Poverty is defined as someone who fails to meet a minimum income threshold set by the government. In Alberta a single parent with two children who earns less than $35,375 after tax per year is considered to be in poverty. Let’s break that number to see what that means in the real world.
$35,375 after taxes becomes $37,144 or $17.85 per hour before taxes are deducted.(1) The minimum wage in Alberta is $15 per hour, which equals $31,200. That single parent of two who is earning a minimum wage for 40 hours a week is earning $2400 before taxes which is 16% below the poverty line.
Housing affordability becomes unstable once household shelter expenses (rent, heat, electricity, etc.) exceed 30% of pre-tax income.
Our single parent (let’s call her Susan) with two children needs to find housing that will not exceed $720 per month including utilities. Take a look at your utility bill. I dare you to imagine how this is possible.
Housing standards are considered acceptable by CMHC if they are adequate in condition, suitable in size, and affordable.
Housing below standards
Housing below standards refers to housing that falls short of at least one of adequacy, affordability or suitability.
Adequate housing does not require any major repairs.
Affordable housing costs less than 30% of pre-tax household income. Shelter costs include rent and any payments for electricity, fuel, water and other municipal services.
Suitable housing has enough bedrooms for the size and makeup of resident households, according to National Occupancy Standard (NOS) requirements.
Enough bedrooms based on NOS requirements means one bedroom for
each cohabiting adult couple
unattached household member 18 years of age and over
same-sex pair of children under age 18
an additional boy or girl in the family, unless there are two opposite sex children under 5 years of age, in which case they are expected to share a bedroom.
More information on suitable housing definitions can be found on the CMHC website.
Back to Susan: We will give her a break by defining her two children as same sex and close enough in age that sharing a room will meed the definition of suitable and won’t cause too much conflict between them.
Susan and her two boys, Michael who is two and Timmy who is four, are looking for a place to live. Susan works 40 hours a week at the local grocery store and is lucky to have a great boss who can give her day shifts to accommodate typical daycare hours.
According to CMHC guidelines, she needs to find a two-bedroom home that will only cost her $720 per month with utilities included. Time to search through Kijiji ads.
Most basement suites in Edmonton don’t meet the definition of a legal suite. Susan is worried about her ex-husband causing problems if she is living in an illegal suite, so she focuses her search on apartments. The average cost of a two-bedroom apartment in a very run-down area is over $1000 per month including utilities. She lucks out and finds an apartment for exactly $1000 per month.
This is 42% of Susan's pre-tax income. Remember that affordable housing is defined as less than 30% of pre-tax income.
She will need $94.25 for a bus pass for herself. (Michael and Timmy are free.) Susan finds a private day home on Kijijii that is very low priced at $750 per child. She qualifies for a full subsidy of $437 for each child, bringing the cost down to $626 for both children.
Susan’s take-home pay is $2280 per month.
She pays $1000 per month for rent.
$94.25 for a bus pass
$313 for each boy to go to daycare
$100 for Michael’s diapers
$50 per child for clothing and incidentals.
This leaves $359.75 for things like groceries, emergencies, birthdays etc. If she or her children are sick for just 3 days, she will lose out on $360 worth of pay. Despite all the luck being stacked in her favour, Susan, Michael and Timmy are now faced with homelessness.
Now consider that most minimum-wage earners do not have one reliable forty-hour job. They have two or three jobs that may add up to forty hours, but may unpredictably fall below that number.
A single parent earning minimum wage is always on the edge of homelessness.
(1) To simplify this model, we are not taking into account other deductions such as EI and CPP, which would make our single parent’s situation even worse.