Despite median household incomes rising slightly in 2022, new data shows Canadians got significantly poorer when accounting for inflation.
New data from Statistics Canada shows that in 2022, income for the median Canadian household after taxes rose by a modest 2.5% to $60,800. However, when adjusting for 6.8% inflation in 2022, median family after-tax income dropped 4% from 2021.
The Impact of Inflation on Canadians
Pandemic Impact on Wages
Since the Covid-19 pandemic, Canadians on average have not seen their wages improve in real terms, as median after-tax household income in 2022 only increased by $40 since 2019.
Provincial Income Trends
Nearly every province and territory saw a decline in median after-tax household income, including Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, Nunavut and the Northwest Territories. Only Quebec, British Columbia, and the Yukon saw a modest increase with Quebec seeing the greatest improvement, as real household income growth grew by just under $3,000.
Experts Weigh In
The data validates the concerns that many Canadians have been communicating to the federal and provincial governments for years.
In a comment to True North, the Canadian Taxpayer Federation’s Ontario director Jay Goldberg blamed the collapse of median household income on the federal government for driving up inflation and the introduction of new taxes in recent years.
“The biggest reason is big government, high taxes, and overregulation that is leading to people not keeping enough of their take-home pay, it’s leading to declining household incomes and its leading to a less competitive economy,” said Goldberg.
“If we want to get back to more economic growth and more money in the pockets of Canadians and start catching up to our peer countries, that means cutting taxes, restraining spending, and positioning the country for growth.”
Impact on Younger Canadians
When asked why younger Canadians were hit the hardest, Goldberg said that the nature of the jobs that teenagers and young adults work makes their positions far more precarious.
“It’s often young Canadians and sometimes seniors who are looking for part-time jobs and…if you have a sluggish economy with high taxes and not enough investment what you’re gonna see is not enough jobs out there,” said Goldberg. “So you’re seeing a lot of Canadians not being able to find jobs. You have some, particularly youth, who are in jobs that are not seeing the wage increases perhaps that you might be able to see because businesses are being taxed through the roof.”
Goldberg's Recommendations
Goldberg says that since after-tax household incomes are dropping, the federal and provincial governments should move to cut taxes to provide relief to Canadians.
“The best way to immediately improve that is to lower taxes. So we’re talking about things like scrapping the carbon tax, undoing the payroll tax increases that we’ve seen over the past few years, looking at income tax reductions so that people can keep more of what they earn and they’re incentivized to work more,” said Goldberg.
What's Next?
The data highlights the need for government action to address the affordability crisis facing Canadians. While the issue is complex, there is a need for policymakers to consider a mix of strategies including tax cuts, investment in job training and education, and measures to control inflation.
