Minimum wage not enough to afford rent in 2022: report

No one earning minimum wage was able to rent an average apartment last year without spending more than a third of their income on housing, a recent report found.

The Canadian Center for Policy Alternatives released a study on July 18 that said the rental wage — defined as the hourly wage required for tenants to spend no more than 30 percent of their pre-tax income on rent while working a typical 40-hour week — is “higher” than the minimum wage in each province as of October 2022.

The analysis included one- and two-bedroom rentals, which made up 33 and 50 percent of all units, respectively, the report said.

The authors of the study, senior economist David Macdonald and political economist Ricardo Tranjan, wrote that even in the provinces with the highest minimum wages – BC, Ontario and Alberta – this does not translate into better living conditions because “landlords take a larger share of wages through high rents.”

“The wage increases that people are fighting so hard for should improve the material conditions of working families, not back into the pockets of the property-owning class,” the report said.

The study says minimum wage earners in most Canadian cities “tend to spend too much on rent, live in units that are too small, or, in many cases, both.”

The largest gap between the minimum wage and the rent required for an average one-bedroom apartment was found in Vancouver and Toronto.

In those two cities, the rent for a room was double the minimum wage set at that time. The rental wage for an average two-bedroom unit is more than double the minimum wage.

On June 1, BC’s minimum wage increased to $16.75 an hour from $15.65. In Ontario, the minimum wage is set to increase to $16.55 an hour on October 1 from $15.50.

The only cities where the one-room rent is lower than the minimum wage are Sherbrooke, Trois-Rivieres and Saguenay, Que.

“Even there, the affordability of renting is declining,” the study said. “Every other CMA in Canada has average rents that exceed what minimum wage workers earn.”

In Sherbrooke, for example, the report says that the 2018 minimum wage exceeded the one-room rental wage by 18 percent, compared to nine percent in 2022.

For most cities, the number of minimum wage hours required to pay rent for a two-bedroom unit also increased between 2018 and 2022.

“Overall, a larger share of the hard-earned income of working-class families is now flowing from employers to landlords, making the rich richer and leaving tenants poorer,” the report said.

“The so-called housing crisis is often presented as a mismatch between supply and demand, while the apparent transfer of income and wealth from low to high income earners is often overlooked.”

The authors point to at least three factors they say make rents higher for low-wage earners, including wage suppression policies, low supply of rental housing and poorly regulated rental markets.

“In other words, the mess we find ourselves in is caused by bosses lowering wages with the help of provincial governments that set minimum wages and federal governments that control monetary policy,” they said.