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Tag: household income

  • A wish list for Carney’s fall budget – MoneySense

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    But things changed in the second quarter as Canada’s economy weakened. This has put the spotlight on the weakness of Canadians’ income and savings in the face of change. It also provides an important opportunity for the November 4 federal budget to protect financial well-being in the months ahead.  

    The income gap reaches a new high

    The income gap, which is the difference in the share of disposable income between households in the top 40% and the bottom 40% of income distribution, is a common measure that makes the news. It was at a record high of 49% in the first quarter, with a slight reduction in Q2, and has been increasing every year since the pandemic. 

    Interest rates have had a lot to do with this. Fortunately, for the first time since 2022, household interest payments declined by almost 5% in Q1. Disposable income, therefore, increased for those indebted households. 

    Then the U.S. tariffs entered the economic picture. Lower-earning households tend to suffer the most during periods of uncertainty and this is holding true now. Statistics Canada reported declining average wages, mainly due to reduced hours of work in Q1. Those working in mining and manufacturing, professional and personal services were particularly affected. 

    For the lowest-income households, income grew at a faster-than-average pace (+5.6%) in the second quarter. But on closer inspection, this was actually due to an increase in government transfers including Employment Insurance (EI), social assistance, and retirement benefits.  

    Unfortunately, tax collections—the very source of these payments in the future— will decline too. The Parliamentary Budget Office projects a lower nominal GDP (which measures the size of the tax base), averaging $12.9 billion less annually from 2025 to 2029. This too is due to the impact of tariffs.

    The government plans to increase taxes for some as well as penalties and fines and resulting interest charges to bolster its revenues. However, a more positive, proactive approach is to make income- and wealth-building easier. That starts with getting back to the basics.

    Diversification of investments matters    

    Despite a good start in the first quarter of the year (Q1), Canadians’ financial well-being was affected by the impact of tariffs imposed in the second quarter (Q2). Consider the following investing trends:

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    1. Lower-income households tend to earn interest income. Net investment income dropped the most for low-income households. The decline in investment earnings (-35.3%) more than offset the decline in interest payments (-7.1%). Second-quarter outcomes were similar.
    2. Higher-earning households have more diversified portfolios, holding more equities. These produce more tax-efficient capital gains and dividend income. These households’ net worth grew as the value of their financial assets increased by 7.1% in Q1—close to three times the rate of inflation—and 9.6% in Q2. These families also had limited growth in mortgage debt (+1.9%).
    3. As a result, by the end of the second quarter, the wealthiest 20% of households had accumulated almost two-thirds (64.8%) of Canada’s total net worth, averaging $3.4 million per household. The bottom 40% of households accounted for 3.3% of total net worth, averaging $86,900.  
    4. As a special wealth-builder category, homeowners experienced lower borrowing costs and lower inflation and this resulted in more savings as debt reduction in Q1. Still, personal net worth declined for younger Canadians and those without investment portfolios, because real estate values also declined.

    Income Tax Guide for Canadians

    Deadlines, tax tips and more

    The wealthy will be OK, others need help

    What can we learn from this? The wealthiest households can continue to increase their net worth, even if incomes are interrupted or don’t keep up with inflation and debt servicing costs are threatened by unemployment, incapacity, or retirement. That’s because their investment earnings and capital appreciation make up for the income gap.  

    Where are the opportunities for lower-income households? There are two. In the face of the same issues, it is critical to be able to continue to save consistently. Second, it is important to earn more tax-efficient investment income.

    This is where government policy comes in. It seems to be an easy ask for some to pay more tax, but that can result in brain drain, reduced incentives work or innovate, and the flight of capital. The real opportunity in the next federal budget is to help all Canadians build both income and wealth, against the backdrop of economic uncertainty, and to do so with the help of knowledgeable professionals.

    Building income and capital: a six-part plan

    Tax and financial literacy is elusive but critical to the prosperity of Canadians. Having the knowledge, skills, and confidence to make responsible financial decisions enables people to plan ahead and deal with increasingly complex systems that are a barrier to accessing income supplements through tax refunds, credits, and social benefits. 

