With a GDP per capita of over USD 44,000, Canada is among the world’s wealthiest countries. The average Canadian income for a full-time employee is around $54,000, and the unemployment rate is 5.40%.
With such a positive economic outlook, it is no wonder that Canada attracts millions of newcomers who want to work or conduct business in the country. But how rich are Canadians, and how is wealth distributed across the country? This article provides a simple analysis of these numbers and other economic data to help you understand Canada’s current and future financial prospects.
- Canada in 2022: Key income statistics
- Canadian income differences between demographic groups
- Taxes in Canada
- Poverty in Canada
- Canadian incomes are rising, are they actually getting richer?
- Canadian incomes make Canada among the world’s wealthiest countries
Canada in 2022: Key income statistics
A person’s income is one of the most relevant indicators of their financial well-being. Whether you are looking for a mortgage, a personal loan, or a credit card, you will be asked to provide evidence of your income. A financial company will judge your situation based on several variables, including your financial position related to other customers and potential customers.
If your individual monthly income approaches or surpasses $4,000, you are in the middle of the economic strata, as the average Canadian monthly income is $4,202.36. Assuming income as the standard measure of wealth, Canadians are the 12th wealthiest people in the world.
It’s no secret that not everyone in Canada lives the same. However, the country isn’t among those with the highest income inequality levels. The largest group of Canadians (18%) have an annual income between $60,000 and $79,000. On the other hand, while 16% of Canadians make over $100,000 per year, about 2% of the population makes less than $5,000 per year, including losses. The average CEO of a top-100 company earns 202 times more than the average Canadian. Some of these CEOs are among the country’s wealthiest individuals.
The wealth of a nation does not only depend on income but also on the cost of living, taxes, and other factors. For this reason, whether you are looking for a job or investment prospects in Canada, it is essential to understand the meaning of these financial numbers and how they can help you make the right decisions. With this in mind, let’s take a closer look at the financial situation of the Canadian population with the help of several statistics provided by the Canadian Income Survey (2020) and other sources.
Canadian income differences between demographic groups
The average income of professionals in the age range of 16 to 24 is $21,000 a year, which is more than $30,000 less than the average income of all professionals from all age groups. These values are not surprising, given that many individuals in this age category are not fully employed or have just started their careers.
Workers between 25 and 34 years of age report an average annual wage of $50,200. This is more than double what Gen Z makes. Millennials have a median household income of $44,093 after taxes. They make more money than previous generations made at their age. For instance, Gen X made $33,276 when they were of the same age while boomers made $33,350. On the other hand, Millennials have significantly more debt than the previous generations and face both a higher cost of living and a much more competitive real estate market.
According to Statistics Canada, in 1999, young Gen-Xers had a 125% debt-to-after-tax income ratio. In comparison, Millennials in 2016 had a 216% debt-to-after-tax income ratio. The main causes of millennial debt are the increased cost of higher education and home ownership.
Professionals aged 45 to 54 report an annual income of $67,400. This age group is the wealthiest demographic group in Canada and represents most of the Canadian workforce. However, although this age range makes the most money, there’s a very significant gender disparity. Men aged 45 to 54 report an annual average income of $78,300. In comparison, women of the same age report an average yearly income of only $56,800. Read more about Why women may need to save more for retirement.
According to Statista, in 2019, the total median income of Canadian senior citizens aged 65 years and over was $29,940. The minimum amount of income needed to have a basic standard of living in Canada is $18,000. This means that over two million seniors do not have a minimum living standard, as they live on a Guaranteed Income Supplement that provides $17,000 a year.
Regional differences & Canadian income
Not surprisingly, some Canadian provinces have it better than others. For example, the highest annual average wage is in Nunavut ($82,875), while the lowest is in New Brunswick ($43,400). As it’s usually the case, some regions in the country also grow faster than others. For example, it is estimated that the average wage in Manitoba will increase by 17.9% by the end of 2022.
In 2021, Calgary was the city that provided the highest average income in Canada at roughly $104,410 per year. Other cities that provided higher-than-average wages are Regina ($97,940), Oshawa ($92,080), and Victoria ($89,640).
