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

With inflation shooting up to a 40-year high this year, the cost of living has become a pressing worry for many British Columbians.

By Iglika Ivanova and Alex Hemingway.

With inflation shooting up to a 40-year high this year, the cost of living has become a pressing worry for many British Columbians.

Stratospheric housing costs are no longer just Vancouver and Victoria problems and sticker shock at ever-rising grocery prices has become an all-too-familiar experience. As prices soar, however, the pain is felt more acutely by those on fixed incomes and workers earning lower wages.

The living wage, updated annually, reflects the income a two-earner family of four needs to meet its basic needs, escape severe financial stress and participate in the social, civic and cultural lives of their community. In 2022, the highest living wage in BC is in the village of Daajing Giids (Haida Gwaii) at $25.87 an hour and for the first time Victoria’s living wage is higher than Vancouver’s at $24.29 and $24.08 respectively.

In many BC communities, two parents must earn well over $20 an hour, each working full-time, to support their family, the recently released living wage rates show.

The living wage is a call to employers to pay family-supporting wages, but 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 public services that reduce the cost of living.

Government policy can make a huge difference to families and reduce the wage pressure facing employers.

Throughout BC, sky-high rents strain family budgets to the breaking point.The provincial and federal governments have made important investments in affordable housing in recent years, but the scale of these investments is nowhere near what’s needed to make up for two decades of inaction.

BC must massively increase investment in dedicated affordable housing. For rental housing for middle-income earners, the government can structure public housing investments so that projects pay for themselves through the rental income they generate. To achieve more deeply affordable rents, separate subsidy streams, grants and cross-subsidization can be used. But a massive build-out must start today.

Close attention is needed to the overall supply of housing. Tackling the rental shortage requires, among other things, an end to zoning policies that block construction of new apartments on the vast majority of residential land (while allowing the most expensive forms of detached housing virtually everywhere). Premier David Eby recently announced steps that could help tackle this problem from the provincial level if cities won’t act.

Easing the underlying housing shortage will take time and should be complemented by stronger rent controls. When rental homes are vacated, landlords can raise rents to whatever the market will allow. This creates an enormous gap between the rents that new and long-term tenants pay. Legislating 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 reduce the incentive for landlords to evict tenants.

Iglika Ivanova and Alex Hemingway are senior economists at the Canadian Centre for Policy Alternatives, BC Office.

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