There is no province in Canada where workers can afford an apartment at minimum wage. The neighborhood-level data paints a dire picture of out-of-control rents. .
David Macdonald (senior economist with the Canadian Centre for Policy Alternatives) and Ricardo Tranjan (political economist and senior researcher with the Canadian Centre for Policy Alternatives’ Ontario office and author of The Tenant Class).
This study examines the gap between the minimum wage and what it costs to rent an apartment in Canada. The rental wage measure provides a clear picture of the relationship between wages and rents because it calculates the hourly wage required to afford rent while working a standard 40-hour week and spending no more than 30 per cent of one’s income on housing. In other words, the rental wage is how much people need to earn to pay rent without spending too much of their income on it.
The rental wage is considerably higher than minimum wage in every single province. Even in the three provinces with the highest minimum wage in Canada—B.C., Ontario, and Alberta—there’s a shortfall in what minimum-wage workers earn and the rent they have to pay, on average. Interactive rental wage details are available by province, city and neighbourhood.
In practice, 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. The wage increases that people fought so hard for should improve the material conditions of working families, not go back into the pockets of the property-owning class.
When we look at Canadian cities (CMAs), the story is equally stark: the one-bedroom rental wage is lower than the minimum wage in only three CMAs. All are in Québec: Sherbrooke, Trois-Rivières, and Saguenay. Even there, rental affordability is on the decline. Every other CMA in Canada has average rents that far exceed what workers earn on the minimum wage.
Vancouver and Toronto are the worst culprits: even two full-time minimum wage workers cannot afford a one-bedroom unit without spending more than 30 per cent of their combined income on housing.
The discrepancy between the rental wage and the minimum wage is such that, in most Canadian cities, minimum-wage earners are extremely unlikely to escape core housing need. They are likely spending too much on rent, living in units that are too small, or, in many cases, both.
The findings presented in this report should not be interpreted simply as a supply and demand problem. At least three sets of factors make rent too high for low-wage earners: wage suppression policies; low supply of rental housing, especially purpose-built, rent-controlled, and non-market units; and poorly regulated rental markets that privilege profit-making over housing security and allow the use of rental accommodation as an asset class. In other words, the mess in which we find ourselves is due to bosses keeping wages down with help from provincial governments that set the minimum wage and federal governments that control 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. When the desired outcome is housing security rather than profit, governments must regulate markets and support non-market housing.
1. Introduction
Housing affordability debates often focus exclusively on rent levels or consider income indirectly through rent-to-income ratios. In contrast, the rental wage measure provides a clear picture of the relationship between wages and rents because it calculates the hourly wage required to afford rent while working a standard 40-hour week and spending no more than 30 per cent of one’s income on housing. In other words, the rental wage is how much people need to earn to pay rent without spending too much of their income on it.
The rental wage for any area can be compared with different income measures (e.g., the minimum wage, the living wage, social assistance rates, and wage deciles), depending on the focus of the analysis. This report presents the rental wage for all provinces and census metropolitan areas (CMAs) and compares them with the local minimum wage. It also looks into 776 neighbourhoods in Canada within those CMAs, providing a detailed picture of affordability across the country.
With a few exceptions, the minimum wage falls well below the rental wage. In every province, the rental wage for one- and two-bedroom units is higher than the minimum wage. In 34 out of 37 CMAs, the minimum wage is lower than the one-bedroom rental wage. In 35 of 37 CMAs, a minimum-wage worker cannot afford a two-bedroom unit without spending more than 30 per cent of their income on rent. In 93 per cent of all neighbourhoods (for which data is available), the one-bedroom rental wage is higher than the minimum wage.
This report also includes comparisons with the findings in our 2018 rental wage report.1 Between 2018 and 2022, rents have become even less affordable to minimum-wage workers, with average rents now consuming a larger number of working hours in most CMAs. Even in Québec, where rents are comparatively more affordable, the trend is worrisome.
Our findings should not be interpreted simply as a supply and demand problem. While evidence shows the supply of rental housing is lagging demand, additional supply alone will not address affordability issues, especially for low- and moderate-income families. To put it simply: additional supply is necessary but not sufficient.
What is built, where it is built, and under what regulatory framework is equally important. Canada needs more purpose-built rental units. Canada needs a larger share of rental housing outside of the private, for-profit rental market. Canada needs regulation that prevents profiteering in the private rental market. More housing anywhere at any cost will simply enrich developers and allow landlords to continue to extract ever higher rents from the tenant class.
Si deseas profundizar en estee tema puedes acceder al estudio completo, con los mapas y gráficos correspondientes en The Monitor
