Northern Economist 2.0

Monday 1 April 2019

Regional Economic Divides a Challenge for Ontario Budget 2019


The Financial Accountability Office of Ontario recently issued a report called Incomes in Ontario: Growth, Distribution and Mobility which summarizes recent trends in personal income in Ontario in the areas of income growth and distribution.  Among the findings were that Ontario’s median income growth was the slowest among the provinces between 2000 and 2016, that there has been an increase in income inequality in the province, and that relative and  inter-generational income mobility has declined – that is over time, it has become more difficult for lower income Ontarians to move up the income distribution and that children of higher income parents are more likely to become high income earners themselves.

As the report states: “It has become more difficult for Ontarians to “get ahead” – that is, move up the income distribution. In this report, upward income mobility is defined as the share of working-age Ontarians who move up at least one income quintile over a five-year period. This share declined from 41 per cent in the early 1980s to 32 per cent more recently. The decline was most pronounced for lower-income Ontarians.”  Moreover, what is also of interest is that while Ontario’s productivity has grown, incomes have not kept pace suggesting that Ontario’s economic growth has not translated directly into increased personal incomes.

Much of this report focused on Ontario wide trends but one of the most interesting pieces of information is Figure B.1 in the appendices - a map titled Median household income across census divisions in Ontario.  In this map, median household income from the 2016 Census is plotted by major census division in Ontario in four categories – Less than $65,000, $65,000 to $69,999, $70,000 to $74,999 and finally more than $75,000.  The map taken from the report is shown below and illustrates Ontario’s great regional economic divides.

 

Ontario’s highest household income regions stand out as mainly two islands on the map – the area surrounding downtown Toronto – that is the GTA and central Ontario – and the Ottawa region.  Downtown Toronto itself has substantially lower household incomes than the surrounding GTA and GTA belt area. The east and the southwest have swathes of lower income areas and then there is the North.