A new study done for the Canadian Housing and Renewal Association shows building more non-profit housing units would boost Canada’s lagging economic productivity.
To grasp the connection between having enough affordable housing and economic productivity, let’s start with what productivity is. Productivity is a measure of efficiency. It measures how much output we get from a given amount of input. Let’s say a baker uses recipes, staff, ingredients, mixers and ovens to produce five dozen cookies an hour. If better mixers or a new recipe or reducing waste results in six dozen cookies an hour, that’s productivity growth. And the baker now has more revenue to use for more profit or higher pay for staff or the ability to buy more or better machines to make more.
Imagine that for the whole economy. We’d have higher incomes and higher tax revenues. (Productivity growth based on using energy or resources more efficiently would also be better for the environment.) Canada’s economy was really productive in the 1960s, but productivity has declined steadily since and has been lower than most other major economies for four decades, with no end in sight. That compromises our ability to do the things we want and need to do as a society.
Which brings us to unaffordable housing. High housing costs divert spending from other efficient sectors or for enhancing our skills. Unaffordable, crowded or poor living conditions affect wellbeing and thus reduce worker contributions to the economy. High housing costs may deter skilled labour from moving to an area, creating a mismatch in skills and job that reduces productivity. Lost time commuting from affordable towns to work places in high-cost locations also reduces productivity.
What’s the impact?
The study projected that Canada will add 1.57 million housing units by 2030. One quarter of that needs to be community housing to boost our supply of community housing to 7 per cent of all housing units (which is the average for major economies). That would require 371,600 of those 1.57 million new units to be community housing. Shifting that number of units from private to community housing would produce a net gain in productivity of between 5.7% and 9.3%. And it would boost Canada’s total production of goods and services (Gross Domestic Product) by between $67 billion and $136 billion. (Our total GDP is $2,8 trillion, so that’s a gain of up to 5 per cent.)
The study notes that we actually need to build many more non-market units than that, but the numbers illustrate that tackling the housing crisis will also tackle a second significant economic challenge.
See more at https://chra-achru.ca/economic-necessity/