Vancouver Fix? Peg Its Minimum Wage to Housing Costs

Instead of wooing tech jobs, support service workers with this ‘Slowest City’ idea.

By David Beers and Patrick M. Condon 12 Jul 2017 | TheTyee.ca

David Beers is founding editor of The Tyee.

Patrick Condon is founding chair of the UBC Master of Urban Design program, and professor in the UBC School of Architecture and Landscape Architecture.

A few months ago we published our Slowest City Action Plan for Vancouver. While delivered with tongue at least partly in cheek, the proposals were actually quite serious. Basically, they argued the city’s leaders have chosen goals and policies that make citizens more sped up and anxious. In contrast, we offered paths for Vancouver to:

1. Shift to a more relaxed way of getting around,

2. Adapt housing stock to conform to actual, achievable incomes,

3. Reimagine the city’s cultural “third places,” proliferating different kinds of settings where people can comingle, and

4. Acknowledge that our jobs mostly are about serving each other in one way or another, therefore foster an urban economy where people doing such work can afford life in Vancouver.

All four aims are realistic, appropriate and in step with a burgeoning worldwide movement to make urban life more humane. In that first article we put forward some policy specifics. If you haven’t read it, no worries. Taking your time is kind of the point! We’ll wait for you to revisit the original piece, and when you have finished, please return here where we shall elaborate on one of our stated goals: shifting Vancouver’s job economy to a less nerve-wracking, more fair and realistic urban ethos.

The key element we propose today: a minimum wage tied to local housing costs, pegging it higher in Vancouver than other places in B.C.

Myth of tech as saviour

As the cost of living in the Vancouver region soars beyond income (which lags Winnipeg or Thunder Bay), Vancouver’s leaders regularly invoke a potential saviour to correct this affordability imbalance: high tech.

“Technology is now a critical part of Vancouver’s economy,” boasted Mayor Gregor Robertson in 2013, “We have more jobs in technology than we have in mining, oil and gas, and forestry combined. Over 80,000 technology jobs. We have amazing clusters of talent here and it is driving the economy of the city now.”

Implicit is the assumption that Vancouver’s economy can catch up with zooming housing costs by churning out higher paying tech jobs. If you aren’t a tech worker you’re probably wondering how that’s going to work out for you.

When Mayor Robertson made his boast, those 80,000 jobs he cited were actually across the whole province, not just in the Vancouver area. What kind of jobs are “in technology”? The wide and loose net used by the 2016 BC technology report card includes people extracting natural gas, selling things online, and maintaining our hydroelectric system. Even then, such tech jobs in B.C. contribute just six per cent to provincial GDP, failing to grow any faster than has the population since 2007. Today B.C.’s tech workers total 93,000. They are dwarfed in numbers by the province’s 355,000 retail and wholesale jobs. Otherwise known as service jobs.

So let’s not forget where our real jobs are. In services.

In the Vancouver metropolitan area, the ratio of service jobs to “goods producing” jobs is over five to one. Just who are service workers? They are the people who serve your latte, sell you a house, empty your bedpans, teach your kids to read, do your taxes, put out fires, treat your cancer, and write for online websites like this one.

Tech drives inequality

But what if there really were a tech industry boom? What if Vancouver were to become the next Silicon Valley? Be careful what you wish for. U.S. cities like Seattle, Boston and San Francisco, cities that have “won” the high-tech lotto by attracting both high tech and “creative class” workers to their city, have not created paradise. In fact, the guy most famous for touting this road to paradise has decided he was terribly wrong. For years, Richard Florida, author of the noted 2002 book The Rise of the Creative Class, convinced scores of city governments to do everything they could to attract “creatives.” Where the creative class roosted, he said, cities reflected a tolerant prosperity attuned to the new age.

But in his just released 2016 book The New Urban Crisis, Florida confesses his horror at what the creative class has done to cities, and admits his own culpability. He marshals statistics to prove that cities that successfully wooed creatives now suffer damaging levels of financial inequality and housing stress. Sure, he says, the highest paid creatives energize downtowns, ride bikes, take transit and shop locally. But they also outcompete local service workers for city amenities, notably housing. For each high-income tech worker landed, there seem to be two or more baristas, waitresses, firefighters or yoga instructors pushed out of paradise or scrambling to stay.

Meanwhile, the myth that creatives are a more tolerant bunch has been dinged badly by conflicts between locals feeling pressured by tech newcomers, incidents like this one in a San Francisco park that went YouTube viral. Such friction, hassle and income disparity are built into the dream of Vancouver as Silicon Valley North. Is this what the average citizen wants, or just those in positions to cash in?

What’s the ‘foundational economy’?

