Ontario鈥檚 minimum wage would have to rise to $40 an hour for 海角社区官网workers to comfortably afford a two-bedroom apartment and still have money for food and utilities, according to a report from the Canadian Centre for Policy Alternatives.
Nearly all Canadians putting in a 40-hour week at minimum wage are allocating more than 30 per cent of their monthly pre-tax income toward rent or mortgage costs 鈥 the marker of unaffordable housing 鈥 Tuesday鈥檚 report found.
And while Ontario has one of the highest hourly minimum wages in the country at $15.50, surpassed only by B.C. at $15.65, the climbing cost of housing in 海角社区官网is eroding any gains made. On Oct. 1, 2022, Ontario鈥檚 minimum wage was bumped to $15.50 from $15 an hour, and it will rise to $16.55 in October.
But that鈥檚 still a far cry from what鈥檚 needed. At an average monthly rent of $2,572, a one-bedroom apartment in Toronto would require the minimum wage to be $33.60 for it to meet the affordability criteria, according to the report. For a two-bedroom apartment, that figure climbs to $40. That means the minimum wage would need to more than double for workers to comfortably afford rent in the city.
Rent jumped by almost 16 per cent for 海角社区官网condos and apartments in June compared to the same time last year, according to a report from and real estate data firm Urbanation.
鈥淗igher minimum wages don鈥檛 directly translate into better living standards. Hard-fought-for wage increases should improve the material conditions of working families,鈥 said Ricardo Tranjan, Ontario political economist at the Canadian Centre for Policy Alternatives and co-author of the report.
Out of the 37 cities studied in the report, only three have affordable two-bedroom apartments for a minimum-wage earner, the report said 鈥 all in Quebec, where the minimum wage was $14.25 during the study in 2022. Minimum wage there is now $15.25. In that province, like many others, affordable housing is in decline while the cost of living is rising.
According to the report, only five cities in Canada have a single neighbourhood where the average two-bedroom apartment is affordable for a minimum-wage worker.
The top five cities with the most unaffordable rent for minimum-wage earners are all in Ontario and B.C., with Vancouver taking the top spot followed by Toronto, Kelowna, Victoria and Ottawa.
As interest rates rise, higher mortgage costs for landlords are off-loaded to tenants who have seen rents increase in the past year, said David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives and the report鈥檚 co-author.
鈥淭his report doesn鈥檛 take into account data for late 2022 and 2023,鈥 said Macdonald. 鈥淲e haven鈥檛 taken into account the latest Bank of Canada rate hikes, which have pushed rents even higher in the last eight months. So the situation for renters is even worse than what鈥檚 captured in this report.鈥
While the lack of supply and increased demand is one reason for unaffordable housing, it鈥檚 not the entire reason, the report argues. The low supply of purpose-built rentals, which provide more varied unit sizes and security of tenure, is causing rents to skyrocket, as people have fewer affordable options to choose from. And some provinces have introduced legislation that vetoes rent control in certain circumstances.
In Ontario, for instance, new buildings, additions to existing buildings and most new basement apartments that were occupied for the first time after Nov. 15, 2018, .
鈥淭his has a negative impact on the well-being of tenant families and the hardship they face,鈥 said Tranjan. 鈥淏ut there are also serious economic repercussions. The pressure on minimum-wage earners means that there will be less spending. And, it will also become difficult for downtown businesses to hire workers, if no minimum-wage earners are able to live downtown.鈥
The current model for building more housing stock is too reliant on developers and investors looking to make a profit, said Macdonald, so the burden falls on government to step up and provide the necessary stock of purpose-built rentals to boost affordability.
鈥淭he purpose of housing is to provide a place for people to live instead of an investment for someone,鈥 he said. 鈥淩ents should not be seen as the vehicle to increase income for investors.鈥
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