Who wins when there is strong economic growth?

One of the questions I get asked a lot is “who wins when a jurisdiction goes through a period of strong economic growth”?    Of course the answer to that varies widely but we can use Statistics Canada data to assess where the gains from economic growth end up.

The following tables show the 10 year increase/decrease in average family income by income quintile for the period 2001 to 2011. These tables show the overall rise in average family income (adjusted for inflation) and then each income quintile faired over the decade.

New Brunswick and Canada both saw a nine percent rise in inflation adjusted average family income over the decade but New Brunswick residents in the two lowest quintiles made gains far in excess of the national average.  Families earning at the lowest quintile in NB now earn slightly more than their counterparts across Canada ($15,900 vs. $15,600).  I don’t  think anyone should be bragging that the lowest earning 20 percent of families make less than $16,000/year but on a relative basis it is higher in NB than NS, QC, ON and BC.  Because this is all family types, there is high percentage of unattached individuals in this quintile.

 

Ten Year Growth in Average Family Income by Income Quintile (2011 Constant Dollars) 2001-2011

Source: Statistics Canada CANSIM Table 202-0703 Market, total and after-tax income, by economic family type and after-tax income quintiles, 2011 constant dollars

 

There is an opinion that natural resources development benefits the few – the examples in Canada do not bear out that view.  As you know, oil, gas, potash, uranium and other non-renewable resource development in Saskatchewan has turned around that economy.   The table below shows that families at the lower end of the income scale actually witnessed much faster relative growth in average family income than those at the higher end of the scale.  Again, those first two quintiles are low income ($18,200 and $38,600) but they are among the highest among the provinces in Canada.

Ten Year Growth in Average Family Income by Income Quintile (2011 Constant Dollars) 2001-2011

Source: Statistics Canada CANSIM Table 202-0703 Market, total and after-tax income, by economic family type and after-tax income quintiles, 2011 constant dollars

 

Interestingly, Newfoundland & Labrador did see faster relative income gains in the higher income quartiles.

 

Ten Year Growth in Average Family Income by Income Quintile (2011 Constant Dollars) 2001-2011

Source: Statistics Canada CANSIM Table 202-0703 Market, total and after-tax income, by economic family type and after-tax income quintiles, 2011 constant dollars

 

Ontario and BC have the dubious distinction of the weakest average family income growth among the 10 provinces.  For BC it is nearly a 20 year period of relative income stagnation.   Not sure anyone is watching but eventually the voters in Ontario and BC are going to figure out that the are slipping on a variety of front.  Check out Ontario where the richies (highest quintile) saw zero growth in inflation adjusted average family income growth over the decade.  Imagine, little old Saskatchewan has almost caught Ontario for average family income (passed it for three of the five income quartiles).

 

Ten Year Growth in Average Family Income by Income Quintile (2011 Constant Dollars) 2001-2011

Source: Statistics Canada CANSIM Table 202-0703 Market, total and after-tax income, by economic family type and after-tax income quintiles, 2011 constant dollars

 

 

 

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2 Responses to Who wins when there is strong economic growth?

  1. mikel says:

    There are some pretty big question marks missing from those numbers. For example, since NB’s population has fallen in several of those years, there may be highest income growth for 20,000 families at the third quantrile, but ten years earlier there may have been 30,000 in that quantrile. How many have moved between them, and how many are being counted?

    And what is the definition of ‘family’, ten years ago a ‘family’ may have been just a dad, ten years later its both mom and dad. Or ten years earlier it could have been a mom and dad, but now families may be ONE person, or a single parent.

    But the main problem is that whenever these types of arguments are made, you can substitute ‘strong economy’ with ‘high oil prices’. Saudi Arabia also tends to make out pretty well, but nobody is saying ‘lets make our society like the Saudi’s’ or even ‘lets make our ECONOMY like the Saudi’s’.

  2. Will says:

    People who ask you this have a hidden agenda. When the myths of fracking dangers are exposed they turn to ‘no jobs or foreign workers or only the rich will benefit. Ignorant questions from those oblivious to Alberta’s successes for veronevwhowants to work, including those we send there and transfer payments..

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