Vancouver is perfectly positioned to pursue a different future that offers a life for its residents that is more stable, more equitable, less frazzled. It starts by recognizing that we already live at a moment when all the most basic processes necessary for survival — building things, making things, growing things, and digging raw materials out of the ground — are performed by fewer than one out of five of us.

As automation accelerates, the proportion of jobs in the non-service sector will continue to shrink, possibly by half. Some economists are starting to recognize the implications. They note that most of our work is in the form of serving each other. They conclude that local economies work best when they are in fact local, with as much of the “work” performed for and within the local region. They call this the “foundational economy” which persists, and maybe even thrives, in the face of automation. Their logic, basically, is that if industrial scale farming, mining and manufacturing are more and more managed with almost no human labour, that frees us up to serve each other, where we are — locally.

But service jobs pay crap, you say. Indeed they do, in the context of Vancouver’s cost of living. Which is why so many of us are working hard at two and three service jobs and not getting ahead. This invites a longer discussion on neoliberal economics, and why the rich keep getting richer and the poor, particularly millennials, keep getting poorer. For now, we can just agree that working harder at the kinds of service jobs most available is not going to secure most people a happy, pleasant future in Vancouver or any of the world’s other so called “hedge cities” — cities that do such a great job of selling their lifestyles to attract global money.

That strategy plays right into what’s causing such disparity in the global economy: a fact that the French economist Thomas Piketty has documented. He makes a strong case that having money to invest these days is way more important than having a skill to sell. Consequently, the investor class is widening the gap separating it from those dependent on paycheques. Workers, stripped of labour protections since the 1980s, have seen their wages stagnate even as they have nearly doubled productivity in the same period, and even as their cost of housing has more than tripled in Vancouver and similar locales.

That’s the perverse policy landscape inherited by today’s Vancouver wage earners who are at their most productive phase of life, ages 25 to 45. Four out of five millennials, and nine out of 10 college educated millennials, will have jobs in the service sector, where, paradoxically, as this sector booms, wages stagnate.

A proposal that reflects reality

Needed are policies designed to bring service job wages in line with housing costs and bring housing costs in line with wages. Vancouver’s political establishment acknowledges this, to a degree. For example, Vision Vancouver has, in the context of its “housing restart,” acknowledged for the first time that we should be building houses with lower price tags that align with average wages — service sector wages.

Strategies for making housing less expensive exist. For example, in our original piece we proposed “hiving” our existing housing stock into multi-unit configurations to reflect new demographic and economic realities. You will hear more about hiving in a coming article.

But for today, let’s address what city hall, other than adopting a “living wage” of at least $20.62 for its own workers and singing the praises of high tech for the rest of us, has not tackled. What can be done to bring wages up for Vancouverites in existing jobs? If the foundational economy is to thrive here, how can we make service sector work a sustainable way of life?

One answer: A city-based minimum wage.

Currently our minimum wage is set by the province and applies everywhere from Fort Nelson to Port Renfrew. In Fort Nelson houses cost about $160,000, and that’s for three bedrooms on five acres and includes a barn! How much more do houses cost in Vancouver? Forget the yard and the barn. Square foot to square foot, housing in Vancouver costs, even for a condo, almost 10 times as much, and rent is catching up fast. So a first step would be a differential minimum wage based on housing costs. Such a wage would rightfully be highest in the city of Vancouver where housing costs are outrageous — following the lead of city hall perhaps and pegging it at $20 per hour. If the provincial government will not consent to a differential minimum wage, the city or cities of the region should go it alone, through whatever device they can manage.

Such a proposal is not radical. In the U.S., localities as near to us as Seattle are legislating their own minimum wages for a lot of the same reasons listed above. While one (flawed, we think) study has sparked a debate about the impact three years after Seattle’s move, the sky did not fall.

The logic to hiking the minimum wage is that the more money you put in the hands of service workers, the more money those workers will have to purchase other services. (See sidebar for more on this.)

The increase in a minimum wage and, perhaps even more important in the long term, a guaranteed minimum income (suggested by both Elon Musk and Bill Gates of all people), invigorates and extends a service-based economy's sustainability and in perpetuity. Therefore this virtuous cycle does not only benefit those making this elevated minimum wage, but rather is likely to elevate wages throughout the service economy and help bring wages closer to home prices.

As mentioned above, there are other actions to be taken in order to align housing costs with wages but a living wage for working families is undoubtedly step one.

Contrast this approach with pegging our future exclusively on the mixed blessing of high-tech jobs, a path that leads to Silicon Valley’s reality of widened wealth divides, long commutes for service workers shut out of the housing market, and the bulk of wealth generated for shareholders who are already among the global elite. Why are we rushing to get to that place? We say: Slow down. And rethink.  [Tyee]

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