Skip To Main Content
Man chasing butterfly across river unaware of alligator
In The News

One in three Canadians lives paycheque to paycheque: CPA Canada study

Canada’s changing labour market makes it difficult for many Canadians to plan for a secure financial future. Fortunately, policy makers are starting to take notice.

Man chasing butterfly across river unaware of alligator CPA Canada’s study shows that almost a third of Canadians face some kind of income volatility, whether it’s the source of the money, the amount they’ll be receiving, or both (Illustration by Wenting Li)

Usually, when we think of poverty, we think in terms of annual income—or lack of income. 

But what if you don’t fit into that definition in the traditional sense—instead, you experience swings in your income from month to month? That could have a big impact on your financial security, and cause a whole host of financial, practical and psychological problems for your entire household.

Yet, many Canadians live with this kind of uncertainty. In fact, a CPA Canada study shows that almost a third of Canadians face some kind of income volatility, whether it’s the source of the money, the amount they’ll be receiving, or both. 

“If you are a part-time worker, for example, you might not be aware what your hours are going to be for the next week or month,” says Francis Fong, chief economist for CPA Canada. “Or you might not be getting your income from the same source. You might have multiple jobs or you might jump from gig to gig. Or you might be a contract or freelancer worker. In any of those situations you could experience volatility.” 


As Fong points out, these kinds of swings go hand-in-hand with the shift away from stable, permanent full-time employment toward more non-traditional forms. But even though the trend is clearly established, little research has been done to date on income volatility in Canada. 

The emergence of income volatility as a policy issue is a relatively new development,” Fong says. “And the CPA Canada study is the first to make a connection between income volatility and broader measures of financial well-being.”

The study shows, in fact, that there is a direct link between income swings and financial capability. People with volatile incomes have more trouble making ends meet, planning ahead, keeping track of money, choosing financial products and staying informed. “They might find it more difficult to make ends meet than people who, while they may have lower incomes, know what they are getting and when,” says Fong.

As Fong points out, this raises an important question about causality. “Is it people with poor financial behaviours who get involved in work that has higher income volatility? Or is the mere presence of income volatility a prohibitive factor toward exhibiting positive financial behaviours? 

“We hypothesize that it’s the latter,” he says. “If you have volatility in your income, it can be more difficult to be proactive in saving for retirement, being conscientious about what you’re able to spend on, choosing good financial products, or staying informed.” 


  • Income volatility can be found across a wide swath of the respondents, regardless of gender, family status, region, education and income sources.
  • People with volatile incomes are more inclined to believe that external forces, such as luck, rather than individual ones, such as skills and effort, determine personal financial outcomes.
  • Volatility is more prevalent among women than men, and among respondents with income between $30,000 and $50,000 (this is consistent with previous research).
  • Self-employment is not associated with higher volatility in the amount of income.

“The issue of financial capability is much more complex than we originally thought,” says Fong. “We now know that a fairly significant number of Canadians have volatile incomes, and that this affects their financial capability. The next step would be to dig down to determine where the pain points are—to find out what’s going on beneath the surface—and try to develop policy to address those issues.”


Recently, says Fong, the federal government created an expert panel on modernizing labour standards. It will be looking at several issues related to the changing nature of work: a federal minimum wage, labour standards protections for non-standard workers, disconnecting from work-related e-communications outside of work hours, access and portability of benefits, and a collective voice for non-unionized workers. The panel is to submit its report by June 30, 2019.

“I think if you look at the kinds of jobs that are associated with income volatility, and what’s in scope for this expert panel, there’s definitely some overlap in terms of what the federal government is hoping to address,” he says.

Fong adds: “I think the key here is trying to find a balance between the way the labour market is evolving, with all the flexibility that entails, and the need to ensure that at the end of the day people are taken care of—that they can maintain their standard of living, save for retirement and have a rainy day fund. Otherwise, we might keep seeing people bouncing in and out of poverty. And that introduces a whole new set of policy problems that I don’t think our systems are prepared for at this point.” 


Learn more about income volatility and how it relates to financial wellness with CPA Canada’s study, The perils of living paycheque to paycheque: the relationship between income volatility and financial insecurity. It is the second in a series of studies on financial capability. The first was The impact of personality traits: a fresh look at gender differences in financial literacy.