August 29, 2021 – New research by the Toronto Region Board of Trade and WoodGreen Community Services reveals that nearly $8 billion is being drained out of Toronto’s economy each year because of housing costs, some of the highest in North America.
Urgency can be hard to convey in economic development. Arguments for investing in infrastructure, workforce development or transit take on multi-year horizons.
This is especially the case with housing. Despite how drastic the situation has become — Ontario is under-building by a massive 24,500 units annually — we often talk about the homes we’ll build 10 or 20 years from now.
But we don’t have decades. New research by the Toronto Region Board of Trade and WoodGreen Community Services — the city’s largest business chamber and social service agency, respectively — reveals that nearly $8 billion is being drained out of Toronto’s economy each year because of housing costs, some of the highest in North America. Over the next five years, that’s almost $40 billion — equivalent to the annual GDP of Hamilton.
Much of that $8 billion comes in the form of wage premiums paid by businesses. Toronto region employers currently have to offer a position for, on average, 10 to 12 per cent more pay than the same job in another area just to remain competitive. Even then, they risk higher turnover as the cost of living in the city gets more expensive each year — forcing organizations to pay more in recruitment costs and harming their productivity.
Industries that can’t pay cost-of-living wage premiums — like those employing teachers, nurses and other public-sector workers — face the biggest risk of their workforce packing up and moving out, despite how essential those roles are.
But the urgency for building affordable housing (defined by the Canada Mortgage and Housing Corporation as housing that costs less than 30 per cent of household income) is greater than protecting the bottom line for businesses. Like with most things related to economic development, there’s a ripple effect.
Industries that can’t pay the premium — like those employing teachers, nurses and other public-sector workers — face the biggest risk of their workforce packing up and moving out, despite how essential those roles are.
And when we bleed $8 billion out of our economy every year, losing talent along the way, businesses go under — which means fewer jobs. We lose the shops and venues that provide entertainment, culture and a sense of personality to our neighbourhoods — all of which will be crucial as we rebuild our visitor economy post-COVID.
As well as sounding the alarm on present-day costs, the latest housing report from the Board of Trade and WoodGreen highlights potential solutions for building the volume of affordable housing we need to keep workers here, and doing it quickly.
For instance, scale workable models. Take Toronto’s Modular Housing Initiative: City Hall took that initiative from idea to occupancy in just eight months — and all during a pandemic. Using this model, 100 studio apartments became available and another 150 are already approved for construction. When a model works, scale up and build more.
As well, strengthen existing multi-sector partnerships. Earlier this year Sun Life, Daniels, WoodGreen and the City of Toronto signed a public-private partnership agreement for a new residential development in Toronto. The agreement meant that about 10 per cent of the development’s 346 units became dedicated long-term, affordable rental units. This should be a blueprint for how we create projects — making room at the table for private, public and social-service organizations to ensure that affordable housing is being prioritized.
Many more levers can be pulled to help the City build affordable housing — such as making available publicly held land, leveraging density and streamlining approvals. But what’s important to understand is this: the affordable housing crisis is not a looming future risk. It is, right now, costing our region billions. Yes, building and preserving housing comes with a price tag — but it is costlier to do too little.
This op-ed was originally published in First Policy Response.
About the Toronto Region Board of Trade
The Toronto Region Board of Trade is one of the largest and most influential business chambers in North America and is a catalyst for the region’s economic agenda. We pursue policy change to drive the growth and competitiveness of the Toronto region and facilitate market opportunities with programs, partnerships and connections to help our members succeed – domestically and internationally.
Andrew Perez, Media Relations Manager