Census Reveals Incomes Increasing Overall, But Little Change For Low-Income Population

For the first time, the 2016 Census of Population program gathered income information solely from administrative data sources (that is, tax records). The use of administrative data reduces the burden on respondents at the time of data collection and increases the quality and quantity of income data. For the 2016 census, income information was based on the entire population rather than only a sample of the population (from long form responses), as was the case in earlier censuses. This new approach means that income data will be much more accurate, particularly for small geographic areas. In addition, there are new data on contributions to three government programs: registered retirement savings programs (RRSPs), tax free savings accounts (TFSAs) and registered pension plans (RRPs).

It is important to note that the census results show the picture of income of Canadians in 2015 before the effects of the oil price downturn in 2015 and 2016 were fully felt.

Household Income    

The median total income of households was $70,336 in 2015, up 10.8 percent from 2005 after adjusting for inflation. The change in income over the decade reflects in large part the high resource prices that impacted Alberta, Saskatchewan and Newfoundland and Labrador, as well as the decline of the manufacturing sector, particularly in Ontario and Quebec. Among the provinces, increases in median income were greatest in Saskatchewan (36.5 percent), Newfoundland and Labrador (28.9 percent) and Alberta (24.0 percent). Ontario had the lowest increase (3.8 percent) followed by Quebec (8.9 percent).

Income taxes reduced the median income of households from $70,336 to $61,348.

All types of families had similar income increases over the decade. The median household income for couples with children was $112,545, up 15.9 percent. Couples without children had a median income of $79,343, an increase of 12.5 percent, while lone-parent families had a median income of $52,265, up 14.4 percent. Persons not in a census family had a median income of $37,955, up 10.9 percent.

Households with people aged 65 and over posted higher income increases.  For households with no persons aged 65 or older, the median income was $77,925, up 11.1 percent. Households with one person over age 65 had a median income of $44,711, an increase of 17.0 percent, and households with two people aged 65 or older had a median income of $67,371, up 15.1 percent.

Individual Incomes

Although having lower total incomes in general, females reported higher income increases than males. In 2015, the median total income for males aged 15 and over was $40,782 while for females 15 and over it was $28,860. Part of the difference was due to the fact that, compared to men, more women work part-time (26 percent of female workers were employed part-time versus 12 percent of males). However the median income for females was up 19.1 percent compared to an increase of only 6.7 percent for males.

Median individual incomes in 2015 ranged from a low of $11,505 for people aged 15 to 24 to a high of $47,384 for people aged 34 to 44. Income increases were higher for females at all ages compared to 2005.   

There were 8.2 million married or common-law couples in Canada in 2016. In nearly all couples, each partner received some form of income in 2015. In about one-third of couples, incomes were fairly equal (both earning from 40 percent to 60 percent of the couple’s total income). This was up from 1985 when 20.6 percent of couples had fairly equal incomes. In just over half (50.7 percent) of all couples, men had relatively higher income, while in 17.3 percent, women had relatively higher income. By comparison in 1985, men had the higher income in 71.3 percent of all couples while women had the higher income in 8.0 percent of couples.

Same-sex couples had higher median incomes than opposite sex couples ($96,870 compared to $87,688). In part this difference can be traced to more same-sex couples being in their prime earning ages. Female same-sex couples had a median total income of $92,857 compared to $100,707 for male couples.

Total income is made up of two main sources: market income from employment, investment and retirement sources, and government transfers from a variety of programs such as old age security, employment insurance and child benefits as well as many smaller provincial programs. Nearly all individuals aged 15 and over report receiving income of some type. Employment accounts for the majority of all income, and just over 70 percent of all people report receiving some employment income. Thirty percent of people report receiving investment income, and 15 percent have retirement income. Overall, just under 70 percent of all people (68.9 percent) received some type of government transfer: 23 percent received Canada Pension Plan/Quebec Pension Plan, 17 percent received Old Age Security/Guaranteed Income Supplement, 9 percent received employment insurance and 14 percent received child benefits. Nearly half of all people received “other government transfers,” but the median amount was only $626.

