Canadian Personal Finance Blog

Looking over at Stats Canada this week, you can see that they have published a report on the Income of Individuals for 2005. The article says:

The median total income of individuals amounted to $25,400 in 2005, up 1.9% from 2004 after adjusting for inflation. This is the largest annual increase in median total income of individuals since 2001. The median is the point where one half of incomes are higher and the other half are lower.

This is one of those, good news, and head scratching news. The good news is that the median total income has gone up by 1.9% so that is a good thing (it would be bad if it had gone down). The head scratcher part of it, is the question of just who is living on this income level?

The median employment income is a little higher at $26,300, but that again seems pretty darn low.

If you have a couple that together are making $52,600 that is a bit better, but again, that seems low.

Now let us bear in mind what the mathematical term Median actually means. Do not confuse Median for Mean or Arithmetic Average , which is:

Pardon me? Add all your numbers up and then divide it by the total number of numbers you added. This article does not mention Mean or Average income, it talks about Median.

What is Median?

Now THAT looks complicated doesn’t it? OK, what Median is, simply is the middle value in a list of numbers. This middle number may be nowhere near the average of all of the numbers, so this Median means half of all Canadians either make or earn less than $25,400.00 and half earn more than that.

What does this number mean, in my opinion is that the gap between the “haves” and “have nots” is widening at an alarming rate these days.

So the Publics (Jane and her spouse John Q.) have a good life and an above average household income of $100,000.00 per year.

Single Income model:

• Income tax paid would be $27,661.98
• They would pay a total of $2640.00 in CPP and EI payments
• Final score around $30K in taxes and payments.

Dual Income model:

• Income tax paid would be $20,561.46 (paid by both)
• They would together pay $5280 in CPP and EI payments
• Final score around $26K in taxes and payments

Interesting so the gap for this family as laid out is about $4000.00 or so. Now this is after tax money, so the single income earner model would need to may about $7000 more gross income to be the same net income.Now I have had some very good comments from various readers (I am impressed that this has caused such discussion), commenting that I am not taking into consideration the high costs of day care and such. Those are good points, but remember that the dual income family also gets to write $7000 worth of that from their income, and no I am not saying it is a “wash” but that needs to be considered. There are other points as well that can be made, but it makes the argument quite complicated.My conclusions and final comments on this topic will be posted tomorrow.For those of you who agree or disagree, I open my forum to you, if you wish to write a rebuttal or supportive article, I am willing to post it (after reviewing it myself, it is my blog, after all). Leave a comment, I will contact you.