    To that end, here’s my six-point wish list. Perhaps you’d like to add to it?

    1. Protection for interest earnings. Periods of high interest rates to combat inflation are particularly damaging to average households that earn interest income. If this monetary policy is necessary, protect those fragile savings from both inflation and taxes. Bring back the $1,000 investment income deduction, eliminated in 1987, to do so.  
    2. Deduction for professional help. Canadians need help with their tax and financial literacy. They won’t get that interacting with online help alone, no matter how good it is. Especially at a time the Canada Revenue Agency (CRA) is pushing for increased digitization, helping individuals better understand basic tax planning—what comes first, an RRSP, a TFSA or FHSA, for example—can bolster lifelong wealth-building habits and help to diversify their investments. To remove barriers to professional help, make income tax preparation and financial planning costs tax-deductible.
    3. Waive CRA penalties and interest from auto-filing. Even though the federal government is touting automatic tax filing for 5.5 million of the lowest-income Canadians by 2028, in reality, navigating both tax and digital complexity underlying this initiative may be unattainable for most targeted filers. Imagine the repayment nightmare for years to come (remember CERB?) if these tax returns are incorrect. The CRA should be empowered to permanently waive interest or penalties resulting from honest errors in automatic tax filing processes. 
    4. Help young people start saving. Young workers are most susceptible to job loss but have the most to gain from increased compounding time in their investments. By enabling matching grants for start-up savings for the first five years after post-secondary education, similar to the grants available for registered education savings plan (RESP) and registered disability savings plan (RDSP) savings, sound saving habits could be encouraged with a New Graduate Savings Plan.   
    5. Recognize community service as a tax deduction. Younger Canadians aged 15 to 24 are most likely to volunteer, while those over age 65 volunteer the most hours. Keeping track of volunteer hours is not much more onerous than keeping track of dollars donated to charity. The resulting tax savings could help with community wealth creation. The Liberals had proposed a Health Care Workers Hero Tax Credit in their party platform. This should be extended to those who volunteer to help others with tax preparation and financial planning, by expanding the charitable donation credit. 
    6. Change retirement savings options. Most people know that the Canada Pension Plan (CPP) alone will not fund their retirement, even with the higher premiums workers and their employers are now paying. Rising CPP premiums squeeze out cash flows needed to fund a tax-free savings account (TFSA), which ensures a tax-free retirement. Required matching premiums also make it difficult for employers to give raises or increase staffing. One way to improve cash flow for more private savings is to increase take-home pay. Governments should encourage TFSA savings by making contributions tax deductible for both employees and employers who contribute to their employees’ accounts.

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    About Evelyn Jacks, RWM, MFA, MFA-P, FDFS


    About Evelyn Jacks, RWM, MFA, MFA-P, FDFS

    Evelyn Jacks is President of Knowledge Bureau, a world-class financial education institute where readers can take micro-credentials in Financial Literacy, the Fundamentals of Income Tax Preparation, and earn career-enhancing Specialized Credentials, all online.

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    Evelyn Jacks, RWM, MFA, MFA-P, FDFS

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  • GoFundMe CEO says the economy is so bad that more of his customers are crowdfunding just to pay for their groceries | Fortune

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    GoFundMe’s CEO just said the quiet part out loud: in this economy, more Americans are crowdfunding groceries to get by.

    The head of GoFundMe, Tim Cadogan, told Yahoo! Finance the economy is so challenged that more Americans are raising money to buy food—an arresting data point that captures the widening gap between household budgets and basic needs.

    In a recent interview on the Opening Bid Unfiltered podcast with Brian Sozzi, he described a notable rise in campaigns for essentials like groceries, a shift from one-off emergencies toward everyday survival.

    “Basic things you need to get through life [have] gone up significantly in the last three years in practically all our markets,” Cadogan said.

    That evolution underscores the new economic reality for many Americans: persistent inflation, higher borrowing costs, and thin financial cushions are forcing many households to triage bills, juggle debt, and seek help in new ways.

