Average Income in Canada – Benchmark Your Prosperity

Canada is known for its high standard of living, economic opportunities, and financial stability. However, average incomes can vary greatly depending on factors like age, gender, location, education, and occupation.

Understanding average income provides insights into the nation’s economic health and allows individuals to benchmark their own earnings. This article will analyze the average income in Canada from multiple angles to paint a comprehensive picture.

Overview of Average Income in Canada

According to Statistics Canada, the average income of Canadian individuals in 2021 was $56,700. This represents a 6.98% increase from 2017, indicating steady income growth nationwide.

Looking specifically at Canadian median income, an important indicator of the typical income earner, the median income of Canadian individuals in 2021 was $43,200. This median income value provides a snapshot of the earnings of the middle-ranking income earner in Canada.

These national income statistics act as useful baseline references. However, averages alone don’t tell the full story, as significant variations exist based on region, age, gender and other factors.

What’s the Average Canadian Income by Province and Territory?

There are noticeable differences in average income among the provinces and territories. Here is a breakdown of the average Canadian income by province in 2021:

As the table shows, Alberta had the highest average before-tax income at $61,500 in 2021, primarily due to high wages in the oil and gas sector. Ontario and British Columbia formed the middle tier, with before-tax incomes of $58,100 and $57,500 respectively.

Quebec followed closely with $54,200. The Atlantic provinces of Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island reported the lowest average incomes, ranging from $49,000 to $51,900, but have still seen growth in recent years.

Nationwide, the average before-tax income in Canada was $56,700 in 2021. The data indicates persisting regional income disparities, with resource-rich provinces like Alberta continuing to top the rankings.

The data on median incomes by province in 2021 further affirms the regional income disparities seen when looking at average incomes. Resource-rich provinces like Alberta and Saskatchewan continue to top the rankings for median income, while the Atlantic provinces sit at the bottom.

Average income, calculated by totalling all incomes and dividing by the number of earners, can be distorted by very high earners. Median income represents the midpoint of the distribution – half of earners make more and half make less.

The median is considered a better reflection of a province’s “typical” earner. Comparing average and median incomes can shed light on income inequality.

Looking at the median income data by province:

• Alberta has the highest median income, but it is significantly lower than Alberta’s average income. This indicates income is skewed upwards by very high earners.
• The gap between average and median incomes is generally widest in provinces with natural resource industries, such as Alberta, Saskatchewan, Newfoundland, and Labrador. This points to highly unequal distributions in these provinces.
• The Atlantic provinces have the lowest median incomes, under $41,200 before tax. But their median incomes are closer to their averages, indicating less inequality.

In summary, median provincial incomes highlight that the majority of earners make well below the averages, especially in provinces with resource industries. Comparing median and average data is an important analysis for understanding income distributions.

What are the Reasons for Interprovincial Income Inequality?

The data reveals noticeable differences in average individual incomes across Canada’s provinces and territories. Eight factors contribute to these persistent regional income disparities:

• Natural Resources – Provinces with abundant natural resources like oil, gas, minerals and forestry tend to have higher wages in those sectors. For example, Alberta has the highest average income due to its oil industry.
• Cost of Living – Variations in cost of living across provinces impacts real wages. Incomes may be higher in some provinces based on higher living costs.
• Industrial Structure – Provinces with a higher concentration of skilled, knowledge-based industries like technology, finance and professional services tend to have higher incomes.
• Unemployment Rates – Provinces with more economic opportunities and lower unemployment tend to have higher average incomes.
• Migration Trends – Interprovincial migration patterns can influence average wages as people move for better opportunities.
• Education Levels – Provinces with a more highly educated workforce tend to see higher average incomes.
• Taxation Levels – Provincial taxation differences lead to variances in after-tax disposable income.
• Rural/Urban Divide – Heavily urban provinces like Ontario and BC show higher incomes than more rural ones.

Understanding these provincial income disparities and their causes can help inform policy to promote nationwide equality and prosperity. Reducing regional economic imbalances remains an essential consideration for the future.

What’s the Average Income by Age Group in Canada?

Income growth and decline clearly progress over a typical career lifespan in Canada. Younger Canadians start with lower income, peak during their prime career years, and see earnings decrease again in later life.

Looking at the average income by age group in 2021:

• Canadians aged 15 to 24 had the lowest average income, earning just $21,400 annually. This age range includes students finishing education and those starting out their careers in entry-level roles. Gaining experience and skills will increase their earnings over time.
• The 25 to 54 age bracket represented the peak earning years. With labour force participation at its highest and individuals gaining seniority in their careers, this group earned an average income of $68,900 per year. This age range accounted for the bulk of Canada’s labour force and economic productivity.
• Individuals aged 55 to 64 were in the later stages of their careers but still saw elevated average incomes of $65,500 annually. Many in this age group occupied senior and management positions, leading to higher pay. However, income slowly starts declining leading up to retirement.
• Once Canadians reach age 65 and older, average income drops to $47,300 per year. This predominantly retired senior demographic generally relies on fixed sources of income like pensions, retirement savings and social supports. Some may have part-time employment income as well.

