The housing affordability crisis in Canada is becoming more critical by the day, especially for minimum wage earners. The Canadian Mortgage and Housing Corporation recommends that, at most, 32 percent of a person’s income be spent on housing. Yet, this is an unattainable goal for many Canadians, particularly those earning minimum wage. Rent prices have soared well beyond this threshold in numerous cities nationwide, putting immense financial strain on millions. A recent study by Zoocasa analyzed how much more minimum-wage workers are paying compared to the 32 percent rule, highlighting the increasing economic pressure Canadians face for affordable housing.
This content was originally published by Zoocasa. View original content and infographics here.
The 32 Percent Rule vs. Reality
The 32 percent rule suggests that 32 percent of your income should go toward rent to maintain a financial balance. However, this guideline is far from reality in cities like Vancouver and Toronto, where even the minimum wage stretches far short of meeting rental costs.
In Vancouver, for example, the minimum wage is $17.40 per hour. Based on the 32 percent rule, a full-time worker should spend at most $905 monthly on rent. Unfortunately, the average rent for a one-bedroom apartment is $2,690—almost three times what a minimum-wage earner can afford. Toronto tells a similar story. With a minimum wage of $16.55 per hour, a worker should ideally pay no more than $860.60 monthly for rent. However, the average rent for a one-bedroom apartment in Toronto is $2,500, leaving minimum-wage earners well short of the required income to live comfortably in the city.
Even in cities with a slightly smaller minimum wage and rent gap, the reality is still harsh. In Edmonton, Alberta, where the minimum wage is $15.00 per hour, a full-time worker should spend at most $780 monthly on rent. Yet, the average rent for a one-bedroom apartment is $1,360—almost double what minimum wage workers can afford. Similarly, in Regina, Saskatchewan, where the minimum wage is also $15.00 per hour, minimum wage workers should spend no more than $780 on rent, but the actual rent for a one-bedroom apartment is $1,300.
Using this guideline in Halifax, with a minimum wage of $15.20, a person can afford rent up to $790.40. However, with the average one-bedroom priced at $2,100, they’d need to earn $40.38 per hour, or $78,750 annually, to make it affordable. Meanwhile, in Abbotsford, the minimum wage is $17.40, allowing for a rent cap of $905. However, to follow this guideline, a one-bedroom apartment averages $1,640, meaning the minimum wage would be $31.54 per hour, or $61,500 annually.
Affordability Still Out of Reach in Calgary
Calgary is often perceived as more affordable than its coastal counterparts like Vancouver and Toronto, thanks to its lower cost of living and more moderate housing market. However, Calgary’s affordability is relative. Alberta’s minimum wage is $15.00 per hour, and a full-time worker earning this would bring home about $2,600 per month before taxes. According to the 32 percent rule, this would mean spending no more than $780 monthly on rent. However, with the city’s average rent for a one-bedroom apartment now at $1,780, that figure is simply unrealistic. To afford the average rent of $1,780, a worker must earn about $66,750 annually, or $34.23 per hour—more than double the current minimum wage in Calgary.
If a couple earning minimum wage in Calgary slightly adjusts the 32 percent rule, they would still be spending around 34.23 percent of their combined income on rent for a one-bedroom apartment. While this is slightly above the recommended guideline, it still gives them more flexibility compared to places like Vancouver, where couples must allocate 44.6 percent of their combined income toward rent for a similar apartment.
Two-Bedroom Apartments: A Greater Affordability Challenge
Renting a two-bedroom apartment further highlights the struggle for minimum-wage earners. In Vancouver, where the average rent for a two-bedroom apartment is $3,800, having only one person paying the rent, like in the case of a single parent and a child, would need to earn $142,500 per year or $73.08 per hour. In Toronto, the average rent for a two-bedroom apartment is $3,200, requiring an annual income of $120,000 or $61.54 per hour. These high costs make it nearly impossible for minimum-wage workers to find affordable housing in these cities without exceeding the 30 percent rule for housing expenses.
In contrast, cities like Winnipeg and Regina offer more affordable options, but even here, the required income for a two-bedroom apartment remains out of reach for minimum-wage workers. In Winnipeg, where the rent for a two-bedroom apartment is $1,740, a renter would need an annual income of $65,250 or $33.46 per hour. Regina’s required income for a two-bedroom apartment is $57,375, or $29.42 per hour. While these rents are more affordable than in Vancouver or Toronto, they still represent a significant financial challenge for minimum-wage earners.
Can a Couple Earning Minimum Wage Afford More Space?
The financial burden is somewhat reduced for couples sharing a two-bedroom apartment, but challenges remain. In Vancouver, a couple would need a combined income of $142,500 to afford a two-bedroom apartment, which breaks down to $71,250 each, or about $36.54 per hour. In Toronto, where rent is slightly lower, a couple still needs to earn a combined $120,000 annually, or about $30.77 per hour, to afford a two-bedroom apartment. Even though sharing rent lightens the load, these figures still need to be attainable for couples working minimum-wage jobs.
In more affordable cities like Windsor or Saskatoon, couples would be closer to the required income but still might need help. For example, in Windsor, where the rent is $1,690 for a two-bedroom apartment, a couple earning minimum wage would have a combined income of $58,500, which is still below the $63,375 required to meet the 32 percent rule. In Saskatoon, where the rent for a two-bedroom apartment is $1,480, a couple earning minimum wage would have a combined income of $58,500, just over the $55,500 required to meet the same guideline. While sharing rent helps alleviate the financial burden, minimum wage alone is rarely enough to afford a two-bedroom apartment in Canada’s cities without exceeding recommended housing costs.
Minimum Wage Is Not Enough
Even for couples sharing rent, the minimum wage is typically insufficient to comfortably afford a two-bedroom apartment while staying within the recommended 32 percent of income spent on housing. For example, in Calgary, where the rent for a two-bedroom apartment averages $2,160, a couple would need a combined income of $81,000. With each partner earning Alberta’s minimum wage of $15.00 per hour and working full-time, their combined income would be about $58,500—well below the required $81,000. Therefore, even with two incomes, minimum wage earners would struggle to afford rent without exceeding the affordability threshold.
In more affordable cities like Edmonton or Winnipeg, couples would be closer to the required income but still might need help. For example, in Edmonton, where the rent is $1,630 for a two-bedroom apartment, a couple earning minimum wage would have a combined income of $58,500, just shy of the $61,125 required to meet the 32 percent rule. While sharing rent helps alleviate the financial burden, minimum wage alone is rarely enough to afford a two-bedroom apartment in Canada’s cities without exceeding recommended housing costs.
Bridging the Divide Between Wages and Rent
Across Canada, the gap between minimum wage and rent costs is undeniable, as rent far exceeds what minimum-wage earners can reasonably afford. Even in more affordable markets, the gap between wages and rental costs remains significant, pushing many Canadians into housing insecurity or sacrificing other essential expenses just to keep a roof over their heads.
To address this growing housing affordability crisis, policymakers must consider increasing the minimum wage to align with the cost of living, implementing stricter rent controls, or investing in more affordable housing options. Without such interventions, millions of Canadians will continue to face the complicated reality of being unable to afford safe and secure housing.