Canada's rich getting richer, poor getting poorer, income gap reaches historic high as wages decline and investment surges
The income gap between Canada's richest and poorest households hit a record high in the first quarter of 2025, according to new data released by Statistics Canada on Tuesday(July 15).The federal agency said the difference in the share of disposable income between the top 40 percent and bottom 40 percent of households widened to 49 percentage points, the largest gap ever recorded in the data series.
The report highlights growing economic inequality in a country often ranked among the world's most livable. The income gap has steadily increased each year since the COVID-19 pandemic began, reversing gains made in the early 2010s.Households in the top 20 percent of the income distribution experienced a 7.7 percent increase in their average disposable income compared to the previous year. The group benefited from higher wages (up 4.7 percent) and strong returns on investments, which surged 7.4 percent year-over-year. By contrast, households in the bottom 20 percent experienced only a 3.2 percent increase in disposable income. Their average wages actually declined by 0.7 percent, reflecting reduced hours and job instability, particularly in retail, service, and part-time work.
The poorest Canadians also saw a steep 35.3 percent drop in investment income, widening the income divide. Many in this group rely on social benefits, which helped cushion some of the losses.'We're not just seeing statistical gaps, we're seeing lives stretched thinner every month,' said David Soberman, a professor at the University of Toronto's Rotman School of Management. 'Inflation, job cuts, and interest rates don't hit everyone equally.' The growing income divide raises questions about economic resilience, affordability, and long-term stability. Rising debt loads and stagnant wages are putting pressure on low-income Canadians, while wealth continues to concentrate at the top.
According to a related Statistics Canada report, the wealthiest 20 percent of households now control nearly 65 percent of the country's net worth. The bottom 40 percent hold just 3.3 percent.
While middle- and upper-income households benefited from cooling inflation and slightly lower interest rates in early 2025, lower-income families continued to struggle with rent hikes, high grocery bills, and unstable employment. The data comes ahead of the next federal fiscal update, where calls are mounting for targeted support measures such as expanded housing assistance, minimum wage hikes, and stronger labor protections.Economists warn that if current trends continue, social and economic polarization could deepen. Statistics Canada is expected to release its second-quarter income data on October 9, which will show whether the trend is continuing or beginning to level off.
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