The typical Canadian worker, whether earning minimum wage or an average income, cannot afford housing in any of the country’s major urban centers — which happen to be where most jobs are located.
Residents of Toronto protest rent increases during the COVID-19 pandemic. (Richard Lautens / Toronto Star via Getty Images)
The average Canadian worker, whether earning the minimum wage or the average income, can’t afford to live in nearly any of the country’s major urban centers — where most of the jobs happen to be. This mess of a situation is compounded by the interplay of low wages, pervasive speculation in the housing market, and the persistent depredations of day-to-day existence for everyone other than the very wealthy.
A recent report by the Canadian Centre for Policy Alternatives (CCPA) highlights a significant disparity between the average wage needed to rent a one-bedroom apartment on a full-time basis and the minimum wage. As the demand for affordable housing continues to rise, the glaring inadequacies of a system driven by the profit motive and market forces have come into sharp relief. This crisis serves as a stark reminder that capitalism is a terrible organizational structure for meeting the needs of ordinary people.
Feeling the Squeeze
The CCPA’s report observes that the average hourly wage required to afford a one-bedroom apartment while working full-time is $25.96 in Ontario, $27.54 in British Columbia, $21.42 in Alberta, and $16.62 in Quebec. Meanwhile, the minimum wages of these provinces, respectively, are $15.50, $16.75, $15, and $15.25.
The minimum wage may be set provincially, but housing costs vary wildly across the country’s main census metropolitan areas (CMAs). Opponents of minimum wage hikes often argue that living costs differ according to geographical location, yet the study reveals a noteworthy finding: the hourly wage required for a one-bedroom rental is lower than the minimum wage in only three CMAs — Sherbrooke, Trois-Rivières, and Saguenay. In sharp contrast, all of Canada’s most populous cities exhibit a substantial disparity between the rental wage and the provincial minimum wage. In Toronto, the rental wage is $33.62 per hour; in Vancouver it’s $32.36; in Montreal it’s $18.00; in Hamilton it’s $23.02; in Winnipeg it’s $20.42; in Calgary it’s $24.65; while in Edmonton it’s $20.89. None of these cities are in a province whose minimum wage is above $16.75.
The report’s authors found that while minimum wages in most of these provinces have risen nominally compared to the 2018 data in the CCPA’s last report, they haven’t risen in tandem with the cost of survival.
As the report notes, “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.”
Not only are rental costs pushing past provincial minimum wages; in many cases, they exceed provincial median wages.
A counterargument might contend that the proportion of workers earning the minimum wage, though increasing over the past decades, is not a fair reflection of the strain faced by the average worker. Most wage contracts are above the minimum wage as bosses need to attract workers who, in turn, need to eat, feed, clothe, and house themselves if they’re going to produce any output. In some cases, these bosses have taken to advertising that they pay above the minimum wage — seeking our congratulations, apparently, as “living wage” employers of living laborers.
The reality is, in fact, less complicated than these detractors suggest. The report reveals that the rental costs identified above are not just pushing past provincial minimum wages; in many cases, they exceed provincial median wages — the income at the midpoint of the labor market. In Ontario, for example, the median wage is $26.06 per hour, in British Columbia it’s $26.44, and even in Manitoba it’s $23.00 — well below the cost of living in these provinces’ most populous cities.
Forced Into Unaffordable Cities
With the exception of a handful of regions in Quebec, the minimum wage falls short everywhere in providing the means to afford housing. Of course, the crisis of housing affordability is even more pronounced in the country’s major urban hubs — such as Toronto, Montreal, Vancouver, and Edmonton — and it is these costs that matter most. As the report notes, “CMAs are often considered the local level for housing and labor markets since people consider housing and job opportunities within their broader region.”
It is true that the demand for housing in the CMAs is outstripping supply. These cities have seen their populations rise sharply, at the expense of other areas. According to Statistics Canada, in 2021, nearly three in four Canadians (73.7 percent) lived in Canada’s urban centers, up from 73.2 percent in 2016. All told, the populations of Canada’s various “downtowns” grew 10.9 percent, twice the speed of the previous five-year period.
As Steven High observes in his history of deindustrialization, Industrial Sunset, this is a long-term trend. Since the 1970s, as the post-war boom receded and Canadian industry grappled with intensified competition abroad and sluggish domestic markets, employment has increasingly been clustered in these CMAs. Over the past decade alone, Oshawa’s General Motors (GM) plant, Windsor’s GM transmission plant, all but one of Hamilton’s steel mills, and Leamington’s Heinz plant have closed. All of the halfhearted attempts to stem job loss and the declining labor standards that come with the concentration and centralization of capital — blank-check subsidies, pension schemes, and the like — eerily echo James Connolly’s famous assertion: “Legislation does not control the Lords of Industry; it is the Lords of Industry who control legislation.”
