Canada Ranks Last in G7 and 32nd of 35 OECD Countries for Income Growth: Analysis

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Canada’s economy may be getting larger, but the income generated for each resident has been growing at a troubling pace. A new C.D. Howe Institute analysis, based on World Bank data, places Canada last among G7 countries and 32nd among 35 OECD economies for growth in inflation-adjusted gross national income per person over the decade ending in 2023.

The finding captures a frustration already familiar to many households: more economic activity has not consistently translated into stronger purchasing power or a visibly higher standard of living. Still, the ranking requires careful interpretation. It measures average national income per person, not individual wages or household disposable income, and it reflects a period shaped by commodity shocks, rapid population growth, weak investment, the pandemic and shifting global trade conditions.

What the Ranking Actually Measures

The comparison is based on real gross national income per capita, expressed in constant 2021 international dollars using purchasing power parities. GNI starts with the value of production inside Canada, then adds income Canadians receive from abroad and subtracts income paid to foreign residents. Dividing that total by the population produces an average per-person measure. Purchasing-power adjustments make cross-country comparisons more meaningful by accounting for differences in local prices rather than simply converting currencies at market exchange rates.

That makes the measure useful, but not all-encompassing. It does not show how income is distributed, whether a particular worker received a raise or how much a family has left after taxes, rent and debt payments. C.D. Howe’s underlying analysis says Canada’s real GNI per person rose only about 2 per cent cumulatively over the decade ending in 2023. The same work puts Canada’s 2023 level at roughly $45,800 in constant international dollars—about 74 per cent of the U.S. level and below the average for high-income economies.

Canada’s Earlier Advantage Has Faded

The weak decade represents a reversal rather than a permanent feature of the Canadian economy. Statistics Canada found that from 1997 to 2015, real GNI per capita grew faster in Canada than in the United States. Canada benefited from rising commodity prices, which improved its terms of trade: exports such as oil and other resources could purchase more imported machinery, electronics and consumer goods. That advantage helped national income rise even while Canadian labour productivity was already trailing the United States.

Conditions changed sharply after the global financial crisis and the mid-2010s commodity-price shock. Statistics Canada reports that Canadian real GNI per capita growth slowed to an annualized 1.22 per cent after 2015, compared with 2.17 per cent in the United States. By the third quarter of 2025, Canada’s real GNI per person relative to the United States was about 10 per cent below its late-1990s position. The comparison suggests that resource wealth can lift purchasing power, but it cannot permanently substitute for stronger productivity, investment and business formation.

A Growing Economy Hid Weak Per-Person Results

Headline GDP can rise while the economic share available per resident stagnates or falls. Canada experienced that divide clearly in 2023 and 2024. Statistics Canada reported that real GDP per capita declined 1.3 per cent in 2023 and another 1.4 per cent in 2024, even though the overall economy continued to expand. Rapid population growth added workers, consumers and total output, but production did not rise quickly enough to create comparable gains on a per-person basis.

This does not mean immigration itself is inherently harmful to living standards. Newcomers expand the labour force, start businesses, fill shortages and contribute to future growth. The problem emerges when housing, machinery, transportation, public infrastructure and business investment do not expand at a similar pace. The OECD estimated that Canada’s population grew by close to 3 per cent in both 2023 and 2024, much faster than most peer economies. Population growth slowed substantially in 2025, and real GDP per capita increased 0.2 per cent in the first quarter of 2026 even as total GDP was flat, illustrating how demographic changes can alter the per-person calculation.

Productivity and Investment Sit at the Centre

Productivity is often misunderstood as a demand for employees to work harder. Economists use it to describe how much output is produced for each hour of labour, reflecting the tools, technology, skills, infrastructure and organization available to workers. The OECD found that Canadian labour productivity growth averaged only 0.5 per cent annually from 2019 to 2023. Since 2000, Canada has also diverged markedly from the United States, where firms have generally invested more aggressively in technology and production systems.