While the average income provides a global view of the income distribution, its value can be skewed by extreme values. Looking at the average salary will not give you a good picture of what workers across all sectors make. Especially if wages in some industries are much higher than in most others.
Median values, on the other hand, provide a more accurate view of the range of values. For example, the median wage is the income cut-off where half of the sampled population earn more, and half earn less. The average (or mean) income is calculated by dividing the total household income by the number of the population sampled.
The average annual median income in Canada was $66,800. The table below illustrates the median after-tax yearly income for 2020 by province.
|Provinces||Average income 2020|
|Newfoundland and Labrador||$59,300|
|Prince Edward Island||$59,400|
Source: Statistics Canada
Unmarried individuals and families in Alberta have the highest median after-tax income of the provinces ($77,700). On the other hand, families in New Brunswick have the lowest income ($56,900).
While a good indicator of the overall wealth level across Canadian provinces, these numbers do not tell the whole story. For instance, these income differences ignore additional factors. Such as the age of the population and the cost of living, which also varies by province. While Ontario is the second wealthiest province in Canada in terms of income, it’s also the most expensive.
Income differences by education and profession
As expected, income varies substantially by education. Individuals with a university degree have the highest annual average salary, estimated at $60,418. More experienced professionals of ages 45-49 have an even higher average annual income, estimated at $89,175.
As in all countries, average wages in Canada vary substantially by industry. Those working in quarrying, mining, and oil & gas extraction have average weekly earnings of $2,242. They are the highest-paid workers in the country.
The lowest paying sector is accommodation and food services. Workers in this field make an average weekly income of $462. Workers in hospitality and retail also have lower incomes than most other workers. They earn an average weekly income of $663.
Average incomes in some industries are growing faster than in others. The Canadian Income Survey found the highest increase in arts, entertainment, and recreation (26.3%), real estate (14.6%), and administrative support (9.4%). Less growth was observed in two industries that provide the lowest incomes, namely health care and social assistance (9.1%) and retail (8.4%).
Gender and ethnic differences
According to a report, women earn about $7,200 less than men annually, even if they have the same experience and demographic background. While the pay gap varies by age group, it starts from a young age and continues into the senior years.
According to an OECD report, for full-time employees, there is a 16.1% difference between the annual median earnings of women and men relative to the median yearly earnings of men. According to the same report, Canada has the eighth worst gender pay gap among a list of several countries.
There is also a substantial gap in income levels between Native and non-Native populations. For example, in urban reserves, non-Indigenous people make 34% more than First Nation workers for the same work, while in rural reserves, non-Indigenous people make 88% more than Indigenous people.
Taxes in Canada
In 2022, the average consumer debt is $20,744 per capita, with the total consumer debt reaching $2.3 trillion. Younger people appear to experience financial stress more often, while Canadians aged 46-55 report the highest average debt, at $31,442 per capita.
One of the most significant expenses for Canadians is taxes. The tax wedge for an average Canadian in 2021 was 31.5%; however, for an annual income of $91,535, the average Canadian family pays $39,000 in taxes, which corresponds to 42.6% of their total income. Taxes Canadians pay include income tax and payroll deductions, property taxes, import taxes, sales taxes, and alcohol taxes, among others.
The tax system is thought to have contributed to decreased income inequality. For example, although the bottom 40% of Canadians make 13% of the total income earned before taxes, the figure goes up to 21% after taxes.
Poverty in Canada
In government surveys, poverty is typically defined based on the Market Basket Measure (MBM), which is an estimate of the share of the population that does not have enough income to afford the cost of a basket of essential goods and services. However, MBM threshold varies by community, meaning that what is poor in some communities might be average in others. This also means that the poor in a rich country will usually be substantially wealthier than the poor in a developing country.
The Canadian Income Survey found that, in 2020, 6.4% of Canadians had incomes below the MBM threshold. Poverty levels varied by region; Quebec reported the lowest poverty rate (4.8%) while Nova Scotia reported the highest (7.7%), followed by Prince Edward Island (7.6%), New Brunswick (7.6%), and British Columbia (7.6%).