The cumulative result of all this has been the concentration of jobs — that is, increasingly lower-wage, service-sector work — in a smaller number of cities where housing is paradoxically the most expensive. This isn’t a mere coincidence. In Ontario, after the 2008 crisis, the then-Liberal government tapped urban planning guru Richard Florida and his Martin Prosperity Institute for ideas to guide the province’s way out of the crisis. Florida, after suggesting that attempts to save dying industries “can only forestall the inevitable,” advocated for an expansion of this process.
The cumulative result of all this has been the concentration of jobs — that is, increasingly lower-wage, service-sector work — in a smaller number of cities where housing is paradoxically the most expensive.
The final report, Ontario In The Creative Age, pushed the government of the day to “reinforce the development of our clustered industries,” and to “link our older, industrial communities and the areas located far from the mega-region to this core so we can move goods, people, and ideas across and through our province and beyond with the speed and velocity required to compete globally.”
In practice, this phenomenon translates to low-wage workers being compelled to reside in Canada’s urban hubs primarily for the sake of securing access to a growing pool of lower-skilled jobs and necessary transportation networks. Consequently, a significant portion of the workforce is forced to compete for limited housing options in order to cater to the concentrated affluence at the heart of these urban centers. This dynamic results in crowded living conditions, bedbugs and cockroaches, dilapidated windows, and similar challenges at one end of the spectrum, while serving the interests of a privileged minority at the opposite end.
Low Wages, High Costs
In each of the major CMAs, the leading landlords capitalize on wealth and job concentration, generating substantial profits under the guise of the country’s purported housing shortage. Statistics Canada estimates that those who own multiple units account for nearly one-third of total home ownership. While the data is imperfect, this is a small share of homeowners in most major areas. In 2020, the agency similarly determined that just 8 percent of Canadian households garnered rental income. Unsurprisingly, the largest share of these landlords lived in the most expensive property markets in the country: Toronto (21 percent), Montréal (14 percent) and Vancouver (11 percent). Real estate investment income is, like all investment income, payment for no actual work — which is why they call it “passive income.”
Leading landlords capitalize on wealth and job concentration, generating substantial profits under the guise of the country’s purported housing shortage.
The underlying principle at play here is that while most commodities experience depreciation over time, land uniquely appreciates due to the Earth’s finite size and fixed land supply. This means that while demand rises, the supply does not. And, accordingly, this dynamic allows for massive rent hikes.
As the report notes:
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. . . . More housing anywhere at any cost will simply enrich developers and allow landlords to continue to extract ever higher rents from the tenant class.
In 2021, Policy Options observed that Canada’s top twenty-five landlords increasingly dominate the rental housing markets of whole cities. “In some communities, financial firms have effective monopolies over the local market.” According to Apartment magazine, Canada’s top ten rental owners and managers now hold over 261,800 units, reflecting a substantial combined increase.
In its 2022 Outlook report, Hazelview Investments vowed to “create value” by investing in areas that are best able to secure rent increases, stating that “we believe the key to creating value in 2022 will be to identify companies with pricing power that can raise rents.” Property management company Skyline’s tenant handbook notes that it aims to cover its expenses with “rent increases.” Skyline vice president BJ Santavy said more bluntly that “tenants are the backbone of a rental housing provider’s business.” Starlight Investments has openly declared its intention to profit from the rental shortage in Canada. “We think there is a definite housing shortage, or almost a crisis level in Canada,” said the company’s CEO Daniel Drimmer in 2019, “and the good news for investors is there is no easy solution in sight.”
While the landlord lobby likes to call its members “housing providers,” they do not make their profits from providing housing. They make their profits from buying land, closing it off, and extorting those who need shelter. As the CCPA report summarizes it, “Markets do not solve the problems they create.” To address the housing crisis, characterized by overcrowding, soaring rents, and meager wages, a fundamental overhaul is necessary.
This calls for a departure from capitalism and a transition toward social ownership of society’s wealth. Such a shift would facilitate investments in production that elevate wages and offer employment opportunities to all. By expropriating the assets of major landlords and property developers, the working class could curtail rent increases and augment the housing supply, better aligning it with demand, all while dismantling the mechanisms that enable the accumulation of “passive income” for the wealthiest individuals in the country.Original post