Key Takeaways
- The Northwest Territories (N.W.T.) has the highest average household income in Canada, with an average of $102,100 in 2023.
- Despite this, the N.W.T. also has the second-highest poverty rate in Canada, with many families struggling to make ends meet due to the high cost of living.
- The high cost of living in the N.W.T. is driven by factors such as the need to fly in most food and goods, particularly in remote communities.
- Income inequality in the N.W.T. is similar to that of Canada as a whole, but there are significant differences in income between Yellowknife and smaller communities.
- The traditional economy, including hunting and harvesting, is not accounted for in income data and is an important part of the livelihoods of many people in the N.W.T.
Introduction to the Northwest Territories’ Economy
The Northwest Territories consistently have the highest average household income in Canada, with an average of $102,100 in 2023, according to Statistics Canada’s Canada Income Survey. However, this does not necessarily mean that everyone in the territory is doing well financially. In fact, the N.W.T. also has the second-highest poverty rate in Canada, highlighting the complexities of the territory’s economy. Statistics Canada research manager Burton Gustajtis notes that the income gap between the N.W.T. and the rest of Canada has narrowed somewhat over time, suggesting that income in the territories has not grown at the same pace as the rest of the country.
High Cost of Living in the N.W.T.
The high cost of living in the N.W.T. is a major factor contributing to the territory’s high poverty rate. Yellowknife-based economist Graeme Clinton explains that the territory’s high cost of living helps drive up wages, as people need to earn more to maintain a similar quality of life. The cost of living in the N.W.T. is particularly high in remote communities, where most food and goods need to be flown in. For example, in the Sahtu region, the estimated cost for a family to live above the poverty line was $83,079 in 2023, compared to $73,613 in Yellowknife. Clinton notes that the high cost of living means that many people in the N.W.T. are working simply to make ends meet, rather than to get ahead financially.
Income Inequality in the N.W.T.
Income inequality in the N.W.T. is similar to that of Canada as a whole, with the bottom 40% of earners owning around 20-22% of the total income in the territory, and the top 20% of earners owning around 35%. However, Clinton argues that this measure is not particularly useful for understanding the N.W.T., where the biggest differences tend to be between Yellowknife and smaller communities. In 2023, the average total income per person in Yellowknife was $84,658, compared to just $53,775 in small communities. Clinton notes that Yellowknife is a wealthy community, with many residents working in high-paying sectors like mining and government, while smaller communities have fewer jobs available and lower-paying jobs, leading to higher poverty rates.
Poverty Rates in the N.W.T.
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 explains that this is because poverty is measured relative to the cost of living, and the high cost of living in the N.W.T. means that even families with high incomes may struggle to make ends meet. Statistics Canada calculates poverty using the Market Basket Measure, which estimates the cost of maintaining a modest, basic standard of living for a family of two adults and two children. In the N.W.T., this cost is particularly high, especially in remote communities.
The Importance of the Traditional Economy
Finally, Clinton notes that income data is only one of many ways to measure how well people are doing, and it does not necessarily tell the whole story. The traditional economy, including hunting and harvesting, is not accounted for in income data, but is an important part of the livelihoods of many people in the N.W.T. Clinton argues that this omission means that income data can be misleading, and that other measures of well-being, such as access to traditional foods and activities, should also be considered. Overall, the economy of the N.W.T. is complex and multifaceted, and cannot be fully understood through income data alone.