This op-ed is featured in today's Vancouver Sun. Links to referenced materials provided below.
Last month the Eighth Annual Demographia International Housing Affordability Study was published, confirming what many Vancouverites already know. After Hong Kong, ours is now the second least affordable city to purchase a home in among 325 metropolitan markets in English-speaking countries.
To arrive at Vancouver's No. 2 rating, the Demographia study divided Metro Vancouver's median house price of $678,500 by a median house-hold income of $63,800. Overlooked in the media coverage was the fact the authors were using the data to make the case for more urban sprawl. They argue that policies like B.C.'s Agricultural Land Reserve are a "war on the dream" (Demographia's term) of home ownership because of their effect on house prices.
While many citizens and politicians agonize over the high cost of housing here, the second figure (income) troubles me at least as much. Here's an irksome statistic for a Vancouverite: Toronto's median household income is $73,800, or 15 per cent higher than Metro Vancouver's. Why are we not as concerned about our low median household income, and looking for ways to close that gap?
What if our politicians promised to fight for better paying jobs rather than the risky prospect of deflating the cost of housing? It used to be candidates for elected office promised a chicken in every pot. It would be a shame if we've given up on that dream.
The non-partisan Brookings Institution recently released its annual Global Metro Monitor study of the economic performance of the largest 200 city regions worldwide. It showed that Metro Vancouver, like other Canadian city regions, is not keeping pace when compared to developing economies in Asia, South America and the Middle East. Slow economic growth results in fewer jobs and lower pay, while making it harder to compete for the best and brightest business minds.
What are we doing about it? In truth, not nearly enough.
One of the Brookings study authors states, "Growth doesn't happen on the national level, it happens at the local level." In other words, metro areas generate disproportionately higher shares of national increases in output and employment.
So it might surprise readers to know there is no regional plan for economic development in Metro Vancouver. Instead, we have a hodgepodge of economic plans city by city, each of us vying for similar business and each with its own set of business permit regulations.
The City of Surrey built its economic plan around practical measures to strengthen job growth through tax holidays and reduced fees. The City of Burnaby set out a 15-year economic growth plan, mapping out sector strategies for film, high-tech and health.
Other plans, like the City of Vancouver's, are driven less by a business bottom line than by political outcomes. Their plan places heavy emphasis on building "green" business over traditional sectors such as our prominent port, forestry or mining. After struggling to understand what green business is, the B.C. Business Council has determined it amounts to a minuscule three per cent of our local economy.
Smart metro leaders, say the Brookings analysts, are crafting business plans that grow jobs from within, building on their distinct market advantages. In our case these advantages would be our access to vast natural resources, a first-class airport, proximity to Asian markets, and good universities.
When it comes to green tech Vancouver has a distinct market disadvantage. Thanks to some of the lowest power rates on the planet there's less incentive to decrease energy consumption. Do these eco-friendly start-ups have a chance for success, or are we spending millions in tax dollars chasing a green dream? Most of us would have greater confidence if business leaders, not politicians, chose the industries with the greatest potential for future growth.
Where our political leaders can make a difference is by championing a regional economic development strategy that focuses on our market advantages, and by seeking to harmonize business regulations throughout Metro Vancouver.
Only when cities such as Surrey, Burnaby, Vancouver and others in the region determine to work together will we see improvements in our economic performance. Then the higher median incomes follow and the prospect of affording a home here becomes much more real.
- post by Mike – mike@mikeklassen.net. Visit back soon for my comments on the 2012 Housing Affordability Symposium. Some great ideas and lessons for our cities!
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Mike – this is a valid point, but we will not get to affordable housing with median household income increases alone.
Vancouver’s median multiple – median house price divided by median household income – is 10.6, with a median house price of $678,500 and a median income of $63,800.
The median house price in Toronto is $406,400, with a median household income of $73,600 (5.5, rated severely unaffordable).
If Vancouver had Toronto’s median household income, its median multiple would be 9.21.
To get to the (still severely unaffordable) 5.5 without lowering housing prices, Vancouver’s median income would have to be $123,363, almost twice what it is today. And that’s assuming that house prices don’t continue to rise.
Two pronged approach, please!
I have to agree with Greg’s comment, we need a two-pronged approach.
And the data above are not granular enough to draw any real conclusions from.
