Employment income since 2006: who gained and who lost

The Harper government claims to be good economic managers pursuing a successful jobs and growth agenda.

To be sure, there are many factors other than federal government policy that strongly influence Canadian jobs and incomes, such as resource prices, business decisions, the state of the United States and the global economy, and the actions of provincial governments. No federal government can take all or even most of the credit or blame for how our economy is doing.

But it is fair to at least ask the question of whether or not Canadians are better off since the Harper government took office in 2006.

Statistics Canada provides data on one key metric of economic well-being – namely income from employment as reported each year for tax purposes. This includes wages from paid jobs and income from self-employment. Such data are available from 2006 to 2012.

Employment income is, of course, by far the major element of household income, which also includes income from investments, pensions, and government social programs such as Old Age Security.

The period from 2006 to 2012 includes the recession of 2008-09 when employment incomes fell due to high unemployment. 2006 to 2008 were years of growth, and the years from 2009 to 2012 were ones of recovery.

The tables below look at changes in median employment incomes from 2006 to 2012. Half of all persons make more than the median, and half earn less. The median is a benchmark for how middle-income earners are doing as opposed to averages, which tend to be raised by large income increases for the very well-off.

There are several factors driving annual employment income. First, annual incomes will rise if pay rates and hourly wages and annual salaries increase. Second, incomes will rise if people are working more hours in the week, and more weeks and months in the year. Third, incomes will rise if well-paid jobs are being created, allowing workers to move from lower-paid to higher-paid jobs.

The Statistics Canada income data for 2006 are adjusted for the 11.63% increase in consumer prices from 2006 to 2012 to get a reading on how the real purchasing power of employment income has changed over that period.

The bottom line for all of Canada is that median annual employment income adjusted for inflation rose by $1,073 or by just 3.5% over the six years from 2006 to 2012, or by about one half of one percent per year. This is certainly a better performance than some other advanced economies, but basically represents a very, very modest increase.

Strikingly, there are very large differences by province and by major urban centres.

Table 1 below provides data by province.

At one pole, as one would expect,  incomes rose the most in the resource producing provinces, especially Newfoundland and Labrador (37.7%) and Saskatchewan (25%), but less so in Alberta (12.9%.)

At the other end of the spectrum, median employment income actually fell in British Columbia (down 2.4%) and in Ontario (down 1.7%.)

Table 2 provides the same data for major cities (Census Metropolitan Areas). Incomes fell the most in hard-hit industrial Ontario, down by 13.6% in Windsor and by 6.5% in Oshawa. Perhaps more surprisingly, incomes  fell by 2.8% in Canada's largest city of Toronto, and rose by just 2.1% in Montreal. Incomes fell by 3% in Vancouver and by 4.8% in Victoria. The biggest gains were in cities in Saskatchewan and Alberta, as well as in St. John’s.

Table 1: Median Employment Income by Province, 2006 to 2012, in 2012 dollars

* Inflation adjustment using Bank of Canada inflation calculator. Source: Statistics Canada. Table 111-0024 - Labour income profile of taxfilers (accessed: January 14, 2015). Based on Taxfiler Data.