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Core Target 2: Personal Income

Where BC Ranks, Provincial Comparison

 (Updated May 6, 2008)
Year

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Rank

3

3

3

3

3

3

3

3

3

3

Core Target Two tracks the level of personal disposable income (PDI) per person. Although its position has improved considerably, BC remained below the national average in 2007. The province hasn't exceeded the national average since 1997. It fell behind increasingly from 1998 until 2003, and then started to rebound. By 2007 it had moved to within $237 of the average.

Among the Canadian provinces, BC has been in third place since being overtaken by Alberta in 1991. Alberta has increased its real personal disposable income per capita substantially since the mid 1990s.

Note: The preliminary estimate for 2007, upon which this update is based, will be revised when final data are released in the fall. The fall release will also include a historical revision of 2004-2006 data.

Why It's Important
Real personal disposable income per capita provides an indication of a person's spending power and standard of living. It represents someone's total income, after subtracting income taxes, CPP and EI contributions and various fees, such as medical insurance premiums.

North American Comparison

In comparison with North America, BC ranked 54th in 2006 out of 61 subnational jurisdictions. The top five jurisdictions in 2006 are all located in the northeastern United States. Except for Alberta at 42nd place, the bottom positions are all occupied by provinces. BC's real personal disposable income per capita was roughly $4,000 above lowest ranked Prince Edward Island but $1,800 below the lowest ranked state, Mississippi, and $28,000 below first place District of Columbia.

Productivity and Income Growth

The 2006 BC Progress Board report, Boosting Incomes, Confronting Demographic Change: BC's "Productivity Imperative" provides a good overview of the importance of productivity to BC's prosperity. Of particular relevance here, it includes a discussion of the relationship between productivity growth and increases in incomes.

Income increases can come about from either growth in labour productivity or increases in the labour force, employment rate or number of hours worked. The labour force is the proportion of the total population that is working or actively looking for work, and fluctuates depending on many economic factors and population characteristics. Because it is a ratio, it cannot exceed 100 percent. The employment rate as well cannot exceed 100 percent, meaning no more than 100 percent of those in the labour force can be employed. There is also a definite limit to the amount of hours that can be worked by any one person or population in a set period of time. Growth in any of these factors, due to their finite quality, may improve income for a period of time, but this cannot be sustained over the longer term.

The short term nature of improvements resulting from favourable changes in the labour force, employment rate or number of hours worked leads to the conclusion that the only long term method to improve income is to grow labour productivity.


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