But Mike’s general point is right, Vancouver will only be a healthy and green city if we grow high-quality jobs. To do that, I believe we need to grow local companies, and this means we need to invest in local companies.
We don’t need to attract external investment or companies. We need to grow local champions.
I spent the last two days at the Canadian Financing Forum. I did not participate in the Clean Tech track but I did have some interesting conversations with clean tech companies that are growing rapidly. According to a PWC analyst from the Bay Area, Vancouver is getting global recognition as a center for innovation in clean tech and green innovation.
Mike’s comment that Vancouver has a market disadvantage when it comes to green tech is precisely wrong, and may come from a straw man definition of what green tech is. This has certainly been a problem with pronouncements by Jock Finlayson, Executive Vice President and Chief Policy Officer of the BC Business Council.
What is a clean tech job/green job?
How many clean tech/green jobs are there in Vancouver? What do they pay? What qualifications do people need in order to find employment in a clean tech/gree job? (Or, who do they need to know?)
We keep reading about clean tech and green jobs which seem to offer minimal employment numbers – as in a couple here, a couple there and they do not address the employment issues that face the vast majority Vancouverites or BC’ers.
Example: Vancouver would have found the City’s Deputy Manager ‘locally’ rather than employing an American from Chicago. (I still cannot believe that in all of Canada, not one person was qualified – but then again, it would have meant a legitimate search and/or a wedding at Hollyhock)
I walked along W. Broadway again today – 2 more shops that were open last week are now gone.
Vancouver isn’t only becoming unaffordable for renters but for retailers as well.
But I guess I shouldn’t fret – green/clean tech jobs will save us.
.. property rates .. ALL real property rates .. residential AND commercial have mostly been driven by foreign ownership who are only interested in buying property for profit…
.. a step in the right direction for affordability would be to restrict property ownership to citizens of Canada and landed immigrants who actually live and do business in and on the properties they purchase….
Wendy, how do you prove that? House is purchase by the wife who lives in Canada with the kids. Husband works overseas – now what do we do? Numbered companies with addresses in Vancouver – what do we do? Canadians who work overseas for 3 years- should they be expected to sell their house?
There are not enough ‘green’ jobs to get us all working. They have shown that to be the case in other jurisdictions. That does not mean we don’t try but let’s not fool ourselves as to the overall impact.
West 4th is being hit with an evolving demographic and huge tax increases due to redevelopment potential on commercial property. Throw in a weak economy and a marginal business is now operating in the red instead of the black. What’s the point… as 3-4 more jobs vaporize right before your eyes.
I agree, affordability is a critical issue, and not just for housing but for retailers, artists, start-up companies, retirees … It is something we have to understand and then address.
But Mike’s point is that afforability has two dimensions and that income is also a critical factor. We have to work to create jobs and wealth locally. I believe the best way to do this is to foster local capital pooling, investment and to grow local companies.
On Green Jobs, my definition is that a green job is one that contributes to long-term social and ecological sustainability.
Social Sustainability – jobs that pay people enough to reinvest in the health of their society and that are open to people of diverse cultural, social and economic backgrounds.
Ecological sustainability – jobs that kead to ecologies that have net primary productivity, growing or at least steady diversity, and where the ecological costs (one type of externality) are captured into prices so that the market can make more effective decisions.
Mining engineering companies that design and build mines that have positive environmental impacts are one example.
Forestry companies that replant diverse species, maintain watersheds, and process locally adding maxium value for unit of environmental impact are another.
Clothing companies that design and manufacture locally and use materials that will last for a long-time and then be easily recycled could be a third.
I suspect that Vancouver’s long-term reilience depends on recreating local manufacturing using next generation technologies and designs, on cultivating a local investment, start-up and growth culture, one integrating people from many different cultures and backgrounds into our businesses, and in building a city that is culturally and ecologically diverse, with high productivity (biological and economic, preferably with reinforcing ties between the two).
..hi Julia.. you sound panicked… scared…
.. my point was that it should be required that a citizen or landed immigrant gets to own property with intentions of making Canada their home and contributing to the community .. instead of the alarming numbers of purchases made by big money from outside of Canada just for investment… driving up the rates in bidding wars ..
my point had nothing to do with green jobs or any other kinds of jobs… or citizens or landed immigrants of Canada who travel internationally to work…….
