Minimum wage couldn't land you a 1-bedroom unit years ago. Now, it's even worse. Here's why

Toronto resident Sylvana Orellana, who earns minimum wage, says paying for her and her two-year-old son's expenses often means sacrificing some bills in order to pay others.

That's because her rent — just over $1,700 per month — takes up a significant amount of her income, and she says she routinely relies on family and friends to help. 

"It's sad to say, but at this point I don't even look at the numbers or how much they're paying me because … it's not going to cover my bills," said Orellana, 23. "I almost ended up in the hospital because of all of this stress."

A new report released Tuesday by Ottawa think-tank Canadian Centre for Policy Alternatives suggests Orellana isn't alone.

Economists David Macdonald and Ricardo Tranjan, the report's authors, found that while minimum wages rose compared to the 2018 data in the centre's last report, they aren't rising as fast as rental rates.

Macdonald says this means many workers are spending too much on rent, while Tranjan says the high cost of rent can ultimately mean that people making minimum wage are at risk of becoming homeless.

"Minimum wages are supposed to improve the conditions of folks that are or near the poverty line," said Macdonald. "But in fact those improvements in minimum wage have largely gone to paying landlords higher rent."

"I'm concerned about minimum wage workers and the kinds of very risky situations they must be putting themselves through," said Tranjan. 

Their analysis, which covered 776 neighbourhoods in more than three dozen of the country's largest cities, calculated how much people have to make in a 40-hour work week in order to pay no more than 30 per cent of their income on housing, something they call the "rental wage." 

Paying any more than that makes housing "unaffordable" according to the Canada Mortgage and Housing Corporation.

The researchers attributed the gap between minimum wage and what's needed to afford rentals to three main factors: wage suppression policies, such as using temporary foreign workers as a way to fill vacancies instead of raising wages to attract domestic workers; a low supply of rent-controlled housing; and poor regulation of the housing market that prioritizes "profit-making over housing security."

Macdonald says things are rapidly getting worse due to rising interest rates and the high cost of construction, while Tranjan pointed to provincial legislation exacerbating market conditions, including Ontario's move to remove rent control for new units and Quebec's attempt to end lease transfers.

The co-authors say a lack of affordable housing isn't just a problem in huge urban centres. Using provincial and federal data from 2022, they found the rental wage for a one-bedroom unit is higher than the minimum wage in most major cities across the country. 

Using the rental calculation, the report also found that minimum wage workers could only afford one-bedroom units in three cities, all in Quebec. And even there, where rents are comparatively more affordable than in other parts of the country, researchers say the trend is "worrisome" as workers still need to earn more than minimum wage to be able to rent an affordable unit.