New research from Canadian Centre for Policy Alternatives reveals crisis of affordability in rental market | National Union of Public and General Employees

New research from Canadian Centre for Policy Alternatives reveals crisis of affordability in rental market

Out of the 795 rental markets analyzed, full-time minimum-wage workers can only afford to live in 24 neighbourhoods.

Ottawa (07 Aug. 2019) ― Much of the talk about the housing crisis revolves around the high cost of home ownership and how entire generations are being squeezed out of the market. An equally important but often neglected piece of the puzzle is the affordability crisis in the rental market. The Canadian Centre for Policy Alternatives (CCPA) focuses on just that in their new research paper Unaccommodating: Rental Housing Wage in Canada.

Approximately one-third of Canadian households (or 4.7 million families) rent their homes. Renting is more common among lower-income families, young adults, new immigrants, and people who’ve just moved to a new city. The CCPA determined that a national average rental wage (the hourly wage a full-time worker must make to be able to rent using no more than 30% of their income) for a one-bedroom apartment is $20.20 and for a two-bedroom apartment is $22.40. Minimum wage rates vary by province, but all provincial minimum wages fall short of paying workers enough to rent using no more than 30% of their income.

Location matters

The rental wage varies depending on location. A full-time worker in Vancouver would need to make $35.43 an hour to afford an average-priced two-bedroom apartment. This means that a minimum-wage worker in Vancouver would need to work 84 hours a week to afford to rent a one-bedroom apartment and 112 hours a week to afford a two-bedroom apartment. Toronto, Victoria, Calgary, and Ottawa also had above-average rental-wage prices. There are 117 neighbourhoods in the Greater Toronto Area, but a full-time minimum-wage worker is priced out of living comfortably (and in many cases, out of living uncomfortably) in all of them.

Even in metropolitan cities with lower-than-average rental wages like Guelph, a minimum-wage earner would have to work 57 hours a week to afford a one-bedroom apartment and 78 hours a week to afford a two-bedroom apartment. Montreal is the single outlier, being a large city that still offers some affordable rentals to full-time minimum-wage workers. Out of the 795 rental markets analyzed, full-time minimum-wage workers can only afford to live in 24 neighbourhoods.

Full-time workers priced out of the market

The CCPA’s paper also compared the wages of Canada’s 5 most common occupations to the national rental wage. 1.8 million workers (12% of all jobs) in Canada are employed as administrative assistants, retail salespeople, cashiers, food counter and kitchen helpers, and food and beverage servers. Based on an average hourly salary, none of the workers in these occupations earn enough to afford most rental properties, even if they work 40 hours a week.

Funding cuts bear brunt of responsibility for crisis

One of the reasons rental costs have gone up is because the rate of new purpose-built rental construction has gone down. In the late 1970s and early 1980s, more than 100,000 new rental apartments were built every year. Then federal cuts to affordable housing, in addition to other factors, caused the number to drop to 10,000 for new rental apartments built in the 1990s. By 1993, all federal government funding for new social housing projects had ended (apart from that dedicated to building housing on reserves).

Since 2016, the federal government has made several efforts to boost the stock of affordable housing. According to the data, the CCPA says the federal programs are working but have a long way to go to make up for the lack of construction of affordable housing since federal support ended in 1993.

Rental support like the new Canada Housing Benefit, which supplements low-income renters, provides some relief while federally funded construction programs are building new apartments. But the CCPA argues that the benefit’s tight budget cap means low-income earners in need of assistance will be squeezed out of the program if they don’t meet the strict eligibility criteria. The paper concludes by stressing that rental subsidies are no substitute for the construction of new affordable housing, which would increase vacancy rates, cool rental prices, and allow more people to live closer to where they work.


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