After-tax household income is rising and income inequality is falling, new census data shows

Income inequality and the number of low-income people fell significantly in 2020, compared to five years earlier, and after-tax household income saw a marked increase, especially in single-parent households, according to new census data released today by Statistics Canada.

Median after-tax household income grew 9.8% from 2015 to 2020, doubling the growth rate experienced by Canadian households from 2010 to 2015, when after-tax income grew at less than half that rate ( 4.5%).

According to Statistics Canada, the increase in median income was largely attributable to transfers from the federal government during the pandemic, especially for low-income families.

“After-tax income growth has been faster for low-income households, reflecting a larger contribution of the Canada Child Benefit and pandemic relief benefits to incomes of low-income families,” said the federal agency.

In female-headed single-parent families, which represent 80% of single-parent households, median after-tax income increased by 22.8% from 2015 to 2020, mainly due to the Canada Child Benefit (CCB) and its bonuses. during the pandemic.

It was not the same for all the provinces. While Ontario, Quebec and British Columbia all recorded double-digit increases in after-tax income, Alberta and Newfoundland both recorded declines in after-tax income of 4.6 and 1, 3%, respectively.

Newfoundland was the outlier in Atlantic Canada, as New Brunswick, Nova Scotia and Prince Edward Island all saw significant increases in after-tax income in 2020 compared to 2015, with increases of 9.2, 8.3 and 10.3%, respectively.

Government benefits are key to increasing income

Statistics Canada explains that in 2020, largely due to COVID-19 lockdowns and their impact on wages, average incomes actually declined to the point where households in Canada were earning about the same as in 2015, but this income was boosted by the benefits of the pandemic and the CCB.

In 2020, for example, the median amount of federal or provincial pandemic benefits received by a Canadian family was $10,000, while the median CCB paid to a family in 2020 was nearly $6,000 per year. , compared to just over $4,000 in 2015.

Government transfers and benefits made a significant difference for family households with children, who saw their median after-tax income increase by 10.5% in 2020 compared to 2015, while childless couples saw an increase of 6 .8% over the same period.

Also during the same period, the proportion of Canadians living in low income fell to 11.1% in 2020, from 14.4% in 2015, mainly due to pandemic benefits for the working-age population and ACE.

Low-income seniors, however, did not fare as well; the proportion of seniors living on low income rose to 15% in 2020, up slightly from 14.4% in 2015.

Seniors also saw the biggest drop in median income, with the median income of Canadians over 65 down 32.2% for men and 23.8% for women. The decline in the median income of men under 65 fell only 2.7%, while the median income of women under 65 fell only 2.4%.

Inequality declining in Alberta, but still high overall

While after-tax income increased significantly in 2020 compared to 2015, income inequality declined across the country, with Alberta recording the largest decline, primarily due to the benefits of the pandemic.

Although Alberta has seen the largest decline, income inequality in the province remains one of the highest in Canada, along with Ontario, British Columbia and Nunavut.

Inequality was lowest in PEI, NB, Yukon and Quebec, following the general trend that regions with higher median household incomes had also higher income inequality.

Large urban centers showed greater income inequality than smaller population centers, with Toronto, Calgary and Vancouver having the greatest inequality compared to Quebec City, Drummondville and Saguenay (both also in Quebec), which had the lowest .

The impact of pandemic-related payments

The impact of pandemic support payments on median after-tax income was significant, Statistics Canada said, with 68.4%, or 20.7 million adults, receiving support from a provincial or federal program. in the event of a pandemic, or an addition to an existing program.

Statistics Canada said 27.6% of Canadian adults received benefits from a federal program, such as the Canadian Emergency Response Benefit (CERB), receiving an average of $8,000 in 2020.

Another 55.9% of Canadian adults received payments through supplements to existing programs, such as the CCB or the GST tax credit, while over 90% of seniors saw supplements to programs like the guaranteed income supplement.

Statistics Canada said 4.2 million Canadian adults have also received support payments from provincial or territorial governments through localized pandemic relief programs.

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