Canada’s income gap declined in the second quarter of 2023 from record highs a year earlier, due largely to worker wage gains and improved benefits for retirees. 

Statistics Canada shared new figures Wednesday on the income gap, or the difference in disposable income between households in the top 40 per cent of incomes and those in the bottom 40 per cent of incomes across the country. 

The data showed the income gap declined to 45.1 per cent during the quarter, down from a record high of 47 per cent a year earlier “when the expiry of government COVID-19 support benefits in combination with weaker labour market conditions pushed the income gap to a historical high.”

A report on the findings highlighted that households in the bottom 20 per cent had significant gains in average disposable income during the second quarter of this year compared to the previous year, due mostly to rises in transfers such as Old Age Security Benefits.

A 10 per cent increase to Old Age Security Benefits for seniors over 75 contributed to more than a quarter of the overall increase in transfers to lower-income households, Statistics Canada said. 

Wage increases also played a role in boosting household incomes.

“Strong labour market conditions had more of an impact on incomes for households in the second income quintile, as increases in their wages accounted for two-thirds of the increase in their disposable income,” Statistics Canada said. 

However, net savings declined for the lowest-income households, as income gains were outweighed by cost-of-living increases, according to the data.

Elevated interest rates put downward pressure on disposable income levels for lower-income households, and average net investment income for the group fell in the second quarter.

“Credit card balances had a more significant impact on the lowest income households, as increases in interest charges were evenly split between credit cards and mortgages for the lowest income households, while the average household dedicated two-thirds of the overall increase in interest payments to mortgage-related debt,” Statistics Canada said.


Higher-income households saw an average disposable income rise at a slower pace during the second quarter compared to the previous year, the release said.

“Gains occurred for wages and salaries, self-employment income and net investment income, mainly from dividends and interest on bank deposits, while increases in interest charges had a relatively minor impact on net investment income,” Statistics Canada said.

The number of higher-income households claiming government benefits as a main source of income fell by about one-third on an annual basis during the second quarter, which partially offset gains in employment income and investment earnings.


Despite a narrowing income gap during the quarter, Statistics Canada noted that the wealth gap widened, with the majority of wealth in Canada “held by relatively few households.”

While the income gap looks at difference in top and bottom-level income, the wealth is defined as the gap in net worth across households in the top 20 per cent compared with the bottom 40 per cent of the wealth distribution.

According to Statistics Canada, the top 20 per cent of wealthiest households accounted for 67.8 per cent of net worth during the second quarter, while the bottom 40 per cent accounted for 2.7 of net worth.

Those figures represent a shift from pandemic trends, StatCan noted, after the wealth gap dropped by 1.5 percentage points from 2019 to 2021.

“The latest estimates indicate a reversal of circumstances for the least wealthy over the last year,” the agency said.