Income inequality in Canada reached a record high in Q1 2025 as top earners gained while lower-income households saw wages and investments decline.
Wealth Divide Reaches New Peak
Canada’s income inequality reached its widest point on record in the first quarter of 2025, according to new federal data. The latest report reveals a sharp contrast in financial gains, with top earners increasing their wealth significantly while the lowest-income households faced wage stagnation and investment losses.
Data Highlights Growing Economic Divide
The gap in disposable income between the top 40% and bottom 40% of Canadian households widened to 49 percentage points, the highest since tracking began. The disparity reflects a growing imbalance in how economic growth and investments are benefiting Canadians.
Investment Gains for the Wealthy
The income surge among top earners was largely driven by investment returns. Those in the top 20% saw disposable income grow by 7.7%, buoyed by a 7.4% rise in investment income and 4.7% wage growth. Many in this bracket remained employed through the pandemic and continued to profit from strong financial markets.
Lower-Income Households Face Setbacks
In contrast, households in the bottom 20% experienced only a 3.2% increase in disposable income, with average wages falling 0.7% and investment earnings plunging 35.3%. Though government transfers rose by 31.2%, they were not enough to offset overall financial losses.
Wealth Gap Mirrors Income Trends
Wealth inequality also widened. The top 20% of households now control 64.7% of Canada’s net worth, averaging $3.3 million per household. Meanwhile, the bottom 40% hold just 3.3%, with average wealth per household at $85,700.
Experts Call for Policy Action
Katherine Scott, a senior researcher at a public policy think tank, warns that such disparity is unsustainable. “It’s a wake-up call,” she said, urging a renewed national focus on fair income distribution. She noted that unlike after the 2008 financial crisis, public debate on inequality has been limited despite alarming figures.
A Call for Structural Reform
Scott emphasized the need to revisit economic structures and ensure all Canadians share in prosperity. “We can’t just grow the pie,” she said. “We have to talk about how that pie is divided, and ensure that people can live with dignity.”
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