Canadian taxpayers more than made up for household income lost during the pandemic. A new study from Statistic Canada (Stat Can) shows the change of employment earnings in Q2 2020. On average, every demographic lost income. However, due to generous pandemic supports, some households received more than 3x the income lost.
About Today’s Data
Today we’re looking at household income quintiles, employment earnings, and pandemic support. Income quintiles are evenly distributed ranges of household earnings, divided into fifths. The lowest quintile is the bottom fifth of income, and the highest quintile is the top fifth. The income lost and the pandemic support are the averages, as calculated by Stat Can. If the difference between employment income lost and pandemic support is a net-positive, the household made more than lost. The opposite is also true, but all quintiles received more than they lost on average.
In General, Households Received More Taxpayer Funds Than Income Lost
The lowest quintile saw the largest replacement of income of any demographic. The average household lost $564 of income in Q2 2020, and received an average of $2,381 in pandemic benefits. This works out to a net-gain of $1,817, or 322% of the income lost over the period. Since the loss was small, it’s easy to see how pandemic support created the largest percentage increase.
Canadian Household Income Change During Pandemic
The dollar change in the average income from employment earnings, and pandemic supports for each household income quintile in Q2 2020. Source: Stat Can, Better Dwelling.The second income quintile saw the largest dollar gain from pandemic support. The average household lost $1,004 of income in Q2 2020, and received an average of $3,699 in pandemic support. This works out to a net-gain of $2,695, or 268% more than the income lost. Not as big of a gain percentage wise, but still a lot more money than was lost.
The third quintile, right in the middle, also more than doubled their losses. Income lost came in at $1,597 in Q2 2020, and they received $4,023 in pandemic support. This works out to a net-gain of $2,426, or an increase of 152% of the income lost. Much smaller, but taxpayers still covered more than double the losses.
Canadian Household Income Net-Change
The net-change in the dollar amount of income lost, after the adding average pandemic supports in Q2 2020. Source: Stat Can, Better Dwelling.The fourth quintile received the most pandemic support in gross dollars. Income loss averaged at $1,914 for Q2 2020, and was replaced with $4,046 in pandemic support. This works out to a net-gain of $2,132, or 111% more money than was lost. They faced bigger losses, but still doubled their income.
The fifth, and highest, quintile lost the most in income support. The income lost works out to an average of $2,604 in Q2 2020, and was replaced with $3,435 of pandemic support. This works out to a net-change of $831, or 31.91% more income than was lost. Pandemic income supports aren’t quite as lucrative if you’re on the top, but they still return some extra cash.
We already knew pandemic supports replaced more than the employment income lost. Seeing the distribution, helps us understand things like the elevated savings rates. If costs were covered by wages, tripling one’s income lost is likely to result in more saving. This does bring up a lot of questions on how incomes will adjust in the post-pandemic world.
Like this post? Like us on Facebook for the next one in your feed.
Precisely why all benefits have been extended well into the summer already. The bigger cliff is going to be how many employees companies keep when they aren’t 75% subsidized.
…or even worst how many people will simply not go back to work after they’ve actually been accustomed to getting paid while staying home. When they figure that hey I’m actually doing better now on account that the Government paid me and told me I didn’t have to pay rent cause I couldn’t get evicted so between me and my partner we now have about 12 grand in the bank. I also handed back my car as I don’t need it so no lease costs or insurance as well as the fuel costs. Plus I learned how to make coffee at home so no more 40 dollar a week habit of stopping to grab not just a coffee but a breakfast sandwich and I also got all this extra time that I was wasting in rush hour going in. Now that I’m getting paid to do nothing the 450 a week I collect actually is better than what I was struggling to make before.
You live in a dream world. People work. The only people who won’t be going back to work are the people who weren’t working before the lockdown. If you want me to elaborate just ask, but seriously you are detached from reality.
This blog had a lot of good commentary till you and the lot scared them off with your diminished capacity.
Correct. I don’t know how many jobs were lost, and what the transition will look like, but I don’t the job losses lasting as long as some predicted.
Most people laid off are only on a temporary lay offs.
You don’t think he has a point though Paul? I think we can expect people to be somewhat rational – if they’re doing better on CERB than at their job, and they’re saving all this money related to driving and ancillary expenses, why would you expect them to go back to work? I think many people are conscientious, and will work anyway because it’s right, but I think you have to consider the laziest people you know and ask yourself what those people would do in this situation?
Although I agree with you in that there will always be lazy people wanting to take advantage of the system, the original post said:
“The bigger cliff is going to be how many employees companies keep when they aren’t 75% subsidized.”
This is different then people already on CERB / EI. It will have an impact on the economy if/when that subsidy ends.
At some point the govt is going to have to wake up and realize this is the new normal. Maybe it’s this year, maybe next year. Maybe they intend to perpetually give out CERB, and if so they ought to consider how people will abuse the system as you describe.
The bigger issue isn’t the wages on transition, but the loss of compounding gains and career growth per year for people just starting out.