Canadians aren’t imagining the cost-of-living crisis

The idea that Canada’s cost-of-living crisis “may be just a perception crisis” or the result of excessive exposure to social media, as argued recently in The Globe and Mail, minimizes the real financial pressures many people face, from rising rents to higher grocery bills.

Framing the issue as one of mindset obscures the structural challenges such as wage stagnation, precarious employment, and growing housing unaffordability – turning systemic issues into personal failings.

While headline data show average after-tax incomes have risen faster than inflation over the past decade, averages obscure what has actually changed. For a growing number of Canadians, work has become more unequal, more insecure, and less reliably connected to a stable standard of living.

Wages, work, and widening inequality

Take wages. While overall employment has remained relatively stable, median wage growth has trailed average wage growth for much of the past decade, pushing the gap between the country’s highest- and lowest-income households to an all-time high in 2025, Statistics Canada says.

Top-income households have seen substantially stronger income growth than those in the middle and at the bottom, widening the gap between those who feel protected from rising costs and those who do not. For some 20 years, Statistics Canada data show median wages grew slower than consumer prices broadly, resulting in reduced real purchasing power.

This inequality is compounded by the changing nature of work. Precarious employment – temporary, involuntary part-time, gig, and platform-based jobs – has become a permanent feature of the labour market.

This is the standard employment relationship for roughly one in five workers, a share that is much higher among younger workers, women, immigrants, and racialized Canadians. These positions typically offer lower wages, fewer benefits, little security, and are more vulnerable to disruption.

This insecurity also weakens bargaining power. Workers on short-term contracts or in gig arrangements are far less able to negotiate wage increases, challenge unpaid overtime, or push back against unpredictable scheduling. Even modest price increases feel destabilizing when income is uncertain. In this context, cost-of-living stress is not about people misunderstanding inflation. It’s about them lacking control.

Inequality further magnifies these pressures. Over the past several decades, labour’s share of national income has declined while profits and top incomes have grown.

Productivity gains increasingly accrue to capital owners and high-skilled workers, not to the median employees or working-class households.

From 1976 to 2000, productivity gains were generally passed on to workers as real wage gains. But in recent decades, the proportion of labour-productivity gains that are being passed on to the typical or median worker has fallen in many advanced countries – a process known as decoupling.

Housing pressures rise

Housing costs expose this divide most clearly. Shelter inflation has consistently outpaced overall inflation, driven by rising rents, utilities, and mortgage interest costs. Renters, who make up about one-third of households, have experienced some of the sharpest affordability pressures, with rising rents consuming a growing share of their income.

Statistics Canada data show lower-income renters often spend much more than 30 per cent of their income on shelter, a widely used threshold for housing affordability stress. At the same time, the Bank of Canada finds about 60 per cent of mortgage holders renewing loans at today’s interest rates will face sharp jumps in monthly payments. No amount of average income growth offsets that.

It is often noted that roughly two-thirds of Canadians are homeowners and should feel wealthier as they build equity because housing prices rise. But housing wealth is illiquid. It does not help pay for groceries, child care, or transportation, nor does it reduce monthly mortgage payments when interest rates rise.

Those who argue most Canadians are better off obscure how sharply outcomes differ, depending on employment security and asset ownership.

Stability is not an unrealistic expectation

Some commentators suggest that many Canadians today have unrealistic expectations based on the growth experienced by previous generations during booming economic times. But the expectation that full-time work should deliver stability is not psychological excess. Rather, it is a material necessity.

At one time, real incomes for typical households grew steadily, supported by productivity gains and expanding employment security. However, since at least the early 2000s, this is no longer the case. Income growth has slowed, careers have become more fragmented, and risk has shifted from employers to workers.

That shift matters. Work and labour research consistently shows that people value security almost as much as income level. When wages feel temporary and jobs feel replaceable, households become more sensitive to price increases, more reliant on credit, and less able to plan for the future.

The rise in household debt over the past two decades is not just a story of consumption. It is a coping mechanism for income and wealth instability. When that expectation erodes, public anxiety is a rational response to changing economic conditions.

Widespread cost-of-living concern is not a contradiction of the data. It is a signal that the link between work and economic security has fractured. Telling Canadians to recalibrate their expectations or be grateful for aggregate progress misses the point entirely. The problem is not that people expect too much, but that work delivers too little certainty for too many.

Answer anxieties and restoring security

The answer to cost-of-living anxiety is policies that strengthen wage growth at the bottom and middle income levels through higher and better-enforced workplace standards; strengthened and expanded collective bargaining coverage and contract protections, temporary and platform workers; and curbing the use of precarious employment by tying public procurement and subsidies to job quality.

It also means reducing the exposure of households to essential costs by accelerating purpose-built housing, stabilizing rents, expanding access to affordable child care and pharmacare, and tackling excessive profits in Canada’s monopolistic and oligopolistic food-supply chains – policies that directly lower monthly expenses rather than relying on asset inflation to do the work.

Restoring economic security requires rebuilding automatic stabilizers and redistributive mechanisms, from more generous and accessible employment insurance to portable benefits that follow workers across jobs, and a more progressive tax-and-transfer system that reduces inequality and ensures that productivity gains translate into broadly shared income growth.

Until the focus is on making work reliably support a decent standard of living, cost-of-living anxiety will persist because, for many Canadians, the crisis is not in perception, but in pay and protection.