N.W.T. consistently has Canada’s highest median income — here’s why

Yellowknife economist says that high incomes in N.W.T. come down to high wages

Families in the Northwest Territories consistently bring home the most money in Canada, but that doesn’t mean everyone in the territory is doing well financially.

Statistics Canada gathers information on the average income for families and single people for each province and territory through its Canada Income Survey.

In 2023, the most recent year for which data is available, the average household income in N.W.T. was $102,100 — over $10,000 more than any other province or territory, and $27,900 more than the Canadian average. But N.W.T. also had the second-highest poverty rate in Canada that year.

Statistics Canada research manager Burton Gustajtis said this is a consistent finding.

“Historically, families and unattached individuals in the Northwest Territories have the highest after-tax income in Canada,”  Gustajtis said.

But Gustajtis said the income gap between N.W.T. and Canada as a whole has narrowed somewhat over this time, “suggesting that income in the territories has not grown at the same pace as Canada.”

‘It’s an expensive jurisdiction to live in’

Income data in the Canada Income Survey include multiple income sources: government transfers, such as employment insurance or the Canada pension, investment income, self-employment income, and wages and salaries.

Gustajtis said that the difference in median income between N.W.T. and other parts of Canada is mostly driven by higher-than average wages and salaries in the territory.

Yellowknife-based economist Graeme Clinton said the N.W.T.’s high cost of living helps explain why wages are high in the territory.

“There’s just an expectation within the labour force to be paid a wage which affords them a similar quality of life, which just means they are going to have to earn more income than you would in some of those southern jurisdictions,” he said.

The territory also has a higher employment rate than the rest of Canada, with more people than average working and participating in the economy, Clinton said.

Clinton pointed to a couple factors that help explain N.W.T.’s high employment rate. One is that the territory’s population skews slightly younger than the rest of the country, with more people of working age.

Another is that not working can be unaffordable in the territory.

“It’s an expensive jurisdiction to live in, so there’s just less people who are idle or outside the labour force,” Clinton said.

Finally, Clinton noted that income assistance in the Northwest Territories is also higher than in most other jurisdictions in Canada, another factor which could lead to higher overall incomes.

Poverty rates

Despite having the highest median income in the country, poverty rates in the N.W.T. are consistently the second highest in Canada, behind only Nunavut.

Clinton said that’s because poverty, unlike income, is measured relative to cost of living.

“You could be a millionaire but it doesn’t help you if, you know, it costs $100 for a loaf of bread,” he said.

Statistics Canada researcher Gustajtis explained that Statistics Canada calculates poverty using the Market Basket Measure. It’s a way to estimate how much it would cost for a family of two adults and two children to maintain a “modest, basic standard of living.” If a family’s disposable income is less than this amount, the family lives below the poverty line.

Statistics Canada calculated that this “modest, basic standard of living” is expensive in Northwest Territories communities — especially in the Sahtu and Beaufort Delta regions, where most food has to be flown in.

In the Sahtu, the estimated cost in 2023 for a family to live above the poverty line was $83,079. In Yellowknife, the estimated cost was $73,613.

Inequality across regions

Gustajtis said that overall, income inequality in the N.W.T. is similar to that of Canada as a whole when you compare the proportion of total income in the territory between high and lower earners.

The bottom 40 per cent of earners in N.W.T. own about 20 to 22 per cent of the total income in N.W.T., compared to 35 per cent of total income for the top 20 per cent of earners.

In Canada overall, the numbers are almost identical, with the bottom 40 per cent earning 21 per cent of income, and the top 20 per cent of earners owning 38 per cent of income.

But Clinton said this measure just “isn’t that useful” for understanding N.W.T., where the biggest differences tend to be between Yellowknife and smaller communities.

In 2023, the N.W.T. Bureau of Statistics found the average total income per person in Yellowknife was $84,658. But in small communities, the average per person income was only $53,775.

“Yellowknife is a wealthy community, even with [the] high cost of living,” Clinton said, with many residents working in high-paying sectors like mining and government.

“Using terms that we used to use — upper-middle class — there’s plenty of those families in Yellowknife, and probably a higher percentage than you would find in a typical Canadian city.”

But in smaller communities, Clinton said, there are fewer jobs available and jobs that don’t tend to pay as well, so more people are unemployed or not working.

“You combine that with a very high cost of living and you end up with a significant proportion of these families coming in below the poverty level,” Clinton said.

Ultimately, Clinton said income data is only one of many ways to measure how well people are doing, and it doesn’t necessarily tell the whole story.

That’s because it doesn’t account for the traditional economy — the value of what people are hunting or harvesting from the land and sharing with their families or communities.

Related stories from around the North:

Canada: Q&A | Nunavut’s incoming premier wants to bring jobs to Inuit and build more schools, CBC News

Finland: Lapland grocers turn to Filipino workforce as population ages, Yle News

Russia: Critical workforce shortage grips Russia’s North, The Independent Barents Observer

Sweden: Sweden, Norway and Finland cooperating to attract workers to the far north, Radio Sweden

United States: Alaska Ambler Road project back in focus as company outlines vision for work ahead, Eye on the Arctic