The data demonstrates that Canada’s income earners go through a predictable cycle over their working lives. Initial lower incomes eventually rise to a peak during the prime 25-54 age range. Incomes trend downwards again in the retirement years as individuals leave the workforce. Understanding this career trajectory helps individuals financially plan and make the most of their peak earning years.

What’s the Average Income by Gender in Canada?

The data reveals a considerable gender income gap persists in Canada. According to 2021 data from Statistics Canada, the average income for males was $66,200 compared to $49,200 for females. On average, women earned approximately 74% of what men earned. While this is an improvement from previous decades, it indicates women continue to face disadvantages in pay equality.

The gender income gap has six contributing factors:

• Occupational segregation – Women remain disproportionately represented in lower-paying roles like teaching, nursing and social work.
• Time out of workforce – Women are more likely to take career breaks for parenting, affecting seniority and career trajectory.
• Unpaid domestic labour – Childcare and household tasks disproportionately fall to women, impacting work hours.
• Hiring discrimination – Unconscious bias can influence hiring and promotion practices favouring men.
• Lack of pay transparency – Salary secrecy perpetuates pay gaps and makes inequality difficult to challenge.
• Contract and part-time work – Women are overrepresented in more precarious employment.

Closing the remaining gender income gap will require action on these systemic issues, including pay transparency legislation, equitable parental leave policies, increasing the minimum wage, and challenging old gender stereotypes.

The income divide also has implications for financial security. Women continue to be an at-risk group, requiring careful retirement and insurance planning. Consulting a financial advisor can help women navigate these challenges.

What’s the Average Income in Canada By Occupation?

Understanding the average income in Canada by occupation is essential for career planning, negotiating salaries, and gaining insight into the country’s labour market. This section provides a detailed breakdown of earnings across various professions, helping you compare wages, identify trends, and make informed financial decisions.

Highest Paying Industries and Jobs

The highest paying industries in Canada based on 2021 average weekly wages are:

• Forestry, fishing, mining, quarrying, oil and gas – $1,949.77 average weekly wages
• Utilities – $1,801.12 average weekly wages
• Finance, insurance, real estate, rental and leasing – $1,402.86 average weekly wages
• Professional, scientific and technical services – $1,461.78 average weekly wages
• Public administration – $1,478.94 average weekly wages

(source: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410006401)

Some of the highest-paying specific occupations are:

• Specialist physicians – $339,000 average salary
• Dentists – $175,000 average salary
• Information systems analysts – $93,000 average salary
• Lawyers – $129,000 average salary

The highest paying industries like utilities, finance, and professional services highlight that jobs requiring higher education and specialized skills correlate with higher incomes. For example, sectors like forestry and mining also pay over $1,900 a week on average despite not needing advanced degrees, showing that demand for certain manual skills also commands high compensation.

Looking at top paying occupations, we see a pattern of jobs like physicians, dentists, lawyers, engineers and corporate executives that necessitate extensive training and credentials. These careers allow professionals to command much higher than average salaries.

Lowest Paying Industries and Jobs

The lowest-paying industries in 2021 based on average weekly wages were:

• Accommodation and food services – $489.85 average weekly wages
• Agriculture – $793.12 average weekly wages
• Retail trade – $821.95 average weekly wages
• Business, building and other support services – $857.12 average weekly wages

And some of the lowest-paying occupations are:

• Food counter attendants and kitchen helpers – $31,000 average salary
• Cashiers – $30,000 average salary
• Early childhood educators – $36,000 average salary
• Hairstylists – $35,000 average salary

On the opposite end of the spectrum, lower paying industries tend to involve more informal training and unspecialized labor. Jobs like retail sales, food service, and personal services pay below the Canadian average. This is predictable given the lower barrier to entry for these roles.

The data emphasizes the strong link between higher skills, more extensive education, and higher incomes in the Canadian labor market. There are of course exceptions, but the general trend shows the value of developing in-demand expertise. For individuals, pursuing higher education and training in fields with skill shortages can unlock above-average earning potential.

For a deeper dive into the specifics of fixed earnings across industries and roles, check out our related article, Average Salary in Canada. This piece focuses on regular wages and compensation trends, helping you better understand how salaries compare across different professions and regions.