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Poverty rates vary by family structure, with those not in economic families having the highest poverty rate, followed by couples with children. Couple families without children tend to have lower poverty rates than the country’s average (4.6%).
The poverty rate also varies by age: 4.7% of children aged 17, 7.8% of adults aged 18-64, and 3.1% of adults 65 and older have incomes below the MBM threshold.
A noticeable difference in poverty rates also exists between Indigenous and non-Indigenous individuals, which is not surprising given the earlier-mentioned gap in income between these populations. In 2020, 11.8% of First Nations individuals were living in poverty, which is about double that of non-Indigenous people. Poverty rates are also higher among individuals with a disability (8.5%) and recent emigrants (8.6%).
Canadian incomes are rising, are they actually getting richer?
Social science studies have shown multiple times that people tend to be pessimistic about the future, including when asked about their opinions on the future of the economy. Whether they believe it or not, Canadians are getting richer. The average hourly wage has almost consistently grown since the 1990s and reached an all-time high in April 2022, when it was $28.68. For comparison, the average hourly wage in 1991 was $13.73. It is estimated that by 2023, the average hourly wage in Canada will reach $30.11.
Some may be tempted to believe that these numbers don’t reflect an increase in wealth, as the cost of living has also increased along with GDP per capita and income. However, there are good reasons to believe that wealth has indeed increased. For example, a 2016 report found that the previous generations of Canadians were 35% poorer than the current generation of young Canadians when adjusted for inflation.
While a one-year interval cannot be used to describe long-term trends, it is worth mentioning that, according to data from Statistics Canada, the number of Canadians who live in poverty has decreased from 10.3% in 2019 to 6.4% in 2020. Poverty has decreased for all types of families, with senior and non-senior couples experiencing the most significant declines in poverty rates.
According to Canada Income Survey, between 2019 to 2020, median after-tax income remained relatively unchanged or even increased for all family types in the country. For couples with children, the median after-tax income increased by 4.7%, reaching $110,700 in 2020.
Senior couples also experienced an annual increase of 4.6% over the same period, reaching an after-tax income of $65,900 in 2020. Unmarried individuals saw a more significant growth rate in their median after-tax income (7.1%), earning $34,500 in 2020.
These growth trends resonate with Canada’s macroeconomic outlooks. For example, in 2021, the country’s GDP increased by 4.6%, while the number of employees receiving benefits or pay from their employers increased by 0.7%.
Canadian incomes make Canada among the world’s wealthiest countries
Canada’s income statistics show that Canada is among the world’s wealthiest countries and most of its population enjoys a high standard of living. The country arguably offers some of the world’s best job opportunities, wages, and employee compensation. Furthermore, there is good reason to be optimistic about the country’s near-future economic outlook.
Whether you are working or doing business in Canada, or planning to do so in the future, understanding the country’s financial outlook should make a difference. The average Canadian income is higher than in most countries in the world, but inequalities do exist. A close look at income data statistics may help you find the right region or industry given your financial needs and interests.
The average Canadian retirement income coming from Canada Pension Plan (CPP) is $8,303 a year.
As of 2022, the average monthly salary in Canada is 4,202.36
In 2022, the average Canadian monthly household income is $6,287.67.
The average net worth of a Canadian is $425,460. The average net worth varies substantially by age; the average net worth of an under 35 is $48,800 while the average net worth of a 65 and older is $543,000.
The average net worth of a Canadian household is $329,900
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About The Author: Arthur Dubois
Passionate about personal finance and financial technology, Arthur Dubois is a writer and SEO specialist at Hardbacon. Since his arrival in Canada, he’s built his credit score from nothing.
Arthur invests in the stock market but doesn’t pay any fees because he uses National Bank Direct Brokerage online broker and Wealthsimple’s robo-advisor. He pays for his subscriptions online with his KOHO prepaid card, and uses his Tangerine credit card for most of his in-store purchases. When he buys bitcoins, it’s with the BitBuy online platform. Of course it goes without saying that he uses the Hardbacon app so that he can manage all of his finances from one convenient place.
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