Canadian Wealth Gap Between Poor and Rich Widens at Record Pace
In the first quarter of 2023, the wealth gap between the rich and poor in Canada reached its widest point ever, according to Statistics Canada. This significant increase occurred amidst high inflation rates and declining real estate values.
During this period, the net worth gap expanded by 1.1 percentage points, marking the fastest growth recorded since 2010 when the agency began tracking this data.
However, the wealth gap was still slightly lower in the first quarter of 2023 compared to the same period in 2020. It stood at 65.1 percentage points, while it was 65.6 points in the previous year. Between the first quarters of 2020 and 2022, the wealth gap had actually narrowed by 1.6 percentage points.
In the first quarter of this year, the top 20 percent of earners in Canada possessed 67.8 percent of the country’s net worth, while the bottom 40 percent held only 2.7 percent. The difference between these two percentages represents the wealth gap.
According to Statistics Canada’s report released on Tuesday, “Most wealth is held by relatively few households in Canada.”
The report reveals that the least wealthy households tend to be younger. Individuals younger than 45 years old accounted for 55.2 percent of the bottom 40 percent in terms of net worth, despite constituting only 36.2 percent of all households.
The report also highlights that recent economic pressures, including inflation, have disproportionately affected the least wealthy. In the first quarter, their wealth decreased by 13.8 percent compared to the same period in the previous year, which is more than triple the rate of decline experienced by the wealthiest.
The report indicates that the net worth of all households declined in the first quarter of 2023 due to lower real estate prices.
In the first quarter of 2023, households younger than 35 years old experienced the greatest decrease in average net worth, with a decline of 8.7 percent. On the other hand, households aged 55 to 64 years old saw their net worth decrease by 1.8 percent.
This corresponds with national data showing that the average price of residential homes in Canada dropped to $686,000 by the end of the first quarter, a decrease of 13.7 percent compared to the same period last year. The report also reveals that the average value of real estate owned by households decreased by 8.6 percent during this timeframe.