Can you afford rent on minimum wage in Vancouver?
Posted July 18, 2023 6:56 am.
Last Updated July 18, 2023 6:57 am.
How much do you have to make an hour to afford a one or two bedroom rental in Vancouver?
It’s well established the city is an expensive place to rent, but a new report highlights just how bad the situation is for many of the people who call — or want to call — this place home.
According to the Canadian Centre for Policy Alternatives (CCPA), a person needs to make $32 an hour if they want to live in a one-bedroom in Vancouver while spending a maximum of 30 per cent of their income.
CCPA senior economist David Macdonald says the think tank came up with that number after reviewing data from around October 2022 — when the minimum wage was just over $15 an hour.
“This isn’t the luxurious accommodation — this is really the basic that you’d need,” he said of the rentals.
He adds to be able to afford the average two-bedroom apartment, a person would have to be making $43 an hour.
“In both cases, this is more than double minimum wage and what that means is that, even for a one-bedroom apartment, you’d have to have two people working minimum wage just to afford a one-bedroom apartment,” Macdonald explained.
“It just goes to show just how unaffordable things are. And even if you look below the surface — you think maybe 10 or 20 years ago, there were areas of Vancouver — maybe not the best areas — where it was affordable to get a one-bedroom apartment. But, in fact, in Vancouver, there are now zero per cent of the neighbourhoods that are affordable for minimum wage workers for a one-bedroom apartment.
“There aren’t even pockets, anymore, of affordability in Vancouver.”
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It appears this isn’t unusual nationally. The CCPA looked at 37 cities across Canada in its analysis, with Macdonald saying only 10 of those cities boast “a single neighbourhood that is affordable for minimum wage workers.”
Macdonald says the disappearance of these so-called “pockets of affordability” in Canada’s big cities is telling.
“Despite the fact that we’ve actually seen a fair amount of movement on minimum wages … we’re not seeing an improvement in living standards, which is what you might expect from increases in minimum wages,” he said.
“So much of those increases are just evaporating into higher rents. So higher minimum wages are to the benefit of landlords, not to the benefit of those low-wage workers that are working at those minimum wages.”
The latest report from the CCPA comes as many Canadians across the country continue grapple with the continued high cost of living. Last week, the Bank of Canada raised its key interest rate yet again, by a quarter-point to five per cent.
The situation has seen many fall into even more debt, with the prospect of climbing out hard to fathom.
As a result of unaffordable rents, Macdonald says many are feeling the pressure.
He adds the CCPA has seen a “huge increase in food bank usage.”
“Which is pretty odd, given the labour market, which has been quite tight. We’ve seen good employment rates for prime working-age individuals. Despite that, we’ve seen this huge spike in food banks. In part, that’s due to high food prices, but in part it’s due to high rent. If you’re tight on money, the expenditures that you pay is rent comes first, then utilities, then food. If you’re going to run out of money, it’s likely on that third expense, the food line.”
Solutions to skyrocketing rents
When it comes to solutions, Macdonald points out the common narrative is that there’s a lack of supply.
“But when it comes to rental affordability, that, in my mind, is a dangerous oversimplification of what’s necessary,” he said.
He notes on one end, rent controls that aren’t “riddled with loopholes” and that are effective are needed. He says you don’t want rents to be rising “substantially faster than the rate of inflation.”
“Ideally, they’re going up lower than the rate of inflation — and those aren’t necessarily in place in most provinces,” Macdonald said.
On the other end, he says governments need to be careful with what he refers to as wage suppression.
As for supply, while he agrees more is needed, he feels it needs to be very specific.
“One type of supply is paving over farm fields in the suburbs and putting up mansions. Well, that’s definitely going to increase supply but it does nothing to improve rental affordability,” he said.
Macdonald believes the best way out of this is to get the federal government more involved in building subsidized and affordable housing.
