Canada's 1%

Income levels for most Canadians haven’t changed much in recent years except for one group -the wealthy - who  are pulling away from the pack. Canadian executive pay has soared since the 1990s.  Their annual incomes have more than doubled over the past three decades while the median taxpayer’s income has changed very little, suggesting that in Canada – as in the United States – the wealthy have benefited most from economic growth and productivity gains.  Once people reach the top 1 per cent, they’re likely to stay there. Last year, the number of high-net-worth Canadians (defined as those with investable wealth of $1-million or more) rose to a record, according to the Royal Bank of Canada.

The higher up the income ladder, the larger the gains. Incomes among the top 1 per cent have climbed 80 per cent since 1986, according to inflation-adjusted calculations by Prof. Veall. They’re up 138 per cent for the top 0.1 per cent of earners and 169 per cent among the top 0.01 per cent – compared with gains of 19 per cent for the bottom 90 per cent of earners. Thus the most affluent are gaining a greater share of the income pie.

The most elite – who are skewing the average upwards – tend to be concentrated in finance and management. In the decade since 2001, median pay for CEOs at Canada’s 100 largest companies has almost tripled to $4.1-million from $1.4-million. (The pay totals are even higher, but the calculation excludes the value of stock option grants and pension accruals in both periods because there is no comparable data available from 2001, when the information did not have to be disclosed.)

To join the top 1 per cent of earners requires $201,400 in annual earnings, and the group encompasses doctors, dentists, lawyers, veterinarians, real-estate agents, architects and engineers. Engineers, for example, have seen their earnings climb 35 per cent in the past 25 years after adjusting for inflation, data from Statistics Canada show. The gains have been even greater in Alberta, where the most senior group of specialized engineers has seen median base salaries rise 18 per cent in the past five years alone, according to the Association of Professional Engineers and Geoscientists of Alberta. Their median base salaries of $218,000 a year – with total median compensation of $325,000 – puts them squarely in Canada’s top 1 per cent. More than half of the income surge experienced by Canada’s top 1 per cent in the past three decades came from two cities alone – Toronto and Calgary.

Earnings at the top have also been boosted by the investment portfolios of wealthier Canadians. Canada’s top 10 per cent earned 57 per cent of all reported investment income in 2010, according to Statistics Canada. Despite all the market volatility of the past five years, the S&P/TSX composite index is up 77 per cent from its bottom in March, 2009, providing income gains for those in a position to take advantage of them.

WHO ARE THE 1 PER CENT?

There were 254,730 tax filers in the top 1 per cent category in 2010,
79 per cent of them male and 21 per cent female. The vast majority – 83 per cent – were married or in common-law relationships, with a median age of 51.
The threshold to reach the top 1 per cent in 2010 was $201,400, while the median income in the middle of the 1-per-cent pack was $283,400 and the average income of 1 per centers was $429,600.
The 1 per cent are more educated than average, with 67 per cent having completed university degrees (compared with 21 per cent of all Canadians over age 15). More than half of the 1 per cent have degrees in three areas of study: business (29 per cent), health (15 per cent) and engineering (11 per cent).
The vast majority of those in the 1 per cent – 88 per cent – work in five broad occupation groups: management (39 per cent), health care (14 per cent); business and finance (14 per cent); education, law, community and government service (11 per cent) and natural and applied sciences (10 per cent).
The 1 per cent paid 21 per cent of all federal and provincial taxes in Canada in 2010. Their median tax bill was $90,100 in 2010, up from $32,300 in 1985.
A growing proportion of the 1 per cent live in Alberta – 20 per cent of them, up from 10 per cent in 1990 – while 43 per cent live in Ontario, 17 per cent in Quebec and 12 per cent in British Columbia.
The 1 per cent are growing more likely to stay at the top. In 1987, 44 per cent had also been in the 1 per cent five years earlier, a proportion that climbed to 53 per cent by 2010.
Highly educated men are increasingly likely to marry women with similar education levels, further boosting incomes at the top. In 2001, 54 per cent of couples marrying in Canada had the same education level, up from 42 per cent in 1971

From here