Minimum Wages Far Short Of Income Needed To Afford Rent

A new report published by the Canadian Centre for Policy Alternatives (CCPA) this week shows there is a massive gap between the minimum wage and the wage needed to afford rent in almost every major province.

The report, titled "Can’t Afford The Rent: Rental Wages In Canada 2022," lists each province's "rental wage," the hourly amount required to afford rent while working full time and spending under 30 per cent of one’s income on housing. The report then compares this figure to the minimum wage in each jurisdiction.

In British Columbia, the "rental wage" for a two-bedroom unit is more than double the minimum wage of $15.65 per hour, which is the highest in the country. The gap between the minimum wage and rental wage for a one-bedroom rental unit is almost $12.

Similarly, the gap between Ontario's minimum wage of $15.50 per hour and its one-bedroom rental wage is more than $10. That gap increases to $14.40 for a two-bedroom unit.

In Vancouver and Toronto, the report explains, even two full-time minimum-wage workers would need to spend more than 30 per cent of their combined income to pay for a one-bedroom unit.

In Vancouver, Toronto, Kelowna, Victoria, Ottawa and Halifax, the rental wage for a two-bedroom unit is more than twice the provincial minimum wage in each city.

The report's authors, David Macdonald and Ricardo Tranjan, note that higher minimum wages in B.C. and Ontario don’t directly translate into better living conditions because "landlords capture a larger share of those wages through high rents."

The authors continue:

"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 report identifies three key factors that contribute to the problem: "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 terms of solutions, the report states that Canada needs to build a larger share of rental housing "outside of the private, for-profit rental market." there is also a need for tighter regulations that prevent "profiteering in the private rental market."

Now, let's turn to the members' corner...

The fact that minimum wages in almost every province fall well short of what's needed to comfortably afford rent comes as no surprise, but highlights an ongoing crisis. Here's what else you need to know.