Earnings account for four-fifths of income

For economic families as a whole, earnings represented the lion's share of income. Of every $100 of income received in 2005, earnings accounted for over $78. Still, this was down from a quarter century earlier, when earnings accounted for nearly $83.

In addition, government transfer payments, such as Old Age Security Pension and Guaranteed Income Supplement (OAS/GIS), Employment Insurance benefits, child benefits, and Goods and Services Tax credits, contributed $9.90 of every $100 in income in 2005. They increased, from $8.30 of every $100 in total income in 1980, to $10.30 in 2000. By 2005, their proportion had slipped.

Investment income represented $4.20 of every $100, while retirement income sources, such as private pensions, accounted for $5.90, more than double the level of only $2.30 in 1980. This gain in the share of retirement income can be attributed to both an aging population and increases in the average amount per recipient.

The recent decline in the share of total income accounted for by government transfers can be attributed to two factors. First, rising private retirement income for many seniors led to a drop in means-tested benefits from Old Age Security Pension and Guaranteed Income Supplement.

Second, other government transfers also declined due to better labour market conditions lifted many families above the threshold for benefits from these programs.

These components varied widely between families at the top of the income distribution and those at the bottom, as well as among the different types of families.

For example, in 2005, when all economic families were ranked by their total income, there were marked differences in the make-up of their income, at opposite ends of the scale. Among the 20% of families with the lowest incomes, earnings contributed about $37.60 of every $100 in income. This compares to $74 for the one-fifth of families in the middle of the distribution, and close to $87 for the one-fifth at the top.

Just over one-half ($52) of every $100 received by families in the lowest quintile came from government sources. This share dropped to $12.40 for families in the middle of the income distribution and to $2.30 for those at the top.