Disposable income gains slowed, with young households hit hardest by affordability and weak jobs
Canada’s income gap remained at a record high in the second quarter of 2025, with new Statistics Canada data revealing that the country’s wealthiest households continued to outpace the rest in both income and net worth.
The agency defined the gap as the difference in disposable income share between the top 40% and bottom 40% of households, which held steady at 48.4% points.
Disposable income grew by an average of 3.9% year-over-year, down from a 5.9% increase in 2024.
“Weak employment gains along with a downturn in economic activity contributed to a slower increase in disposable income for households in the second quarter,” Statistics Canada said.
The employment rate has trended downward since early 2023, with most job growth coming from part-time work.
Wealth gap widens, top earners pull ahead
The wealth gap also widened. The top 20% of households accounted for nearly two-thirds (64.8%) of Canada’s net worth, averaging $3.4 million per household, while the least wealthy 40% held just 3.3%, averaging $86,900.
“The wealth gap grew as strong financial market gains benefited the wealthiest, while a decline in real estate values weighed on the average wealth of younger age groups and the least wealthy,” the agency said.
Younger Canadians, particularly those under 35, saw their wealth increase by just 2.1%—slower than any other age group. Statistics Canada attributed this to declining real estate holdings and a trend of younger households reducing mortgage debt, likely due to affordability concerns.
“Some of the youngest households may be prioritizing coping with the cost of living and reducing their debt obligations when financial support from family or other sources becomes available.”
A recent BMO survey revealed that 45% of Canadian parents and grandparents planned to provide financial support to their adult children or grandchildren within the next year. A Royal LePage survey also found that 41% of first-time homebuyers expect financial help from family or friends.
Canadian workers are making some financial gains, with Gen Z saving the most, but buying a home is still tough, according to National Payroll Institute.
Net saving deteriorates as costs outstrip wage gains
Net saving worsened across all income groups for the first time since peak inflation in 2022, as wage gains failed to keep pace with rising costs for essentials like housing, transport, and groceries.
While the Bank of Canada’s policy rate fell to 2.75% in Q2 2025, easing some borrowing costs, it also reduced returns on savings, with mixed impacts across the income spectrum.
The income and wealth gaps report came in the wake of Canada’s labour market adding 60,400 jobs while the jobless rate stayed at 7.1%. These strong gains, led by full-time work and a manufacturing rebound, have cast doubt on a Bank of Canada rate cut and forced mortgage professionals to rethink their outlook.
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