    Groceries as the new emergency

    Cadogan’s observation—that more people are asking strangers to help pay for staples—marks a sobering turn for a platform historically associated with medical bills, disaster relief, and community projects. When the cost of food stretches paychecks past the breaking point, crowdfunding morphs from altruism to a parallel safety net.

    In previous Fortune coverage of inflation’s long tail, consumers’ coping tactics have included trading down brands, shrinking baskets, delaying car repairs, and leaning on credit cards. The shift Cadogan describes suggests those tactics have run out of runway for a growing slice of the country, especially younger and lower-income households who rent, commute, and carry variable-rate debt.

    The inflation aftershock

    Even as headline inflation cools from its peak, elevated price levels remain embedded in household budgets. Fortune has tracked how cumulative inflation, not just the monthly prints, weighs on families. For instance, groceries cost more than they did two or three years ago, rents have reset higher, and child care is straining paychecks.

    Wage gains helped many workers, but unevenly and often after costs had already jumped. For families without savings buffers, a higher cost baseline is the real story. That backdrop explains why an uptick in grocery campaigns on GoFundMe isn’t a curiosity—it’s a barometer of the current economy.

    The credit crunch at the kitchen table

    Household balance sheets have been whipsawed by stubbornly high prices on necessities as well as steeper borrowing costs on credit cards and auto loans. Fortune’s reporting has highlighted rising delinquency rates among younger borrowers and the squeeze from student loan repayments resuming after a long pause. For some, the social capital of friends, community groups, and online donors now substitutes for financial capital. Crowdfunding groceries is a last-mile solution in a system where wages, benefits, and public supports haven’t fully bridged the gap.

    The Great Wealth Transfer meets a giving plateau

    Cadogan also frames this moment as an opportunity: the U.S. is entering a historic wealth transfer as baby boomers pass tens of trillions to heirs and philanthropy. Yet overall charitable giving as a share of GDP has struggled to break out sustainably above roughly 2%. A central challenge is converting private balance-sheet strength into public generosity at scale. Fortune has explored the paradox of robust asset markets—fueled by equities, real estate, and private investments—coexisting with widespread financial insecurity. The wealth transfer could amplify that divergence or narrow it, depending on whether inheritors and living donors commit to more dynamic, needs-based giving.

    Gen Z, millennials, and a new donor thesis

    The GoFundMe CEO hopes younger donors, who are often more values-driven, digitally native, and community-oriented, will push giving higher and faster.

    These cohorts already power mutual aid networks and micro-giving online; the question is whether that instinct can scale beyond one-off campaigns to sustained support for food security, housing stability, and local services.

    If employer matching, donor-advised vehicles, and purpose-built funds become easier to use—and if transparency and immediacy remain high—small-dollar giving could compound into a measurable macro effect.

    What comes next

    Many Americans remain one shock away from going into arrears. More GoFundMe campaigns for groceries fits that narrative and raises a challenge to wealth holders on the cusp of inheritance decisions.

    If the wealth transfer is the economic story of the decade, the generosity transfer might be its moral counterpart. Whether giving can rise meaningfully above its long-running share of the economy will hinge on channeling today’s empathy into tomorrow’s infrastructure, so that no one needs to pass the hat to put food on the table.

    For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

    Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.

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    Ashley Lutz

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  • Online dating lets us look for similar education levels, adding to income inequality

    Online dating lets us look for similar education levels, adding to income inequality

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    Online dating may be partially to blame for an increase in income inequality in the US in recent decades, according to a research paper.

    Since the emergence of dating apps that allow people to look for a partner based on criteria including education, Americans have increasingly been marrying someone more like themselves. That accounts for about half of the rise in income inequality among households between 1980 and 2020, researchers from the Federal Reserve Banks of Dallas and St. Louis and Haverford College found. 

    Using data from the Census Bureau’s American Community Survey from 2008 to 2021, when online dating quickly became prevalent, the economists found that women became slightly more selective when choosing partners based on age, while men became slightly more selective based on education. 

