New report outlines a stark rental market for minimum wage earners
Posted Jul 20, 2023 04:04:11 PM.
Last Updated Jul 21, 2023 02:05:45 PM.
A new report from the Canadian Centre for Policy Alternatives is painting a bleak picture for those who are earning minimum wage and looking for a market value rental.
The report outlines how much a minimum wage earner would have to make to rent out a one-bedroom and two-bedroom apartment.
The data is compiled from Canada Mortgage and Housing Corporation’s (CMHC) information portal, which display’s data from its rental market survey.
In Waterloo Region, there is no affordable one-bedroom or two-bedroom rental units available for a full-time minimum-wage worker.
David Macdonald is a senior economist with Canadian Centre for Policy Alternatives and he said in an interview with CityNews Kitchener that the data outlines someone not spending more than 30 per cent of their income on rent.
“It means you’re spending no more than 30 per cent than your pre-tax income on your rent which is how CMHC defines the income portion,” he said. “If we look at Kitchener, Cambridge and Waterloo, you would have to make $28 per hour to afford a two-bedroom apartment. To afford a one-bedroom apartment, you would have to make $24 per hour. The minimum wage is $15.50 per hour.”
Macdonald also said that the current minimum wage is a fair amount less than what you’d have to make just to afford a one-bedroom apartment.
“We also looked further down into these cities to see if there are pockets of affordability or neighbourhoods where you can make minimum wage and still afford even a one-bedroom apartment, and there aren’t.”
Macdonald said that’s not unusual for this report.
“There are only ten cities in the country out of 37 that even have a single neighbourhood that is affordable for someone making minimum wage looking for a one-bedroom apartment so even pockets of affordability that used to exist 10 or 20 years ago just don’t exist in the same way anymore.”
Macdonald added that because of the increase in mortgage rates, that is one reason why rent is becoming so high.
“You increase the interest rates for the landlords and they turn around and try and pass that on to tenants and in turn, you get higher rent as a result.”
He said builders aren’t focused on building affordable housing because they tend to not make any money of those types of units.
“In most cases, private builders aren’t on their own going to build affordable construction because they can’t make money on it. They can’t charge enough rents to make it worth their while.”
Macdonald said the only way to address the crisis properly, the supply has to be purpose-built rental and non-market.
“It has to be non-market so you’re charging what your costs are and not what the market will bear so that it can be for affordable for folks who are working at minimum wage to find a place to live in these cities.”