Income inequality in Canada up despite salary increases: StatCan

Most Canadians’ income and savings have taken a hit in the past year, according to Statistics Canada. But its latest report suggests while COVID-19 had a significant impact, it didn’t affect everyone equally.

While there were “broad-based increases” in wages and salaries, income inequality increased.

Looking at the first quarter of 2022 compared to the same time in 2021, Statistics Canada says those in the lower-income brackets were much worse off. They saw their disposable income drop and savings crater.

“Average net saving declined the most for the second income quintile, down 95.3% relative to the same quarter of the previous year. Furthermore, net saving for households in the lowest income quintile remains below levels observed at the start of the pandemic in the first quarter of 2020.”

Researchers point to assistance programs brought in when the COVID outbreak was at its worst. They note while things like the Canada Emergency Response Benefit helped many people a year ago, now that CERB has long disappeared, people have a big financial hole to try to climb out of.

Conversely, the household income of those in the top 20 per cent actually went up. Older Canadians were also better able to weather the storm because of financial tools and other resources — like RRSPs and pensions.

Younger Canadians’ debt-to-income ratio surpassed pre-pandemic levels in the first quarter of 2022, Statistics Canada said in its report, “with the debt-to-income ratio increasing by 5.0 percentage points for those aged younger than 35 years and by 4.5 percentage points for those aged 35 to 44 years.”

“While growth in income over the last two years outpaced debt for households aged 45 to 64 years, mainly attributable to increases in wages and salaries, the debt-to-income ratio for seniors remained relatively stable.”

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