    But when the researchers compared that with data on married couples from 1960 and 1980, they found that people in the recent period increasingly went for partners with the same wage and education levels. And while many people married someone of the same ethnicity, people became less and less selective on race over time.

    Who people marry has a major impact on household income. The research shows that the two main contributors to inequality through the selection of a future spouse are education and skills. They are followed, to a much lesser extent, by income and age, while race plays a relatively inconsequential role, co-author Paulina Restrepo-Echavarría, an economic policy advisor at the St. Louis Fed, said in a blog post describing the paper.

    Overall, the predominance of online apps to find a future partner has led to a 3-percentage-point increase in the Gini coefficient — a widely used measure of income inequality, the research shows.

    “We find that the increase in income inequality over the past half a century is explained to a large extent by sorting on vertical characteristics, such as income and skill, and their interaction with education,” the economists wrote in their paper.

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    Alex Tanzi, Bloomberg

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  • Los Angeles County demographic changes: What you need to know about new 2022 U.S. Census data

    Los Angeles County demographic changes: What you need to know about new 2022 U.S. Census data

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    The U.S. Census Bureau released the 2022 American Community Survey this week. The survey, which looks at demographic data in five-year increments, introduced several new detailed tables and demographic breakdowns. We looked at some trends in the data.

    Nearly 6 million people 65 and older live in California, a figure that is slowly growing. In the last five years, 716,000 people became senior citizens in the state. That number will nearly double by 2030. Los Angeles County is home to roughly a quarter of the senior citizens in the state.

    As the cost of living increases, the number of Golden State senior citizens in poverty is also rising, with nearly 14% of Los Angeles County senior citizens living below the poverty line. The national poverty rate declined significantly to 12.5% during the five-year period from 2018-22.

    Across the country, housing costs continue to rise. Financial planners advise that no more than 30% of household income be spent on housing costs. The latest data show that is far from the reality for 41% of homeowners with a mortgage in Los Angeles County. For homeowners without a mortgage, roughly 16% are house burdened. It’s also not easy for renters. More than half of renters spend more than 30% of their household income on housing costs.

    The data also point to how the pandemic changed the way people work. In Los Angeles County, the number of people working from home tripled from more than 270,000 to 810,000 in just five years. That number tracks with the rest of the state’s pool of people working from home, which tripled from 1 million to more than 3.2 million. For those having to commute into the office daily, the mean travel time to work has stayed the same with most L.A. County residents getting to work in 30 minutes (although most L.A. city residents would laugh at this figure.) The number of unemployed people in the county has gone down by 4% since 2017 with roughly 300,000 without work.

    The new American Community Survey includes updated race data. They show the county has grown in its Asian and Latino population. Roughly 1.4 million people identified as Asian in Los Angeles County, up 2.4% from a decade ago. Those who identify as Latino and Hispanic account for nearly half of the population of the county. The county lost 80,000 Black people over the last decade.

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    Sandhya Kambhampati

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  • Americans are sinking in debt as household expenses grow faster than income, new poll says. ‘The economy is good on paper, but I’m not doing great’

    Americans are sinking in debt as household expenses grow faster than income, new poll says. ‘The economy is good on paper, but I’m not doing great’

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    About 2 in 3 Americans say their household expenses have risen over the last year, but only about 1 in 4 say their income has increased in the same period, according to a new poll from The Associated Press-NORC Center for Public Affairs Research.

    As household expenses outpace earnings, many are expressing concern about their financial futures. What’s more, for most Americans, household debt has either risen in the last year or has not gone away.

    Steve Shapiro, 61, who works as an audio engineer in Pittsburgh, said he’d been spending about $100 a week on groceries prior to this past year, but that he’s now shelling out closer to $200.

    “My income has stayed the same,” he said. “The economy is good on paper, but I’m not doing great.”