Weak capital investment is a major part of the gap. The OECD reported that investment per worker in Canada in 2023 was only 85 per cent of its 2014 level. Statistics Canada’s latest capital-stock figures show that non-residential capital grew just 1.4 per cent in 2024, slower than residential capital. For a technician, nurse, construction worker or factory employee, productivity growth can come from better software, more efficient equipment, improved training or faster transportation—not from rushing through a shift. Without those supports, adding more workers can expand total GDP while leaving output and income per person under pressure.

Housing Became an Economic Capacity Test

Housing is usually discussed as a cost-of-living issue, but it also affects productivity and income growth. Expensive or scarce housing can prevent workers from moving to cities where their skills are most valuable, force longer commutes and make it harder for employers to recruit. The OECD has linked Canada’s affordability problem to insufficient supply, restrictive density rules, slow approvals and a mismatch between the homes being built and the homes households need. Rapid migration amplified those pressures during the highest-growth years.

The scale is substantial. CMHC estimated in 2025 that Canada would need to build roughly 430,000 to 480,000 homes annually for a decade to restore affordability to 2019 levels—approximately double the prevailing pace. There has been progress: housing starts increased 6 per cent in 2025, led by record rental construction in several cities. Yet CMHC warned in 2026 that ownership-oriented construction, especially condominiums in Toronto and Vancouver, had weakened. Better housing supply alone will not fix national income growth, but it can reduce one of the largest barriers preventing population and employment growth from translating into higher living standards.

The Household Experience Is More Complicated

A weak GNI-per-person ranking does not mean every Canadian household saw the same result. National income is an average, while families experience the economy through wages, taxes, benefits, housing costs, interest payments and job security. Statistics Canada reported that median after-tax income for families and unattached individuals was $75,500 in 2024 and was relatively unchanged from 2023 after inflation. The national poverty rate was also broadly stable at 11 per cent, representing about 4.5 million people.

Results varied within that total. Median after-tax income rose for families, including couples with children, while it was essentially unchanged for unattached individuals. Seniors also recorded gains, helped by both market income and transfers. These differences explain why broad economic statistics can coexist with sharply different personal experiences. A homeowner who renewed a mortgage at a higher rate, a renter facing a large increase and a retiree receiving indexed benefits may all interpret the same year differently. GNI per capita is therefore best understood as a warning about the economy’s capacity to generate rising prosperity, not a complete description of every household budget.

Tax Reform Is One Proposal, Not the Whole Answer

C.D. Howe argues that Canada’s tax structure is an important contributor to weak performance. Its 2026 proposal would lower personal and corporate income-tax rates, simplify credits and shift some revenue toward consumption or payroll taxes. The authors estimate that their revenue-neutral package could eventually add about $140 billion in non-residential capital and raise GDP by roughly $79 billion, or 2.5 per cent. Those figures are modelled projections, not guaranteed outcomes, and shifting taxes could create winners and losers depending on how credits and protections are designed.

Other institutions emphasize a broader reform package. The OECD has called for stronger competition, fewer internal trade barriers, more business investment, better research commercialization, faster housing approvals and improved workforce skills. The federal government has responded with measures including a Productivity Super-Deduction, expanded research incentives and legislation aimed at easing federal barriers to interprovincial trade and labour mobility. Supporters argue these steps can attract capital and help firms scale. Critics may reasonably question their cost, implementation speed and whether targeted incentives are as effective as simpler, economy-wide rules.

The Next Few Years Will Show Whether the Slide Has Stopped

There are reasons for concern, but the ranking should not be read as proof of irreversible decline. Canada continues to benefit from a strong macroeconomic framework, an educated workforce and a well-capitalized banking system. Real GDP grew 1.7 per cent in 2025, and per-capita GDP edged higher in early 2026. Those developments are more encouraging than the declines recorded in 2023 and 2024, although one or two quarters do not establish a durable turnaround.

The more meaningful test will be whether business investment, output per hour and real household incomes begin rising together. A sustainable improvement would also require housing and infrastructure to keep pace with the population, while trade uncertainty and U.S. tariffs remain major external risks. Canada’s ranking is ultimately less about national prestige than compounding: a small annual growth gap, repeated for a decade, produces a large difference in purchasing power and opportunity. Closing that gap will require policies that survive election cycles, private-sector investment that extends beyond real estate and a clearer focus on what each worker and resident can produce and earn.

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