Earning Less and Spending More: A Reflection of the Times

It all started with FOMO…

I was coveting a house. Renting a townhouse, I wanted a place to call my own. I have owned houses before, but life changed, and I had to let those go. Despite the fact that I desperately wish I could turn back time, I am still a renter. 

Over the last few weeks, I have been, self-admittedly, experiencing FOMO. I have a fear of missing out. It’s not fear of not receiving, but a fear of not having a choice. 

Home Ownership and Renting

There’s a lot of controversy about homeownership vs. renting. Many people believe owning a house allows you to build equity, but it comes with a cost. Appreciation is never a sure thing, and as the owner, all repairs and maintenance belong to you. 

Renters claim expenses are lower than owning a house. Renters never need to replace a furnace, pay for a new roof, or pay realty taxes. A two-month notice to the landlord means the renter is free to move anywhere, without having to wait for a house to sell. A smart renter who invests the difference between owning and renting will often come out ahead. 

This is not a debate about which is better or worse. That’s a topic for another day. 

Back to my FOMO. I was scouring the real estate sites, looking for the “deal” or a diamond in the rough. I was shocked to see houses had more than doubled in cost over the last 20 years, and it led me to a comparison that was shocking. 

The Year: 2000

In the year 2000, I rented a two-bedroom apartment. It was close to amenities and downtown, but still located in a residential area. The building was an actual apartment building with laundry facilities and an elevator. People were friendly, and we were allowed pets. That apartment was my all-time favourite. When the sun set, the bedroom walls would glow a soft orange. All windows faced a city park that featured the old canal, and a large totem pole. It was big enough for two, and for a time, it was perfect for one. 

I paid $650 a month for this apartment. 

In the same year, I worked for a call centre where I made nearly twice the minimum wage. I had started in an entry-level position, working full time and receiving raises fairly regularly. Walking to work or taking the bus was an option, therefore I did not need a car. Grocery shopping was a bit more difficult, but it meant I purchased less, and supported smaller vendors when shopping downtown. My only real expense was my rent. 

My rent was only 33% of my gross income. 

By the time I left that employer, I was making 2.5x the minimum wage. Minimum wage did increase slightly – I believe it increased by $0.60 cents. I was earning a decent income for a position that was available to anyone with a high school diploma. Also, I had medical benefits, and paid vacation. 

The Years: 2005 – 2008

Unfortunately, and ultimately, my position was reassigned to Manila, and I was on the hunt for my “career”. After working for a couple employers, I decided that it was time to get educated for my new career, so I went back to school. 

It was a difficult two years, as my marriage ended shortly after I had started school, and I was not working during the school period, as our course was intense. Did I say intense? INTENSE.  After I graduated, I applied myself to working in the field. 

That was almost 13 years ago. 

The Year: 2019

So, I was reminiscing about lower-priced houses, and apartments of the past, and I decided to look up the rental cost for that apartment I rented. Then, I calculated my income and made the same comparison as above. 

The same apartment rents today for $1,450.00. It’s scary to think that rent has increased so significantly over the last 19 years, but it’s a fact. It’s just like food, transportation, utilities, cost of licences and everything else. 

Then I looked at my wage. I am now in a position where education is mandatory, and I am considered to be a senior staff (not based on age! based on experience). Ready for this? 

I earn $4.00 more today than I did 20 years ago. I have no medical benefits.  

That same apartment would eat up nearly TEN PERCENT MORE of my income! It would be approximately 42% of my current gross income. 

Let’s consider minimum wage as a scale: Today I make less than 2.5 times the minimum wage. It’s less than 2 times the minimum wage. In fact, I earn 1.5 times the minimum wage. 

So, the apartment now costs 223% more than it did in the year 2000. But my wage has decreased to being 1.5 times the minimum wage. My wage, with education and without benefits, has only increased by 21% in 20 years. 

How can this be real? When minimum wage was increased to a more reasonable amount (it jumped from $11 to $14 very recently), a relative few received an equal increase while still earning above minimum wage. Most of us did not get an equalizer increase. In fact, when I asked my previous employer if considerations would be made for the increase, I was informed that “no one in the company makes minimum wage, so it doesn’t affect anyone”. 

Did they not understand that the increase in minimum wage (and no increase to our wage) created a situation where costs significantly rose, and in turn, we were actually making less than we were before?

The New Norm

All of this is part and parcel of my FOMO experience, as I am not sure if I should try to purchase a house to stop the cycle of housing increases. Perhaps I should continue to rent, as it would be cheaper … or would it? I have no idea anymore. What I see is a new norm: the working poor. 

I know I live in a first world country, and I have heat, hydro, water and food. I am grateful for all that I have, and know things could be much, much worse. Yet, I still work a 40-hour work week, and when my wage does not increase to match the increases of the cost of living around me, I am losing ground. I feel like I am failing.

I must admit: I panicked. What if we have to move? What if we need to find a new place to live? How are we going to afford it? Why can we not afford a house when others around us are buying and selling? How are we going to save money, afford to have a roof over our heads and feed ourselves? What will retirement look like?  

Then I wondered where all the money has gone. If we (employees) are not receiving adequate increases, and the cost of living is demanding more money, who is the lucky winner of this windfall?

This is the new norm. We are making less money every day, and every time that someone increases the minimum wage, small business owners are shut down, and we, as the former middle class sector, make less and less. 

Yet those entry level jobs now pay $14/hour … it almost makes you wonder if it’s worth the $25k in student loans.

One day, I’d love to address employers and governments. I’d love to shout from the rooftops that we need something done to adjust the gap. It’s getting too wide of a divide. 

What happens if that divide increases? 

We are earning less, and having to spend more. This is our new reality.