A recent study by the Fraser Institute gives low marks to middle class incomes in larger Canadian cities as compared to their American counterparts.
The study looked at incomes in the largest 141 metropolitan areas in Canada and the United States, 14 of which were Canadian.
The study found only two Canadian cities made it into the upper half of the rankings. Most of Canada’s largest cities sat at the very bottom.
“Canadians in our largest urban centres are generally earning less employment income than people living in comparable American cities,” said Ben Eisen in a news release. Mr. Eisen is senior fellow with the Fraser Institute and co-author of the study.
The highest-ranking Canadian census metropolitan area was Ottawa-Gatineau, which ranked 52 out of 141, with a median income of $45,500, closely followed by Edmonton, which ranked 53 at $45,470. Calgary was the next highest at $43,870.
By comparison, the top-ranked U.S. cities, San Jose and San Francisco in California, had median incomes of $73,896, and $70,315 respectively.
Compare that to the relatively poor showing of Canada’s three largest cities—Toronto, Montreal, and Vancouver—which between them make up over a third of the country’s population.
Toronto ranks 127 out of 141, with a median income of $37,550. Vancouver ranks 131 out of 141, with a median income of $37,300. And Montreal came in at 134 out of 141, with a median income of $36,660.
“While the top of the rankings is dominated by very large metro areas in the United States, Canada’s largest metro areas are found near the bottom of the list,” the study says.
“In short, the government sector and the oil and gas sector are the major contributors to the relative success of Canada’s highest performing cities.”
The study also points out the best-performing American cities have a much more diversified income than in Canada.
“America’s top performers on this metric are economically diverse, whereas the handful of Canadian cities that are at or near the middle of the Canada/ US rankings are either capital cities with large public administration sectors, or are cities that benefit substantially from natural resource development, or both,” said the report.
The median income for places like Ottawa sounds quite low, but there are two important points to make.
First, the study is based on median incomes, not average. There can be a big difference.
An average income is when everyone’s income—all the way from those working at a fast-food joint to CEOs earning six and seven figures—is added together and divided.
Median income refers to an income that is exactly in the middle: there are as many people earning less than the median as there are those earning above the median.
“The methodological choice to focus on median incomes is borne out of the authors’ preference for analyzing the health of labour markets for middle-income residents,” said the study.
The second point is that incomes are from 2019, the last year before the pandemic threw a monkey wrench into economic results.
The authors don’t delve too much into the reasons for the difference in incomes between the United States and Canada. But another factor may be Canada’s slow rate of economic growth.
In July, the Fraser Institute published a study called “What is Behind Canada’s Growth Crisis?” Done by Philip Cross, who used to be chief economic analyst at Statistics Canada, the study highlighted how Canada’s economic growth has been lagging behind the United States’ for years.
“If you really want to see where the Canadian economy is headed, look at business investment, where we’re down over 20 percent, over the last decade, while the U.S. has been up over 20 percent,” Mr. Cross told The Epoch Times on July 18. “Look at exports, the most concrete manifestation of our competitiveness, where again, we’re down over the last decade, while the U.S. has been up over 10 percent.”
Mr. Cross added while economic growth may sound like a bunch of numbers to some people, it has real-world consequences.
“Just look at the despair that young people feel in this country about their future, about ever having a home. You’ll see what the negative effect of an absence of economic growth for nearly a decade has on people,” he said.