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Minimum wage not enough to afford average rent in any Canadian province
CCPA report says this isn't just a market failure, but the result of misguided political decisions.
If you’re a Canadian worker on minimum wage, chances are you’re unable to afford rent, according to a new report from the Canadian Centre for Policy Alternatives (CCPA).
The study, Can’t afford the rent: Rental Wages in Canada 2022, is co-authored by CCPA economists David Macdonald and Ricardo Tranjan. It contrasts the minimum wage in each province with an hourly rental wage calculated for each province and some of Canada’s largest municipalities.
The hourly rental wage is how much a tenant must make to dedicate no more than 30% of income to rent while working a 40-hour work week, based on figures from October 2022.
In Alberta, where the minimum wage has been stagnant at $15 since 2018, the one-bedroom rental wage is $21.42 and two-bedroom rental wage is $25.37 — a $6.42 and $10.37 an hour gap, respectively.
B.C. has the highest minimum wage in the country, which was $15.65 in October, but it also has the highest housing costs.
The minimum wage in B.C. would need to be $27.54 for a one-bedroom apartment to be affordable and $33.10 for a two-bedroom — a respective gap of $11.89 and $17.35.
With a $15.50 minimum wage, Ontario workers would need to make $25.96 to afford a one-bedroom rental and $29.90 to afford two bedrooms — a respective difference of $10.46 and $14.40 an hour.
According to the report, “this means that the higher minimum wages in these provinces don’t directly translate into better living conditions because landlords capture a larger share of those wages through high rents.”
While all provinces’ rental wage exceeds minimum wage, the gap is smallest for one bedroom in Newfoundland and Labrador at $2.24. For two bedrooms, the lowest gap is Quebec at $4.46.
The contrasts are even wider in the metropolitan areas of Canada’s two most expensive cities. In Toronto, the gap between minimum wage and rental wage is $18.12 for one bedroom and $24.53 for two. In Vancouver, it’s $16.71 for one bedroom and $26.95 for two.
Even someone making $67,000 — well over minimum wage — in the Vancouver area helping people find affordable housing is having trouble finding an affordable place to rent.
In Alberta’s three biggest cities, the gap isn’t as stark, but people who make minimum wage still don’t make enough to afford rent.
In Calgary, the difference between minimum wage and minimum rental wage is $9.65 for one bedroom and $14.51 for two; in Edmonton, it’s $5.89 and $10.61; and even in Lethbridge, it’s $4.62 and $6.65.
The only cities where minimum wage exceeded the cost of rent are all in Quebec — Sherbrooke, Trois-Rivières and Saguenay.
The disparity between minimum wage and rental wage isn’t simply a matter of supply and demand being out of sync, but the product of a series of policy choices.
The report identifies three in particular: wage suppression, a lack of rent-controlled, below-market housing options, and a weak regulatory framework that treats housing as a commodity to be bought and sold, rather than a necessity for survival.
“Supply is necessary but not sufficient,” Tranjan told The Orchard. “We put a lot of emphasis on building more and yes, building more is necessary. What you built, where you built it and the regulatory framework that you put in place — all that matters, too … We tend to forget that part of the conversation.”
In the report, the authors wrote:
[T]he mess in which we find ourselves is due to bosses keeping wages down with help from provincial governments that the minimum wage and federal governments that set monetary policy.
It’s also due to governments’ collective failure to build, finance, and acquire the right kinds of rental housing, which is compounded by landlords who use their political influence to weaken rental market regulations, allowing them to increase rents and profit margins. Markets do not solve the problems they create.
Tranjan told The Orchard that the problem has only grown worse since 2018, when the CCPA last measured rental wages.
Another economist, Roslyn Kunin, told CBC News in its story about the CCPA report that there’s no connection between wages and the housing market, as if they exist entirely separate from each other.
Kunin suggested workers need to simply get better at their jobs so the market gods can reward them with the ability to afford housing.
“For individuals, the best thing to do is to get as much education, experience, training as possible so you can work for a wage that's higher," she said, apparently oblivious to the fact that education, experience and training cost time and money people on minimum wage lack.
Tranjan told The Orchard that this is a “disingenuous” argument which blames working people for being unable to afford housing. He added:
You can't have a housing market that is completely decoupled from the labor market. They have to have a relationship. There's various levels of skills and wages in any labor market. But I would argue anyone working 40 hours a week, regardless of where you are in that range of wages and skills, should be able to afford a place to live.
Read the full report here.
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