Expert wants government to strengthen employment insurance and social assistance programs
Despite a modest rebound in wage growth in recent years, Canada’s lowest-income households continue to fall behind, as rising living costs outpace earnings and compound affordability pressures, according to a recent report.
Specifically, wages for Canada’s lowest-income earners have stagnated while the cost of living has soared, leaving many households with little financial room to manoeuvre, according to a new report from the Canadian Centre for Policy Alternatives (CCPA).
Between 2019 and 2023, the lowest quintile of earners saw virtually no wage growth. In 2024, retail workers earning an average of $745 per week experienced no increase in wages at all. By contrast, the highest-income households recorded the largest earnings gains during the same period, widening the gap in income and wealth across Canadian society.
“Modest wage growth post pandemic hasn’t been enough to offset rising costs for the basics and interest payments on debt—and wage gains have been trending down too this past year,” says Katherine Scott, director for the CCPA's gender equality and public policy work.
Meanwhile, higher income households had a much bigger wage growth.
“Not only did the top 20% of households record the largest wage gains between 2019 and 2023, they also benefited from higher investment returns in the market and the run-up in housing prices, widening the gap in income and wealth with poor households,” says Scott. “These households were easily able to accommodate rising prices.”
Wage growth in Ontario has fallen behind the rest of Canada for more than two decades due to prolonged economic stagnation, according to a previous report from the Fraser Institute.
Inflation has technically cooled to around 2% annually, but the Canadian Centre for Policy Alternatives (CCPA) points out that prices for core necessities remain substantially higher than pre-pandemic levels.
Between 2019 and 2024, the cost of essentials rose sharply: food by 23.3%, shelter by 24.0%, and transportation by 21.6%. Groceries alone were 10.4% more expensive in 2024 than in 2022, while shelter costs surged by 15.4% over the same period—well above the 9.2% increase in the overall Consumer Price Index (CPI).
The CCPA warns that these price increases disproportionately affect low-income Canadians, who spend a significantly larger share of their income on essentials. In 2023, households in the bottom income quintile allocated 62.6% of their total expenditures to food, shelter, and transportation—up from 59.8% in 2013. By contrast, households in the top income quintile spent just 34.9% on these necessities, down from 37.9% a decade earlier.
Low-income families are now spending nearly every dollar they earn—94.6% of their income—on immediate needs, leaving little room for savings, education, or unexpected expenses. This compares to just 55.7% among those in the top 20%.
“Poor and modest-income families spend basically every dollar they have on their immediate needs,” says Katherine Scott. “Increased food, shelter and energy costs are an especially devastating reality for low-income households because these households spend more of their income on essentials, leaving little to spend on healthy food, suitable housing, needed medications or education—never mind savings to put aside for rainy days.”
Canadians’ concerns about their personal finances have surged amid mounting economic uncertainty and market volatility, according to a previous report from BMO Financial Group.
Scott also criticises the federal government’s response to the post-pandemic “affordability crisis.”
Temporary supports such as the GST Credit top-up, the Grocery Rebate, and one-time rental benefits have not addressed the root causes of cost pressures, nor have they provided sustained relief for vulnerable households, she says.
Proposals like reducing the lowest federal personal income tax rate from 15% to 14%—while costly at $5.4 billion annually—are unlikely to benefit lower-income Canadians, the report argues. This is because the richest 40% of Canadians are expected to capture three-quarters of the tax savings.
The CCPA is calling for a comprehensive affordability strategy, including expanded investments in public infrastructure, income security reforms, and strategic policy interventions targeting the housing and food sectors. These include:
“A real affordability plan would, for instance, significantly expand the stock of community and non-profit housing, directing more money to the Rapid Housing Stream of the Affordable Housing Fund, the new Canada Rental Protection Fund, and the Urban, Rural, and Northern Indigenous housing strategy,” says Scott.
“A real plan would address the financialisation of housing that continues to fuel the affordability crisis and bring in a robust renters’ bill of rights and national rent controls.”
Most Canadians worry they’re not saving enough, according to a previous report from H&R Block Canada.
