Income inequality narrowed amid fiscal supports in 2020: StatsCan

By James Langton | May 28, 2021 | Last updated on May 28, 2021
2 min read
A miniature woman standing in a pile of low coins and a miniature man standing in a pile of tall coins.
© Hyejin Kang / 123RF Stock Photo

Thanks to generous government support efforts, all households finished 2020 with higher incomes than the year before — with lower- and middle-income households benefiting most, according to new data from Statistics Canada.

The national statistical agency reported that income inequality declined in 2020, as the gap between the highest- and lowest-income households shrank by 1.9 percentage points, compared with the previous year.

“The overall gains were led by unprecedented increases in current transfers in the second quarter, as governments’ Covid-19 support measures were implemented to help mitigate negative impacts from the pandemic,” the agency said.

Households in the lowest 20% saw their disposable income rise 17.6% and net worth gained 10.7% over 2019 levels.

“Gains in net worth for the lowest-income earners were driven by larger percentage increases in real estate assets that outpaced increases in mortgage debt,” StatsCan said, adding that the lowest-income households also reduced their non-mortgage debt by more than other groups in 2020.

Notwithstanding the rise in income, employee compensation dropped in 2020 for all households, with the lower-income households and younger households taking the hardest hit, “as many people in these households work in industries or jobs hard-hit by the pandemic,” StatsCan noted.

The agency also reported that overall household spending declined in 2020, led by the highest-income earners, who reduced spending by 7.0% compared with the previous year. These high-income households also saw net worth rise by 9.0% in 2020.

With incomes up and spending down, savings improved for all households, too.

“Middle-income households experienced some of the biggest gains as they switched to a net saving position in 2020 from a net dissaving position in 2019,” StatsCan said.

James Langton headshot

James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.