Nov 17, 2022

Living wage increases highlight urgent need to expand government efforts on housing affordability

By and

Affordability has long been a concern for residents of Metro Vancouver—a region notorious for stratospheric housing costs—but with inflation shooting up to a 40-year high this year, the cost of living has become a much more pressing worry for many.

Sticker shock at ever-rising grocery prices is now an all-too-familiar experience, but as prices soar the pain is felt more acutely by those on fixed incomes and workers earning lower wages.

It now takes an hourly wage of $24.08 per hour in Metro Vancouver for two parents each working full-time to support a family of four. This is the 2022 living wage for Metro Vancouver. It is $3.56 higher than last year because of the rapidly rising costs of living, especially housing and food.

While the living wage is a call to employers to pay family-supporting wages (to direct and contract employees alike), the labour market alone cannot solve all problems related to economic insecurity. Our standard of living is a combination of earnings, benefits, government income supports and accessible public services that reduce the cost of living.

Government policy can make a huge difference to families and reduce the wage pressure facing many employers, and has done so in the recent past.

Sticker shock at ever-rising grocery prices is now an all-too-familiar experience.

The 2017 provincial election was won on the promise to make life more affordable across BC. Since then, the provincial government eliminated MSP premiums, brought in a new child benefit and made historic investments in child care. These actions concretely reduced the cost of living for families with young children and actually lowered the Metro Vancouver living wage rate in 2019. The savings were so substantial that they offset increases in the cost of food, housing and other essentials until this year. But they have now been effectively wiped out by ballooning rent and food costs.

The provincial and federal governments have made some important investments in affordable housing in recent years. But the scale of this investment is nowhere near what’s needed to make up for two decades of inaction by austerity-minded governments.

The time is now for BC to step up its game and massively increase investment in dedicated affordable housing. The province can afford to do so, even in the current uncertain economic environment. In the case of rental housing for middle-income earners, the government can structure public housing investments so that projects pay for themselves through the ongoing rental income they generate. To achieve more deeply affordable rents, separate subsidy streams, grants and cross-subsidization can be used. But we need a massive build-out that starts today.

  The time is now for BC to massively increase investment in dedicated affordable housing.

Bringing rents down also requires close attention to the overall supply of housing. Tackling the rental shortage requires, among other things, an end to zoning policies that block the construction of new apartments on the vast majority of residential land (while allowing the most expensive forms of detached housing virtually everywhere). Incoming premier David Eby has hinted at possible interventions to tackle this problem from the provincial level if cities won’t act.

Efforts to ease the underlying housing shortage will take time, however, and they should be complemented by stronger rent controls. When rental homes are vacated, landlords are free to raise rents to whatever market rate they can find a new tenant willing to pay. This creates an enormous gap between the rents that new and long-term tenants are paying. Bringing in a vacancy control policy would mean capping rent increases even when tenants move out and a unit is re-rented. Not only would this help curb spiking rents, it would also reduce the incentive for landlords to evict tenants.

There are a number of other specific actions that governments can take to make life more affordable. Additional investments to further reduce child care fees and provide a dental benefit for young children are coming in December and will benefit many families. But housing costs will continue straining family budgets to the breaking point unless sky-high rents and the chronic shortage of affordable homes are addressed.

Read the 2022 Living Wage report.

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