Here's where Vancouver ranks among Canadian cities when it comes to income inequality

Cranes tower above condos under construction near southeast False Creek in Vancouver, on Sunday Feb. 9, 2020. THE CANADIAN PRESS/Darryl Dyck

Income inequality, known for its corrosive effects on health, happiness and community ties, is worse in Vancouver and some nearby municipalities than in most other places in Canada, according to a new analysis of Statistics Canada data.

West Vancouver ranked second for income inequality on a national list assembled by the Local News Data Hub at Toronto Metropolitan University, while the area that includes part of the University of British Columbia's Vancouver campus was third. The city of Vancouver ranked 11th.

The divide between the affluent and people who struggle financially is most visible in Vancouver. There are low-income residents in the city's Downtown Eastside who “haven't been out of the (neighbourhood) in many, many years,” said John Zador, the community engagement co-ordinator with Exchange Inner City, a local economic development organization.

Zador said residents may not venture further afield “because they're not made to feel welcome” outside their neighbourhood. The city's design, he added, makes it easy for people to avoid the Downtown Eastside or take transit past it, creating a “bubble of isolation between the haves and the have nots.”

In West Vancouver, a historically wealthy community of just under 45,000, the high levels of income disparity may be driven in part by the gap between the municipality's affluent population and lower-income residents who live near its outer boundaries, said Memorial University geography professor Nicholas Lynch, who studied income inequality in Vancouver. The highest-earning 10 per cent of households in West Vancouver made nine times more than the lowest-earning 10 per cent.

Other experts have suggested there are West Vancouver residents who report lower annual incomes but aren't really hard pressed for cash. Some may be accessing earnings from overseas while there may be others who are well-to-do pensioners who can draw upon savings and other assets.

In cities with a high degree of inequality, high- and low-income residents tend to “become socially isolated among people like themselves,” said Ivan Townshend, a social geographer at the University of Lethbridge.

People of different means have fewer opportunities to cross paths when neighbourhoods separate based on income, Townshend said. The isolation makes it easier for rich and poor to form ideas about each other based on stereotypes and then blame the other group for social ills, he added.

Rowan Burdge, provincial director at the B.C. Poverty Reduction Coalition, said the sense of community in a place is undermined “if people are frightened of people from different income levels.”

Burdge pointed to street sweeps by Vancouver police to remove unhoused people from public spaces as an example of how companies and more affluent residents can use their political and financial power to make low-income people less welcome in neighbourhoods.

Income inequality has been linked to a reduced sense of community belonging, greater distrust among residents, more financial worries and increased anxiety about social status - outcomes all associated with lower levels of happiness and poorer mental and physical health. Research has also associated big income gaps with greater political polarization and increases in theft and vandalism fuelled by desperation and a sense of unfairness.

To compare income inequality across Canada, the Local News Data Hub ranked the country's 418 municipalities with more than 10,000 people using Statistics Canada's 2020 Gini index for adjusted after-tax household income.

The Gini index is an internationally recognized tool statisticians use to measure how income is distributed across a society. Income, in this case, takes into account wages, pension income, investment earnings such as dividends and interest, and government transfers like social assistance. The number 1 ranked municipality had the highest level of inequality.

The national ranking, which was reviewed by Statistics Canada senior research analyst Xuelin Zhang, points to significant variations among communities. For instance:

- Cities with more than 200,000 people tended to place high in the Gini ranking for inequality. Toronto, which ranked ninth overall on the list, Calgary, which was 22nd, and Montreal, in 29h place, were all near the top of the list along with Vancouver.

- Surrey, B.C., with about 600,000 people, was an exception to the big city pattern, placing 180th on the list. Research suggests income inequality is less of an issue in fast-growing places like Surrey because they tend to have middle-income populations with fewer extremely high-earners compared to established economic hubs like Vancouver or Toronto.

- Other Vancouver-area municipalities with significant gaps between high- and low-income residents included White Rock in 15th place, the district of North Vancouver in 17th, the city of North Vancouver at 24th, and Richmond, which ranked 27th.

- Elsewhere in B.C., municipalities that ranked high for inequality were the Victoria suburb of Oak Bay, which was 13th, and Saltspring Island in 16th place.

- The widest gap between high- and low-income residents in Canada was in Westmount, Que., home to about 20,000 people. In Westmount's richest neighbourhood the median household income is $360,000, according to data from the non-profit Centraide Montreal. The municipality, however, also includes people who live in extremely low-income neighbourhoods on its periphery. The highest-earning 10 per cent of households in Westmount made nearly 11 times more than the lowest earners in 2020.

Statistics Canada data show income inequality declined nationally between 2015 and 2020, largely due to the Canada Child Benefit introduced in 2016 and pandemic-related government transfers like the Canada Emergency Response Benefit (CERB). But David Macdonald, an economist at the Canadian Centre for Policy Alternatives in Ottawa, said inequality and poverty are expected to rise now that CERB payments have ended.

Macdonald also pointed out that the Gini measure tends to underestimate inequality because it is calculated based only on income data and doesn't include inherited wealth, capital gains or non-financial assets like real estate. “If you include capital gains in the definition of income,” he added, “then you actually see income inequality grow.”

A recent Statistics Canada report illustrated Macdonald's point. The wealthiest 20 per cent of households controlled two-thirds of the country's net worth as of early 2023, the report found, while the bottom 40 per cent accounted for just 2.7 per cent. The report also noted that the wealth gap between rich and poor in Canada widened at the fastest pace on record in the first quarter of this year. Compared to the wealthiest households, lower-income Canadians accumulated more debt, saw their savings shrink and received less investment income.

Social justice advocates say there are many ways to reduce income inequality. Bridget Clarke, the advocacy co-ordinator at the St. John's Status of Women Council in Newfoundland, said stronger pay equity legislation would help.

Labour organizations argue for increases in social assistance, paid sick days, a higher minimum wage and updated labour laws that reduce the number of precarious jobs and make it easier for workers to unionize.

Last year, Halifax Regional Council and the Union of BC Municipalities both passed resolutions calling for a federally funded guaranteed basic income.

This story was produced by the Local News Data Hub, a project of the Local News Research Project at Toronto Metropolitan University's School of Journalism. The Canadian Press is the Data Hub's operational partner. Detailed information on the data and methodology can be found here.