Now we have answers to Canadian housing boom! Canadians who lost their jobs last year had a less than average income

It turns out there’s one similar thing among Canadians who lost their jobs in 2020 because of the COVID-19 pandemic – they all earned $27.81 an hour or even less.

However, the largest drop was seen in case of those whose income was even lower. This segment earned less than $13.91 an hour.

Such results were released in a report by CIBC Economics based on Statistics Canada data. The report says all the jobs lost last year were among Canadians with lower than average incomes.

The bank decided to avoid monthly fluctuations of the national job market’s numbers in order to show the drastic widening of Canada’s income gap caused by the pandemic.

“It’s a very abnormal and asymmetrical crisis,” – Benjamin Tal, the report’s author and CIBC’s deputy chief economist, noted. “The crisis hits a service sector strongly, and this segment includes mostly low paying jobs.”

According to the report, the lower the income is, the worse the job market sector performed last year.

The largest job losses were seen in case of Canadians with part-time jobs, temporary workers and self-employed.

Meanwhile, those with a higher income have faced net job gains during the pandemic, which is an abnormal tendency amid the recession.

The increase in higher-paying jobs hid the sharp employment decline in the sector of low-wage workers.

Moreover, the largest job growth was reported in case of Canadians with higher incomes (an hourly wage of at least $41.73).

“It’s surprising, that high-wage earners gained almost 350,000 jobs over 2020,” – CIBC says.

Nevertheless, although top-earning jobs were up, the ability to spend was almost absent.

“When you can’t spend, but your income is growing, your savings account is increasing as well,” – Tal noted. “We can see almost $100 billion of excess cash right now.”

And still, the growing gap between the rich and poor may get even worse.

“The situation will likely get worse over the next months,” – the report says.

But there are signs that the economy’s recovery during the second half of this year will be sharp.

CIBC expects Canada’s unemployment rate to go down below 7%, which is good news following the 9.4% rate reported by Statistics Canada earlier in February.

“The demand is extremely strong,” – Tal said. “Not all the excessive cash will be spent, but much of it will be directed to the service sector, and it’s great as we need jobs in this segment”.

“That’s why we predict a strong economic recovery”.

We are already witnessing unprecedented boom on Canadian real estate market in the midst of COVID-19 and recession. Moat of our clients are well positioned and ready to spend extra dollars they would otherwise send on vacations and travel. With the further reopening of economy, return of international student and immigration we might see even tighter real estate market and higher price acceleration.