Housing driving a wedge between rich and poor

By Judith Maxwell

Rising home prices are often treated as a sign of prosperity, but they also drive a wedge between the rich and the poor.

In its Vital Signs 2010 report, Community Foundations of Canada has asked the question: “How much ‘house’ can Canadians afford?” Well, it all depends on your income, your down payment and mortgage interest rates, as well as the cost of the house.

And today, the average price for a house is 4.1 times the annual median family income, up from 3.1 times in 1995.

Broad averages like these hide many diverse stories. Some people can afford to spend $1 million on a house, others can’t make next month’s rent.

Benjamin Tal of CIBC Economics^[i] says that the most vulnerable groups are those who live on less than $50,000 a year. If they own a house, and not many of them do, he estimates that they are paying 51% of their gross income on mortgage payments plus hydro and property taxes. In contrast, people with incomes over $50,000 pay an average of 24% of gross income.

The Community Foundation of Ottawa has demonstrated the wedge between rich and poor in its Vital Signs 2010^[ii] report. Ottawa, like many other cities large and small, has a serious shortage of affordable housing, specifically apartments with rent geared to income.

For a family of four on social assistance (Ontario Works), for example, monthly assistance amounts to $1,844. This is not enough to cover the average monthly rent for a 3 bedroom apartment ($1,257) plus a nutritious food basket ($735). The family therefore has to choose between lower quality housing and being able to cover costs of food, transit and other necessities.

A lot of working Canadians face the same dilemma. Almost half of the people on low income in Ottawa do not receive Ontario Works benefits – they are the working poor. Their wages, even when they work 49 weeks a year, don’t cover basic shelter, food and necessities. Many depend on the food bank to get through the month.

These are untenable choices for families. The underlying problem is that Ottawa has a waiting list of 10,000 families looking for affordable housing but has only built an average of 164 new units per year over the past decade.

Real estate developers don’t build affordable housing because it is not a profitable business. Governments have reduced their contributions to this kind of housing, and not-for-profits, which are ready and able to build, don’t have access to capital.

This puts Canadians to a test. Do we let this gap between rich and poor continue to grow? Or can we get creative? Surely financial innovation plus a social conscience can free up resources to build more stable, decent and affordable housing.

Tom Carter^[iii] Canada Research Chair at the University of Winnipeg, says that good housing plays a stabilizing and facilitating role in the community. It improves:

• Physical and mental health
• Educational attainment
• Family life and social interaction
• Income security
• Labour force attachment
• Integration of immigrants, and
• Community development

Sounds like a good investment to me.

Judith Maxwell is the former Chair of the Economic Council of Canada, and Founding President of Canadian Policy Research Networks.

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^[i] Benjamin Tal, Consumer Watch Canada, “Assessing Vulnerabilities in the Canadian Housing Market,” CIBC Economics, May 25, 2010.
^[ii] Community Foundation of Ottawa, Ottawa’s Vital Signs, 2010.
^[iii] Tom Carter and Chesya Polevychok, Housing is Good Social Policy, Canadian Policy Research Networks, 2004.

Young workers highly vulnerable in our unsettled economy

Throughout the month of October the Vital Signs Canada blog will feature guest bloggers who are experts on various aspects of community vitality. Today’s contributor is Dr. Sharon Manson Singer, President and CEO of Canadian Policy Research Networks.

Collaboration between public and private sectors the key to enhancing youth employment

The recent Community Foundations of Canada (CFC) Vital Signs report on youth unemployment highlights that young workers (ages 15-24) are particularly vulnerable when economic times get tough.  According to the report, the youth unemployment rate stands at 16.3% — a staggering figure which is expected to grow faster than unemployment in the general population.  For those youth lucky enough to be employed, the average work hours per week (a meager 23.4) are the lowest in more than 30 years. 

Youth have always been some of the most vulnerable workers in our society and often get left behind in policies and programs designed to enhance job skills, training and employment.  Last year, Canadian Policy Research Networks (CPRN) published a series of research papers entitled, Pathways for Youth to the Labour Market  which examines how young people in Canada navigate from school to the labour market, and the outcomes associated with taking different paths.  Our research found that Canadian youth often take a non-linear route to the labour market, taking time off from their studies or switching educational programs – a reality our government and school training and employment-readiness programs do not always accommodate. 

CPRN research confirms that graduates of post-secondary education (university, college and trades programs) are more likely to be employed and earn more than those who only have a high school diploma, high school dropouts, and even those who temporarily take a break from high school (but later graduate).  This means that the link between education and employment is critical, and that career development programs and services that can increase educational attainment for Canadian youth, and help ready young people for the jobs that match their interests and skills, are paramount. 

Unfortunately we found that career development services for youth in Canada are (with some notable exceptions) largely fragmented, inconsistently funded, piecemeal and difficult for young Canadians to access.  We also found that much more needs to be done to encourage an emphasis on a vocational curriculum in high schools, and to enable partnerships between schools (secondary and post-secondary) and employers, and to strengthen co-operative and apprenticeship programs in the public and private sectors.

Our research series highlights opportunities for schools and governments to expand and coordinate resources between regions to enhance learning pathways for Canadian youth, and highlights the need for a national career development strategy for youth or national standards for service quality and provision.  But governments are not the only players. 

CPRN research also highlights the important place of business and the labour movement in career training and guidance.  In our Youth Dialogue on learning and work, more than 140 youth from across Canada told us that they feel they did not have the appropriate information about the array of careers open to them.  They called for more, and better, information on both employment and educational opportunities, including entrepreneurial paths and the trades.  Canada falls well below other developed countries on employer investment in workplace learning – so there is an opportunity here. The private sector in partnership with schools and governments could work together to help accommodate this need and better prepare Canadian youth for the labour market. 

Canada will soon experience a significant inter-generational transfer of employees with a large outflow of baby boomers from the labour force; at the same time, Canada will require a highly skilled labour force to compete in today’s global markets.  Increasing resources and attention to targeted youth education, training and employment programs will have lasting benefits for the Canadian economy as a whole.  If we are to increase our productivity as a country we cannot afford to let this generation drift off.  This is not just about their future, but our future as well. 

Dr. Sharon Manson Singer is the President of Canadian Policy Research Networks (CPRN), a leading non-partisan think tank providing socio-economic policy research and engagement to Canadian leaders.  Follow CPRN on http://twitter.com/CanadianPolicy. 

www.jobquality.ca

To assist youth, and others, to navigate through the labour market, CPRN runs the website  JobQuality.ca which is sponsored by governments, labour and the private sector alike, and provides information on the quality of jobs in Canada.  Site information includes news articles and reports, interviews and online surveys, as well as job quality indicators on such issues as work-life balance, job security, job design, pay