Mind the gap
The rise and fall of the disposable income gap in Alberta
By Rob Roach, ATB Economics 25 January 2024 1 min read
Alberta is an “economic powerhouse” in Canada. This is reflected in a number of indicators, including the highest GDP per capita, the highest employment rate, the highest retail sales per capita, and highest average weekly earnings of any province.
With the release of updated disposable income per household data* by Statistics Canada on Monday, we have another measure of Alberta’s economic oomph to consider.
Sure enough Alberta had the highest disposable income per household of any province in 2022. At $113,572, disposable income per household in Alberta was 22% higher than the national average of $93,290. The closest province was B.C. at $99,474.
The difference is largely due to the higher wages and higher employment rate in Alberta, as noted above.
What’s telling is how household disposable income in Alberta has changed over time.
Household disposable income in the province has been higher than the national average since 1999 when the current data series began (and likely for many years prior), but the difference has gone through some dramatic fluctuations.
As you can see from the chart below, the gap widened in the mid-2000s when Alberta was in the midst of a natural gas-driven economic boom to 33% higher than the national average. It widened again over the first half of the 2010s during the provincial economic boom brought on by elevated capital spending on oil sands projects. A series of economic events—the 2015-16 recession, market access issues in 2019 and COVID in 2020—have been accompanied by a reduction in the gap from the peak of 41% reached in 2015 to the smaller (but still wide) 22% seen in 2022.
*Household disposable income is the sum of all income received by members of the household including government transfers (e.g. Old Age Security benefits) minus current transfers paid by them (e.g. income tax). As such, it is the amount available to a household for final consumption of goods and services and voluntary savings.
Answer to the previous trivia question: Gold was discovered on January 24, 1848 by James Marshall at a sawmill in California. The discovery sparked the California Gold Rush.
Today’s trivia question: Popularized by economist John Maynard Keynes, what is the paradox of thrift?