Income Inequality Surges in Canada: Record-Speed Gap Widens, Statistics Canada Reports

Income Inequality Surges in Canada: The disparity between the top 40 percent and bottom 40 percent of household incomes has reached 44.7 percent, a 0.2 percent increase from the same time last year, according to data released on Tuesday. The figure remained below pre-pandemic levels, which averaged 45.1% from 2010 to 2019, according to the data.

According to the report, the wealth disparity between the wealthy and the poor widened at a record rate in the first quarter of this year, increasing by 1.1 percentage points from the same period in 2022.

Income Inequality Surges in Canada: Record-Speed Gap Widens, Statistics Canada Reports

According to the findings, the top 20% of income earners increased their disposable income faster in the first quarter of 2023 than they did the previous year. This increase was fueled by investment earnings such as dividends and bank deposits, which nearly doubled to 22.7 percent from 13.4 percent for all households during the same time period.

The report revealed that the lowest income earners also experienced financial growth, albeit at a sluggish rate.

In the first quarter, the bottom 20% of low-income earners saw average salary increases of 1%, compared to 4% for all households, while self-employment income decreased by 6.7%. The group benefited from retirement benefits, and 38.8% of this group cited government assistance as their primary source of income, up from 34.2% in 2022.

The data revealed that low-income households also experienced a decline in average net investment income, with increased interest rates on loans and mortgages accounting for 84.4 percent of the decline.

Every household, with the exception of those with the highest incomes, reported a decline in savings during the first few months of 2023 below the levels recorded three years prior, at the outbreak’s onset.

Almost all Canadian households whose net worth decreased attributed it directly to real estate (92,1 percent), according to the data. The data revealed that the average real estate value held by households decreased by 8.6% in the first quarter of this year compared to the same quarter one year prior.

Younger age groups face the greatest financial risk due to record debt-to-income ratios, the report warned.

According to the data, debt-to-income ratios for young Canadians and Canadians of prime working age reached record highs in the first quarter of 2023.

Despite gains in income, high inflation and interest rates continue to burden these households, according to the report.