The Wage Structure, Rents and Urban Inequality in Canada

Richard Florida’s new book, The New Urban Crisis (Basic Books, 2017) takes a careful look at rising inequality in big cities in the United States. He details the fact that many of the winners of today’s economy, the top 1% and top 10%, are located in a small number of “superstar” cities such as New York, Los Angeles, the Bay area, Washington and Boston where well paid jobs in higher education, finance, tech, higher education and entertainment are highly concentrated.

These cities are increasingly polarized between very rich and poor neighbourhoods as the affluent and young professionals return to the city while soaring rents and house prices force the middle-class and many of the poor out to the deteriorating older suburbs.

Similar but less extreme patterns have been found in Canada by David Hulchanski of the University of Toronto and other urban geographers who have documented increased income polarization and erosion of the middle-class and mixed income communities in Toronto in particular.

Statistics Canada recently released data from the Job Vacancy and Wage Survey which show hourly earnings of full-time workers by detailed occupation by city as well as for rural areas. (See CANSIM Table 285-0050.) These provide some insight into the question of whether earnings in Canadian cities are highly polarized.

WAGES BY CITY
Senior Managers Sales and Service Ratio
All $52.40 (100%) $18.85 (100%) 2.8
Halifax $44.10 (84.2%) $17.50 (92.8%) 2.5
Montreal $49.60 (94.7%) $20.90 (110.8%) 2.4
Toronto $63.70 (121.6%) $20.35 (108.0%) 3.1
Calgary $62.50 (119.3%) $19.30 (102.4%) 3.2
Vancouver $55.30 (105.5%) $19.10 (101.3%) 2.9
Hourly Wage of Full Time Workers. CANSIM 285-0050

 

The Table shows earnings of the highest and lowest paid broad occupational categories, senior managers, and sales and service workers, for Canada and for selected cities. As shown the ratio of the highest to the lowest paid group is 2.8 at the national level, meaning that senior managers earn on average 2.8 times as much as sales and service workers. But the ratio is significantly greater in Calgary (3.2) and Toronto (3.1)

Unsurprisingly, the most highly paid senior managers are to be found in Toronto and Calgary which are major financial centres and the home of many corporate head offices.

What is interesting is the relatively more uniform level of hourly earnings of sales and service workers. These are only very modestly above the national average in Toronto (108.0%), Calgary (102.4%) and Vancouver (101.3%.) And sales and service wages in these cities actually lag behind Montreal.

House prices in Vancouver and Toronto are, of course, far higher than the national average, as are rents. CMHC data show that the average monthly rent of a two bedroom apartment in Toronto is $1327 and $1450 in Vancouver (and $1258 in Calgary), compared to a national average of $962 per month and just $668 in Montreal.

Richard Florida highlights the low incomes of urban service workers in many big US cities after adjusting for inflated rents. This is clearly also a problem in some of Canada’s most successful big cities.

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