    About 8 in 10 Americans say their overall household debt is higher or about the same as it was a year ago. About half say they currently have credit card debt, 4 in 10 are dealing with auto loans, and about one in four have medical debt. Just 15% say their household savings have increased over the last year.

    Tracy Gonzales, 36, who works as a sub-contractor in construction in San Antonio, Texas, has several thousand dollars of medical debt from an emergency room visit for what she thought was a bad headache but turned out to be a tooth infection.

    “They’ll treat you, but the bills are crazy,” she said. Gonzales said she’s tried to avoid seeking medical treatment because of the costs.

    Relatively few Americans say they’re very or extremely confident that they could pay an unexpected medical expense (26%) or have enough money for retirement (18%). Only about one-third are extremely or very confident their current financial situation will allow them to keep up with expenses, though an additional 42% say they’re somewhat confident.

    “I’ve been looking forward to retirement my entire life. Recently I realized it’s just not going to happen,” said Shapiro, of Pittsburgh, adding that his wife’s $30,000 or so of student debt is a financial factor for his household. The couple had hoped to sell their house and move this past year, but decided instead to hold on to their mortgage rate of 3.4%, rather than facing a higher rate. ( The current average long-term mortgage rate reached 7.79% this month. )

    About 3 in 10 Americans say they’ve foregone a major purchase because of higher interest rates in the last year. Nearly 1 in 4 U.S. adults have student debt, with the pandemic-era payment pause on federal loans ending this month, contributing to the crunch.

    Will Clouse, 77, of Westlake, Ohio, said inflation is his biggest concern, as he lives on a fixed income in his retirement.

    “A box of movie candy — Sno-Caps — that used to cost 99 cents is now a dollar fifty at the grocery store,” he said. “That’s a 50% increase in price. Somebody’s taking advantage of somebody.”

    Americans are generally split on whether the Republicans (29%) or the Democrats (25%) are better suited to handle the issue of inflation in the U.S. Three in 10 say they trust neither party to address it.

    Geri Putnam, 85, of Thomson, Georgia, said she’s been following the ongoing auto strikes with sympathy for the workers’ asks.

    “I don’t think it’s out of line, what they’re asking for, when you see what CEOs are making,” she said. “I think things have gotten out of control. When you can walk into a store and see the next day, across the board, a dollar increase — that’s a little strange. I understand supply and demand, the cost of shipping, et cetera. But it seems to me everyone’s looking at their bottom lines.”

    Putnam also said she sees her six children struggling financially more than her generation did.

    “They all have jobs and have never been without them,” she said. “They’re achievers, but I think at least two or three of them will never be able to buy a home.”

    A slight majority of all Americans polled (54%) describe their household’s financial situation as good, which is about the same as it’s been for the last year but down from 63% in March of 2022. Older Americans are much more confident in their current finances than younger Americans. Just 39% of 18- to 29-year-olds describe their household finances as good, compared to a majority (58%) of those who are 30 and older. People with higher levels of education or higher household incomes are more likely than Americans overall to evaluate their finances as solid.

    About three-quarters of Americans describe the nation’s economy as poor, which is in line with measurements from early last year.

    Among those who are retired, 3 in 10 say they are highly confident that there’s enough saved for their retirement, about 4 in 10 are somewhat confident, and 31% are not very confident or not confident at all.

    Clouse, of Ohio, said the majority of his money had gone towards caring for his wife for the past several years, as she’d been ill. When she passed away this past year, his household lost her Social Security and pension contributions. He sees the political turmoil between Republicans and Democrats as harming the economy, but remains most frustrated by higher prices at the supermarket.

    “Grocery products going up by 20, 30, 40%. There’s no call for that, other than the grocery market people making more money,” he said. “They’re ripping off the consumer. I wish Mr. Biden would do something about that.”

    About 4 in 10 Americans (38%) approve of how Biden is handling the presidency, while 61% disapprove. His overall approval numbers have remained at a steady low for the last several years. Most Americans generally disapprove of how he’s handling the federal budget (68% disapprove), the economy (67%), and student debt (58%).

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    Cora Lewis, The Associated Press

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