Income Growth Trends In Canada

Over the past decades, there has been moderate growth in average total income for Canadians. Here is a summary of average income growth from 1981 to 2021:

• From 1981 to 1991, average income grew by 3.3% over the decade to reach $40,400. Growth was slow in the 1980s.
• Income growth picked up in the 1990s, rising 12.3% from 1991 to 2001 to hit $45,400.
• The 2000s saw slower growth of 7.8%, with average income rising to $49,000 by 2011.
• In the past decade, from 2011 to 2021, average income grew by 15.7% to reach $56,700. This was the strongest period of growth.

Over the past 40 years, average Canadian income has risen by about 45% in nominal terms. However, when accounting for inflation, the growth in real average incomes has been slower.

The data shows periods of stagnation mixed with times of faster growth. Incomes have steadily risen on average, but higher earners have tended to benefit disproportionately. The growth has also not been even, with incomes rising fastest in the most recent decade compared to the 1980s and 1990s.

How to Protect Income Through Insurance?

Insurance is vital in protecting income and savings against unexpected life events. The right insurance coverage can help safeguard your finances if you lose your job, have a medical emergency, or need long-term care. There are four types of insurance Canadians should consider:

Disability Insurance

Disability insurance replaces a portion of your income if you are unable to work due to illness or injury. It is essential for shielding yourself from income loss. Policies pay out after you have been disabled for a waiting period, often 90 days. Payments typically replace 60-80% of income. Purchase enough disability coverage to maintain your lifestyle.

Life Insurance

Life insurance provides a lump sum payment to beneficiaries upon the policyholder’s death. It ensures your family is financially secure and can cover expenses like funeral costs, mortgage, and daily needs. Term life insurance is the most affordable option for most working-age Canadians. Purchase a policy large enough to replace at least 5-10 years of income.

Critical Illness Insurance

Critical illness insurance pays out a lump sum if you are diagnosed with a serious health condition like cancer, stroke, or heart attack. It can help cover treatment costs and income loss from being unable to work. These policies pay out within 30 days of diagnosis. Purchase enough to cover at least several months of income.

Long-Term Care Insurance

Long-term care insurance helps pay for extended nursing and home care as you age. It protects your income and assets against the high costs of assisted living or in-home care, which are not covered by provincial healthcare. This coverage gives you options to receive quality care.

Speaking with an insurance advisor can help you understand your risks and tailor the right insurance portfolio to protect your income and savings throughout life’s ups and downs. The right coverage provides peace of mind.

FAQs related to average income in Canada

What was the average income in Canada in 2022?

According to Statistics Canada, the average pre-tax income of Canadians in 2022 was $55,600, while the average after-tax income was $45,600. Average incomes vary each year due to economic conditions.

Where are the highest average incomes found in Canada?

The provinces with the highest average incomes are Alberta, Ontario and British Columbia due to high wages in sectors like oil/gas, finance and technology. Major cities also report higher averages than rural regions.

Why do average incomes vary so much by province in Canada?

Average provincial incomes are impacted by factors like natural resource industries, knowledge-based sectors, unemployment rates and demographics. Cost of living also causes wage variance.

When did average income growth stagnate in Canada?

Canadian income growth stagnated through the 1980s and 1990s compared to faster growth in recent decades. Slow economic expansion and recessions contributed to slower income gains.

Do men or women have higher average incomes in Canada?

Canadian men have significantly higher average incomes than women, around 25% more on average. This wage gap is attributed to occupational segregation, work experience differences, hiring biases and other factors.

Is income mainly from wages and salaries in Canada?

Yes, wages and salaries make up the bulk (around 80%) of income for the average Canadian. Other sources are government transfers, pensions, investments and self-employment.

How does Canada's average income compare to other developed countries?

Canada's average income is lower than the US but higher than the UK, Australia and much of Europe. Countries like Luxembourg and Switzerland top the rankings for the highest average incomes globally.

Where are the lowest average incomes found regionally in Canada?

The Atlantic provinces of New Brunswick, Nova Scotia, Newfoundland and PEI have the lowest provincial average incomes in Canada due to less industrialization. Rural, remote northern communities also lag behind.

Why do income disparities between provinces persist in Canada?

Factors like geographic size, lack of high-paying sectors and out-migration to Western provinces contribute to lagging Atlantic wages. Resource abundance in the West also widens the gap.

Can you explain the difference between median and average income in Canada?

The median represents the mid-point of the income distribution, while the average is total income divided by population. Median income is lower as averages are skewed higher by top earners.

What are the main income support programs in Canada?

The largest income support programs are the Canada Pension Plan, Old Age Security, Employment Insurance and the Canada Child Benefit, which provide financial assistance to seniors, families, etc.

How progressive is Canada's income tax system?

Canada's federal-provincial income tax system is considered progressive with higher earners paying increased tax rates and a larger share of the overall tax burden through deductions and brackets.

What financial advice is recommended based on Canada's average incomes?

Advice includes maximizing registered savings plans, managing debt levels wisely, purchasing adequate insurance protection and investing prudently within your means.