A new RBC Economics report notes that Canadians have “amassed record savings and wealth” during the COVID-19 pandemic.
“But for Canadians of colour,” economist Rannella Billy-Ochieng wrote, “the gains have been less substantial.”
But as Billy-Ochieng noted, this is not something new.
“For decades, visible minorities have had fewer vehicles with which to build wealth,” the RBC economist noted in her report Thursday (January 13).
This means that visible minorities are “less likely to own financial assets or businesses”.
“And critically, they are less likely to own homes,” Billy-Ochieng noted.
Again, it’s not at all suprising.
As the economist noted, visible minorities earn 85 cents per dollar “compared to the non-visible minority population, often despite having more formal education”.
Speaking about wealth, Billy-Ochieng pointed out that home equity accounts for almost 40 percent of total national household net worth.
The economist explained that home equity “represented the largest source of wealth appreciation during the pandemic”.
Wealth from the appreciation of home values accounted for 55 percent of a total $2.8 trillion increase in household wealth gains since the fourth quarter of 2019.
But people of colour are left “on the outside looking in” because they had a lower rate of homeownership.
“Had visible minorities owned homes at a similar rate to white Canadians their collective net wealth would be $100B higher,” Billy-Ochieng stated.
There are additional reasons as well.
Visible minorities earn less from wages and investment income, which Billy-Ochieng noted was “as little as 65 cents per investment dollar compared to the non-visible minority population”.
As well, visible minorities suffered disproportional job losses in 2020.
“Recent survey data showed that despite an improving labour market, their unemployment rate remained 1.8 percentage points above their peer group in Dec 2021—a legacy that predates COVID,” Billy-Ochieng wrote.
The economist’s report is titled “Unleashing Opportunity: The economic gains in narrowing Canada’s racial wealth gap”.
Addressing this wealth gap lies not just in homeownership.
Billy-Ochieng’s primary recommendation is for Canada to help visible minorities succeed in business and entrepreneurship.
“Empowering talented Canadians from visible minority groups with more opportunity can help to narrow long-standing wealth gaps, while fostering positive long-run productivity impacts,” the RBC economist stated.