Unemployment runs well above averages as inflation-adjusted earnings stall in Canada’s largest city
Toronto is facing mounting evidence that its economic performance has lost momentum, with new research showing residents are contending with higher unemployment and little progress in living standards compared with other major Canadian cities.
A new study from the Fraser Institute examines Toronto’s economic outcomes over roughly the past two decades and finds that, despite strong population growth and job creation in absolute terms, the city has struggled to translate that growth into better labour-market results or rising real incomes for workers.
By 2024, Toronto’s unemployment rate had climbed to 8 per cent, exceeding both provincial and national averages. The figure was more than two percentage points higher than the average unemployment rate across Canadian census metropolitan areas and well above the level seen in other large Ontario cities.
Income data tells a similarly subdued story. After adjusting for inflation, median employment income in Toronto declined slightly between 2000 and 2023, falling by 0.2 per cent. Over the same period, other large Canadian metropolitan areas recorded average gains of more than 15 per cent, highlighting how far Toronto has fallen behind its peers.
The report challenges the perception of Toronto as a reliable economic engine for the country. As the study notes, “Far from being an economic powerhouse, the evidence presented here points to rising unemployment, weak income growth, and stagnant living standards in Canada’s largest metropolitan area.”
Fraser Institute senior fellow Ben Eisen, a co-author of the study, said the trends have been evident for years. “Despite its history as an economic engine, Toronto now lags behind Canada's other large metropolitan areas on key economic metrics. Unemployment rates have been higher, and median-income growth has been slower in Toronto for a long time now.”
Eisen also warned that Toronto’s struggles have implications well beyond city limits. “Toronto represents about 20 per cent of the entire national economy, and its stagnation is an important contributor to Canada's dismal recent economic growth story. Given the outsized role Toronto plays in Canada's overall economy, the city's underperformance is a concern for all Canadians.”
While the study does not prescribe specific policy solutions, its findings add urgency to ongoing debates among policymakers, business leaders and investors about how to restore stronger growth and improve living standards in a city that plays an outsized role in Canada’s economic fortunes.
