Data published by Statistics Canada last week show that the gap between rich and poor Canadians is growing at the fastest rate on record.
According to the report, the wealthiest 20 per cent of Canadian households accounted for more than two-thirds of all net-worth in the first quarter of 2023, while the poorest 40 per cent accounted for less than three per cent.
The gap between the wealthiest and poorest Canadians increased by 1.1 per cent in the first quarter of 2023 relative to the same period last year. "This was the fastest increase on record for these estimates, which date back to 2010," Stat Can explained.
The increase represents a gradual reversal of slightly reduced wealth inequality seen between 2020 and 2022. The gap between rich and poor decreased by 1.6 per cent between the first quarter of 2020 and the same period in 2022. But the first four months of 2023 are a different story.
"The least wealthy were affected more by recent economic pressures, as they decreased their net worth by 13.8% in the first quarter of 2023 relative to the same quarter a year earlier," according to Stat Can. "This reduction represented more than triple the rate of decrease for the wealthiest (-3.8%)."
For the least wealthy Canadians, mortgage debt increased by 23.8 per cent, while their other debts increased by 4.6 per cent. Younger households were the most negatively impacted, as those aged under 35 years saw their net worth decrease by 8.7 per cent compared to those aged between 55 and 64 years, who saw a decrease of 1.8 per cent.
Meanwhile, debt-to-income ratios for younger and core working age Canadians reached the highest rates on record.
Besides wealth inequality, the gap between low and high income households also widened, as the gap in the share of disposable income between the bottom 40 per cent and highest 40 per cent of earners reached 44.7 per cent, a 0.2 per cent increase over 2022.
"Although households of younger workers increased their employment income, persistently high inflation and interest rates continued to restrain their ability to make ends meet, as these households tend to hold higher balances on credit cards and mortgages relative to older age groups," Stat Can explained.
Last month, the Bank of Canada increased the base interest rate by 0.25 per cent, with the policy interest rate now standing at 4.75 per cent. This, along with a string of other previous increases, has substantially raised the cost of borrowing, particularly for Canadians with variable rate mortgages. Since the central bank began a series of interest rate hikes at the beginning of last year, some of those with variable-rate mortgages have seen their monthly payments increase by as much $1,000 per month.
In turn, this is prompting some landlords to increase rents, as they seek to extract a profit from renters on top of their increased mortgage payments. In May, CTV News reported that average rent in all of Canada was up 9.6 per cent over 2022, with the average asking price for a unit now surpassing $2,000 per month (the average is even higher in the country's most expensive cities, like Vancouver and Toronto).
Meanwhile, the cost of living for certain goods is continuing to rise. Although the overall rate of inflation slowed to 3.4 per cent in May, this was largely accounted for by a decrease in costs for gasoline. The cost of groceries increased by nine per cent year over year, and economists warn high costs for food could be here to stay.
Amid these high grocery prices, which have persisted for months, Canadian grocery giants enjoyed a sales boost and paid their executives handsome bonuses in 2022. Metro's five executives received a combined total of $3.7 million in annual bonuses, a 13.7 per cent increase over the previous year.
Galen Weston, who served as CEO of Loblaw before stepping down in April, enjoyed a massive 55 per cent increase in his total compensation in 2022, including $8.4 million from his role at Loblaw. That pay increase came after consultants hired by the Weston family determined that Galen was not being paid enough.
Empire Company Ltd. CEO Michael Medline was paid $8.7 million in 2022.
Now, let's turn to the members' corner...
Most Canadians who aren't in the richest echelons of society are acutely aware of how difficult things currently are. Here's what else you need to know.