..by the way… what kind of ‘green jobs’ would you create??? .. what of ANY kind of jobs would you create ..for that matter?? .. and I’m not talking about service based minimum wage jobs.. I’m talking about quality jobs .. career jobs.. with income to actually afford the high cost of living here in this gorgeous city.. .. what kind of evidence is there of all of this ‘job creation’ the government (any level..pick one) claims they’ve created..
… creative solutions are needed .. thinking outside the box ..
bestest
Wendy, you misinterpret my comments. I am not remotely panicked – I AM however pragmatic. I am a bit of an immigration junkie and I am well versed in how our notion of immigrants is far from the reality. Thinking that controls on ownership is the silver bullet is purely delusional. For ever rule there is a loophole. Are you intending to tell people that come on a 5 year work permit to bolster our economy that they can’t purchase housing to living in?
Vancouver has become a wealth based city not an income based city and that horse left the barn years ago while we weren’t watching.
I think we need to adjust our expectations a little. If you want to live in Vancouver, you have to live with less. It is a personal choice but a choice no less. There is no fence around Vancouver that says you MUST live here. And that is called the free market. When people stop wanting to live here, prices will correct or at least slow down.
Once I fully grasp what a green job might look like, I can offer comment. I agree, services jobs don’t pay the bills. Manufacturing and tech jobs do… so why are we rezoning our industrial land?
Steven, I like your definitions.
Not to answer for Julia, but I think the issues with what you say are
(i) There is only ancedotal evidence for your claims that foreign investment is driving up prices in Vancouver. I believe it is a major factor, but not the only one. The non-cash economy, the fact that many wealthy people choose to live in Vancouver and make their many elsewhere and decisions by the NPA and Vision to favour high-end development and to differentially tax residential vs. business properties are all factors.
(ii) In any case, the city does not have any power to act on this, so you should be directing this towards the Harper government. And the Harper government with its domination by big energy interests will not want to do anything that risks foreign investment.
(iii) Even if the Harper government does want to act (which I very much doubt) they would find their hands tied by various international trade and legal agreements.
The jobs that I do create in Vancouver are mostly in software engineering and pay high five to low six figures. In the next year I expect to create about five such jobs. I expect to also create the same number of jobs in on-line marketing management, at a slightly lower average salary.
Longer term, I want to find ways to create next generation manufacturing jobs in BC. This is something I am actively investigating.
Note that the most exciting company at the Canadian Financing Forum was D-Wave. And D-Wave does make things – quantum computers. Yup, the most advanced computers in the world are being built in Vancouver.
And again, these few ‘green jobs’ do not help employ the masses and are only suited to those that have a set skill level.
That is true, but it is also generally true of all jobs being created these days. They are either low-paying services jobs or high-paying knowledge worker jobs (and in Vancouver even the high-paying knowledge worker jobs are not enough for most people to afford to buy housing). What do you see as a solution?
The only hope I see is to reinvent manufacturing and bring it local again. But even in this case people will need skills in design, materials handling, software engineering … we need to create jobs for a new generation that can think with their hands and their brains.
“we need to create jobs for a new generation”
I think this is approaching the issue from the wrong end. We need to look at the goods and services where there is a demand, now and in the future, and look to where the private sector can produce competitively. And then ensure the proper education and training infrastructure is in place as well as the best environment to attract the businesses that are going to create the jobs.
Right now it looks like we are going to be short of skilled trades. What are we doing about this? Why are we graduating twice as many teachers as there are openings each year at great cost to the taxpayer?
It would be great if we did manufacture locally but how, in the short term, are we going to do that competitively? It’s not only China we have to worry about. Caterpillar closed an Ontario plant because they could produce cheaper in the US.
What is ironic is that we are scratching our heads on how to create high paying jobs yet there is a well organized lobby totally committed to prevent the development of our energy sector. These are high paying jobs in an industry with high barriers to entry (especially if you don’t have resources) and cannot be outsourced. And they are sustainable in the medium term and as a minimum will help pay the bills while we develop other avenues of employment.
