In most major Canadian cities, there are no neighbourhoods where a minimum-wage worker could comfortably afford an average-priced one-bedroom apartment, according to a new report.
The Canadian Centre for Policy Alternatives found such a worker could afford the average one-bedroom rental rate in 9 per cent of 795 neighbourhoods, and 3 per cent for two-bedroom units. Out of 36 metropolitan areas, 23 had zero neighbourhoods where a full-time worker earning the minimum wage could afford the average one-bedroom rental rate.
For the purposes of its report, the CCPA assumes that to comfortably afford an apartment, its tenant is spending no more than 30 per cent of their pre-tax income on shelter. This aligns with an affordability threshold from Canada’s national housing agency.
“Across the country, skyrocketing rents for decent apartments show no signs of falling,” David Macdonald, the report’s author, said in a press release. “Building more dedicated affordable housing would increase vacancy rates, cool rental prices and better accommodate the many people shut out of Canada’s overheated housing market.”
As of 2017, more than one million Canadians were earning the minimum wage, according to a Statistics Canada report from last year, and lower-income individuals are more likely to rent their housing than own it.
But the report suggests that rental affordability, particularly in Canada’s largest cities, is not strictly a concern for those earning the minimum wage.
For instance, in British Columbia, the minimum wage was $12.65 as of last October. But to comfortably afford a two-bedroom rental in the Vancouver area at an average price of $1,842 a month, a full-time worker would need to earn $35.43 an hour, the report said. For a one-bedroom unit at an average price of $1,389 a month, it’s $26.72 an hour. The report assumes full-time work equivalent to 40 hours a week, 52 weeks a year.
The average hourly wage for full-time employees in B.C. was $29.08 in June, according to Statscan.
For Canada over all, a full-time worker would need to earn $22.40 an hour to afford the average-priced two-bedroom dwelling, and $20.20 for the average one-bedroom unit.
Roughly 28 per cent of Canada’s 13.7 million full-time workers are earning less than $20 an hour, Statscan data show.
As part of its analysis, the CCPA used minimum wages from October to match the release date of rental market data from the Canada Mortgage and Housing Corp. In many jurisdictions, minimum wages have since increased, including in B.C. to $13.85 an hour.
The report focused on 795 neighbourhoods, across 36 census metropolitan areas, for which rental and income data were available; this included parts of all provinces, but none of the territories.
The CCPA often used rental rates that combined those of purpose-built apartments and condominiums. It’s also worth noting that in many households, several people are contributing toward rental costs, whereas this report focuses on single-income households.
The report arrives as Canada’s rental market is getting tighter. The national vacancy rate for purpose-built apartments declined to 2.4 per cent last year from 3 per cent in 2017, according to CMHC, which said higher immigration levels were a key factor in the decline. In particular, the Toronto and Vancouver areas are home to some of the lowest vacancy rates in the country.
In both cities, condo construction greatly exceeds that of apartments, and condos comprise a growing share of rental supply. Condos are also more expensive: In the Vancouver area, the average two-bedroom condo rented for more than $2,000 a month last year, compared with $1,649 for a two-bedroom apartment. In the Toronto area, condos were even steeper, with the average two-bedroom unit renting for nearly $2,400 a month.
Matt Lundy