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Summary
- The youngest households have seen the largest gain in their net worth, up by 9.8 per cent.
- The income gap between poor and rich declined in 2020 as disposable incomes rose.
- Nearly 22,000 people have died of COVID in Canada as of March 1, 2021.
The income of Canada’s poorest households rose by 36.8 per cent in the first three quarters of 2020 due to massive government spending in COVID-19 relief, the country’s top statistical agency said on Monday.
Furthermore, the youngest households have seen the largest gain in their net worth, up by 9.8 per cent as the government began transferring money into their bank accounts, which exceeded the losses in salaries or self-employment income, Statistics Canada said in a release.
Although the net effect of the government funds on various income groups can be found in the GDP data and the national balance sheet, the latest data gives a detailed view of the impact, it said.
Income Gaps Decline in 2020
The income gap between the poor and the rich declined in 2020. Disposable income of the poorest households rose 7.2 per cent in the second quarter, while the income of the rich declined from 40.1% to 37.7%. The reduction in the income gap was due to cash transfers to poor families.
In the first quarter of 2020, household incomes across all sections had declined due to the COVID-19 restrictions, but increased government spending in the subsequent period had eased the situation.
This was visible in the second quarter when the disposable income of the lowest-income earners and the youngest households rose by 33.6 per cent and 20.1 per cent, respectively. Had there been no support, the overall disposable income of all households would have dropped by 3.6 per cent in the second quarter, Statistics Canada noted.
Pic Credit: Pixabay.
Young, Poor See Largest Salary Cuts
The young and the poor households have seen the largest decline in salaries in the first quarter as economic activities came to a grinding halt. The salaries of poor households declined by 2.3 per cent while that of youngest households by 1.6 per cent.
These groups of people were the worst affected during the lockdown, but their situation gradually improved in the third quarter with consistent government support, the agency said. Likewise, incomes of those who were also engaged in private business besides jobs have also dropped.
The lowest-income households faced the brunt of the lockdown with their incomes reduced by 31.9 per cent, followed by major income earners (aged 55 to 64) by 17.2 per cent, it said. But they have added the largest gains in incomes in the third quarter of 2020.
COVID Aid Exceeds Salary Losses
The amounts received in Federal aid by poor households and the young have exceeded their incomes from wages and salaries. Government transfers to poor households increased by an unprecedented 57 per cent as it rolled out more categories of COVID aid in the subsequent period.
Although they had witnessed notable declines in income in the second quarter, the government support has sufficiently covered those losses, it said. Also, households could save more due to the combination of government transfers and the fewer avenues for spending during the lockdown.
According to Health Canada, a total of 21,994 people have died due to COVID as of March 1, 2021. Also, 813,778 people have recovered from the disease in the same period.
