The pandemic continues to create economic anomalies a new report from Statistics Canada reveals
The gap between the lowest-income households and the highest narrowed in 2020 according to new data from Statistics Canada.
Low income households saw their disposable income grow by almost 37% more than other households with their net worth increasing by almost 10%. Combined with lower spending, this also helped boost savings.
The gains in disposable income was driven by “unprecedented transfers to households” as government COVID support measures exceeded losses in wages, salaries, and self-employed income.
For middle income households, government support provided an average $2,500 more than the level of lost wages while middle-aged and young households saw an average $3,000 net gain in the second quarter.
Even in the third quarter, households received an average $1,000-2,600 through COVID support measures.
The analysis, based on the first three quarters of 2020, shows that low income earners (bottom quintile) saw their share of disposable income from 6.1% in the first three months of 2020 to 7.1% in the second quarter. Over the same period, those in the highest quintile saw a decrease from 40.1% to 37.7%.
While undoubtedly hardest hit by job losses and closure of businesses that could not operate from home, lower income and younger households saw the largest rebound in disposable income in the second quarter (33.6% and 20.1% respectively).
Net worth gains
The Statistics Canada report shows that household net worth grew by 5.2% relative to 2019 up to the third quarter of 2020, reaching an average of $786,000 per household.
Net worth increased more for lower income households than for those in the top fifth of earners – a 6.3% gain year-over-year compared to 4.8%.
This was driven by those lower income homeowners who saw the value of their homes rise by more than their mortgage debt. They also reduced their non-mortgage debt by more than the highest earners (by 1.8% vs. 1.0%).
The full report is available at https://www150.statcan.gc.ca/n1/daily-quotidien/210301/dq210301b-eng.htm?HPA=1.
