gauge the financial resources available to people is to look at the after-tax incomes of households. Statistics Canada recently published estimates of disposable incomes for both families and individuals not in families for 2017, covering all metropolitan communities in the country. Note that Statistics Canada’s definition of income understates total compensation by excluding the fast-growing, non-wage benefits paid by employers (e.g. contributions to CPP/QPP and other pension plans, employment insurance, health and dental benefits, life insurance and so on).  Here is a high-level summary of the Statscan findings:
- The median
after-tax income for families and individuals not in families combined stood at $52,330 in 2017. Adjusted for inflation, this was up 1.8% from 2016 but was just 4.6% higher than in 2012.
- Median disposable income rose across most census metropolitan areas in 2017, with the main exceptions being Calgary, St. John’s, Oshawa and Saskatoon.
- Among 35 urban regions, Lethbridge, Metro Vancouver and Montreal recorded the fastest growth in median disposable income between 2012 and 2017. Calgary and Edmonton posted the weakest growth over the same period – with the oil price collapse of 2014-15 being a key factor behind this poor showing.
Disposable Income by City
Table 1 provides data on median household income for the four census metropolitan areas (CMAs) located in British Columbia, as well as for Canada as a whole. The highest median income in “urban B.C.” is found in the Capital Region (Victoria), followed by Kelowna, Greater Vancouver and Abbotsford-Mission. All four British Columbia CMAs enjoyed solid increases in median income between 2012 and 2017. That isn’t surprising, inasmuch as B.C. led the country in aggregate economic growth over that period. B.C. also posted above-average growth in real gross domestic product (GDP) on a per capita basis.
Despite this, British Columbia’s place in the income pecking order leaves much to be desired, particularly considering the relatively high cost of housing in our urban centres. Median household incomes in B.C. cities are far below the levels in the country’s richest urban communities, as shown in Table 2. Calgary, Edmonton, Ottawa-Gatineau, Guelph, Oshawa, Hamilton, Regina, Saskatoon and Lethbridge all boast median incomes noticeably higher than those reported for the four British Columbia CMAs. Moreover, in Vancouver and Abbotsford-Mission median incomes remain lower than the Canadian average, notwithstanding B.C.’s relatively robust economic growth rate over the past few years.
The bottom line is that B.C. has work to do to raise household incomes along with overall living standards – a point that’s also highlighted in the Business Council’s 2019 B.C. Prosperity Index report. To that end, policy-makers and business and community leaders need to be focused on fostering high-wage employment, retaining and growing corporate head offices, accelerating productivity, and encouraging innovation across the private and public sectors.
 CIBC Economics, “Canada’s Income Problem,” In Focus, October 28, 2019. The comprehensiveness of the income measure referred to by CIBC is not clear. For example, if it does not include employers’ social contributions on behalf of employees, or the labour income of the self-employed, it may understate employees’ actual total compensation. It is also unclear which price series are being used to convert incomes from nominal to real, which can make a big difference to real wages growth over time.
 “Income of families and individuals: Sub-provincial data from the T1 Family File, 2017,” The Daily, July 11, 2019. It is not clear what price series Statistics Canada is using to convert incomes from nominal to real. The choice of price series can lead to real income growth being over- or under-stated.
 The median is the exact mid-point in the distribution of after-tax incomes.