High-income Canadians not spared from economic onslaught

For those who made the most money, there were radically diverse patterns of income development

High-income Canadians not spared from economic onslaught

While the COVID-19 pandemic had a significant impact on middle- and lower-income Canadians' earnings in 2020, high-income Canadians had a decidedly different experience, according to recent data from Statistics Canada.

Using the 2020 Longitudinal Administrative Databank, the federal agency’s research found that the average total income of all Canadian taxpayers increased by 5.5% to $54,200 between 2019 to 2020.

Taxpayers in the lower half of the distribution benefited from a gain that was significantly bigger, as their average income increased by 19.2% to $22,100, primarily due to government transfer programs connected to COVID-19.

But from 2019 to 2020, Canadians with the highest incomes sustained the biggest losses in average income.

Canadians in the top 1% of earners experienced a decline in their average total income of $5,500, to $512,000. The average total income of those in the top 0.1% decreased from 2019 to 2020 by $67,800, while the top 0.01% witnessed the greatest decline of $506,800.

There were large drops in dividend income from Canadian firms for tax filers in the high-income brackets in 2020, which speaks to the pandemic's significant effects on financial markets. The average dividend income for those in the top 1% fell by $10,500 in 2020, to $77,300. The decline among filers in the top 0.1% was even more pronounced, decreasing by $82,600 to $348,600, while the top 0.01% suffered a $592,900 plunge to $1,543,400.

The declines in dividend income in 2020 easily outpaced slight adjustments in earnings and salaries for the top taxpayers, causing high-income Canadians' average total income to decrease.

In the top 1%, both men and women's average incomes decreased, falling by 0.6% for women to $451,100 and by 1.0% for males to $532,700.

In what could be a foreshadowing of women’s more dominant role in the wealth space, women represented 25.4% of the top 1% of taxpayers in 2020 – rising from 24.7% in 2019. They also made up 18.8% of the top 0.1% filers in 2020, 0.8 percentage points higher than 2019.

Women's income from wages and salaries increased by $2,600 to $225,300 in 2020 for those in the top 1%, while men's income decreased by $2,500 to $346,500. Average dividend income of women in the top 1% decreased by $11,200 to $78,500, while men in the cohort saw a decrease of $10,300 to $76,900.