Words of wisdom from Brian Eno:
“One very strong thing that I can remember was a real decision that I took when I was nine, which was probably my first really important decision. I can remember my father coming home from work as he always did– he always had to work lots of overtime in order to get enough money, because the job wasn’t well-paid. I can remember him coming home from work and just falling into a chair and going to sleep because he was so tired he couldn’t even eat, and I thought, ‘The one thing I’m never going to do is get a job.’ I saw that it was a trap, because he was so tired and so exhausted on every level that he was never going to be able to do anything else but get up the next day and go to work.”
Absolutely! We should be freeing upcoming generations from the ‘job’ trap of letting forces beyond their control determine their economic well-being. We need to teach people how to find work, build careers, and control their own ‘means of production’ wherever possible. It doesn’t mean everyone has to be an entrepreneur, simply that they have a better understanding of their potential and how jobs can hinder their efforts to achieve the larger goals they may have set out for themselves. Absolute best decision I ever made was to quit a good-paying job I’d come to hate so I could strike out on my own and triumph or fail due to forces within my control, rather than be beholden to a head office that didn’t share my aspirations. A nation of people who chart their own course will crush any country of ‘workadaddies’(to steal from Tom Wolfe).
http://www.furious.com/perfect/bangseno2.html
“We should be freeing upcoming generations from the ‘job’ trap of letting forces beyond their control determine their economic well-being.”
No one can eliminate all those forces that are beyond their control. While you deserve a lot of credit for having the guts to go for it on your own, you have merely exchanged one set of economic risks for another.
“jobs can hinder their efforts to achieve the larger goals they may have set out for themselves”
It is a Progressive delusion that we can all choose the jobs we want to do and the economic benefits we believe we are entitled to will naturally follow. And it is disfunctional if too many people believe it.
“A nation of people who chart their own course will crush any country of ‘workadaddies’(to steal from Tom Wolfe).”
There are literally hundreds of millions of people in the developing nations (if not billions) who have to scratch out a living the best they can and can only dream of our standard of living. I think that kind of motivation might trump a nation of self actualizers.
Bill:
You’ve misrepresented my comments to bolster your own argument. I’m not speaking of ‘progressive’ anything, or entitlements. I speak of education and options, so that individuals better understand the realities of employment and what a job can and cannot provide.
Enjoying your work because it speaks to an inner drive one has is the first rung on the ladder of success and it should be as available to the pauper’s child as the billionaire’s. That equality of opportunity can only come when we face the realities of work, namely that one’s ability to choose the best fit among the varying kinds of work available is the best way to build a robust economy, because it encourages ‘buy-in’ and commitment that can’t be gained through threat of unemployment or perpetuating a fallacy that not everyone can be happy in their ‘job’.
I don’t believe that I misrepresented your comments nor do I disagree with all your points but your conclusions do not follow from your arguments.
There is no doubt that success follows when passion, ability and opportunity meet. Steve Jobs and Bill Gates are extreme examples and there are countless stories of smaller successes resulting from this combination. But these are the exceptions and not the rule.
For the rest of us mortals it is a trade off between what we really like to do, what our abilities tell us we should be doing and what the rest of the world is willing to pay us. That is why there are so many different recreational outlets from sports to arts that enable people to enjoy their passion even if they do not have the ability to earn enough doing it. Others take satisfaction and delight in raising their family. For these people their employment provides them with the economic means that enables them to participate in the activities they enjoy.
I agree that there should be opportunity for everyone to maximize their economic potential but it may not lead to a outcome that the individual hoped for.
I am sorry you had a bad corporate experience but you seem to have found a solution that works for you. It doesn’t mean that it is the only path for a satifying life.
Bill:
You are misrepresenting my comments I’m afraid. In my very first comment I made it clear that not everyone need be an entrepreneur, yet you are continuing to argue as though I had made the assertion that self-employment is the answer for all.
No Chris, I am not talking about self-employment but any employment at all. Please re-read my comments in the context of all employment. You will see that I am saying better advice to young people is to take a look at the economics of the job opportunities out there first and then match their abilities and interests to those existing opportunities that will provide them with the economic benefits that will sustain the life style they want. If they do that, we will likely end up with more skilled trades people and less Liberal Arts graduates.
” take a look at the economics of the job opportunities out there first and then match their abilities and interests to those existing opportunities that will provide them with the economic benefits that will sustain the life style they want.”
My point exactly, as I’ve been saying since my first post on the topic. We just come to different conclusions.