Low Income 

Low income can be defined in many different ways, and various measures were reported in the Census. However, Statistics Canada based its analysis of 2015’s low-income data on the low-income measure after tax (LIM-AT). This measure refers to a fixed percentage (50 percent) of median-adjusted, after-tax income of private households. The adjustment for different household sizes reflects the fact that a household's needs increase, but at a decreasing rate, as the number of members increases.

In 2015, 14.2 percent of the population were living in a low-income household, up slightly from 14.0 percent in 2005. The percentages of people living in a low-income household were highest for those under age 25 (17 percent) compared to 12.6 percent for people aged 25 to 64 and 14.6 percent for people aged 65 or older. The prevalence of low income was little changed for most age groups except those aged 65 and over, where the rate increased from 12.0 to 14.5 percent. However, with the growth in Canada’s older population, the number of seniors living in a low-income household increased from 479,000 to 791,000, an increase of 65 percent.

Low-income rates for seniors were very different depending on the family situation. For seniors living as a couple, the low-income rate was 7.6 percent. In comparison, the rate for seniors living alone was 33.8 percent. 

In 2015, low-income rates in most provinces ranged from 12.8 percent (Saskatchewan) to 17.2 percent (Nova Scotia). Alberta, however, was an outlier, with a low-income rate of only 9.3 percent. 

Contributions to Registered Savings Accounts

In 2015, nearly two-thirds of Canada’s 14 million households contributed to at least one of three savings accounts: 40 percent contributed to a tax free savings account (TFSA), 35 percent contributed to a registered retirement savings account (RRSP) and 30 percent contributed to a registered pension plan (RPP). Just under 10 percent of households contributed to all three plans.

As might be expected, the incidence of contributions increased with after-tax income. For example, among households with income under $20,000, less than 20 percent made contributions to at least one plan. But two-thirds of households with after-tax income of $50,000-$59,999 contributed and more than 90 percent of those with after-tax income over $100,000 contributed to at least one plan. 

Implications for Marketers

The increasing incomes of Canadian families is generally good news for marketers, though all the updated income data is useful. Accurate income information plays a vital role in a range of business applications, including target marketing, customer insights, media planning, site location studies and response analysis. Banks and investment companies can use the income data to better understand the potential for specific products like RRSPs and TFSAs. Universities and charities can use the income data to identify high-value prospects from contributor lists and target areas that may be home to prospects with significant incomes. And retailers and real estate developers draw on the income data from the census to plan commercial and residential developments and better understand financial risks. All use the income data to help identify areas of opportunity in support of their marketing strategies.

As always, it is important to recognize that summary measures such as the median hide a wide distribution of incomes that likely reflect very different consumer behaviours. Furthermore, although income is an important characteristic, it should be considered along with other demographic characteristics and consumer values. Subsequent census releases will provide additional income-related information, including data collected by the long-form census questionnaire on ethno-cultural, housing, education and labour characteristics. Parsing these factors can be made easier for marketers with a consumer segmentation system, which can reveal the interplay between income and a variety of consumer characteristics.

In recent years, marketers have tended to focus heavily on the young Millennial generation. This group will certainly become more and more important in the coming decade as they complete their education, move out of their parents’ home and start families on their own. However, the distribution of income across age groups should remind marketers that other generations still offer significant opportunity too. In particular the Boomers are often overlooked by marketers. This growing older generation is very different than seniors of past years: they are more educated and they’re enjoying many more post-retirement years in relatively good health with considerable spending power. Marketers and advertisers should follow the money and pay more attention to this older population.

That said, the levels of low income reported in the census point to continuing challenges for governments and other organizations interested in reducing poverty. Child poverty was little changed over the decade 2005-2015, and levels of low income for seniors actually increased.  The low-income rates for the elderly point to two different subpopulations: elderly couples with a low-income rate of 7.6 percent and elderly people not in families with a rate of over 30 percent. Many in the latter group are older women living on their own. Over the next two decades, the older population will nearly double and, unless something is done to reduce low-income levels, this trend will result in a doubling of the number of seniors living in poverty.

A more detailed analysis of these Census results will be presented in a webinar scheduled for 2:00 p.m. EDT on Wednesday, September 20. You may register here.

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