1. Small businesses and housing costs
There’s been a torrent of articles recently about the struggles small businesses are facing, including two articles published right here in the Halifax Examiner.
This morning, Jennifer Henderson reports on a recent virtual discussion hosted by the Truro and Colchester Chamber of Commerce, in which small business owners and local agriculture interests voiced their frustrations, which can at times feel a bit unfocused.
“Everyone is scrambling to fill orders,” said Michel Raymond, executive director for the Canadian Manufacturers and Exporters, Nova Scotia division. “Fuel costs aren’t driving that. Most companies can’t keep up with demand because they can’t find the people to work.” But then Raymond immediately shifted her attention: “We know the fuel issue is going to continue and that will impact revenues and make it hard to reinvest. The elephant in the room right now is the extra cost in terms of Nova Scotia Power buying fuel.”
Well, which is it? Is it labour or is it fuel? It is, of course both. I’m a small business owner, and I understand that there are any number of concerns constantly knocking at the door. It can be overwhelming, making it hard to focus on any one.
Each business is distinct, with its own mix of revenues, costs, and customers, but Jessika Hepburn, who, Suzanne Rent reports, is closing The Biscuit Eater Café & Books in Mahone Bay, gets at the most pressing issue for small businesses:
Like other restaurants, Hepburn and Graham couldn’t find enough staff. Last year, the couple raised their wages to $21/hour and offered access to apartments upstairs in the building that houses the café. Still, they struggled to find enough workers. Hepburn said no one who lived locally applied for the jobs, and any executive chefs from elsewhere were asking for salaries they couldn’t afford.
The cost of housing in the area, like elsewhere in the province, has increased considerably.
“We don’t recognize 90% of the people left on the South Shore,” she said. “One of the ideas behind buying the café in 2016 was to resist that idea of gentrification of our communities and turning them into towns that only operate seasonally.”
“It’s not that no one wants to work. It’s that there’s nowhere for them to live, there’s no health care, there’s no daycare.”
Let’s talk about the cost of housing.
On Friday, I got a press release from rentals.ca, which relates rental costs as published on its own website. While there are certainly other platforms for listing rentals, I think the rents and percentage changes rentals.ca publishes are consistent which those I’ve seen elsewhere, or at the very least aren’t wildly different. From the release:
Average rent for all Canadian property types listed on Rentals.ca increased 3.7 per cent from April to May, the largest monthly increase since May 2019, according to the Rentals.ca and Bullpen Research & Consulting latest National Rent Report.
Average rent for all Canadian rentals rose 10.5 per cent year over year in May.
Halifax finished 17th on the list of 35 cities for average monthly rent in May for a one-bedroom at $1,669 and 18th for average monthly rent for a two-bedroom at $2,037.
Year over year, average monthly rent in May for a one-bedroom in Halifax was up 13.4 per cent and up 9.7 per cent for a two-bedroom. Month over month, average rent in Halifax was up 3 per cent for a one-bedroom and up 3.8 per cent for a two-bedroom.
Hepburn, at The Biscuit Eater, focuses on the housing costs for potential employees, which is certainly a big factor for any labour-intensive business. But what about housing costs for potential customers?
If someone’s rent increased at 13.4% over the last year, but their income held flat or rose by just 2 or 3%, then there’s a big loss in discretionary spending — call it 10% of their total income shifted away from other expenditures and towards rent, but discretionary spending is already a tiny portion of people’s total spending, so in real terms it can be a 50% or more cut in discretionary spending. Multiply that by everyone in the city, and that’s a huge loss of potential sales to small businesses, revenue being lost by coffee shops, bars, restaurants, and other small retailers.
Every time rent increases more than pay, it’s a direct hit to small businesses.
It’s great to see Hepburn directly name the problem. And certainly other small business owners recognize the problem, and some speak out directly about it. But in general, small business owners are mostly silent to the issue.
What explains the general inability of small business owners to speak to the main limiting factor for their customer base, the increase in rental costs? For sure, in the rush of business, it’s hard to get beyond immediate concerns — payroll has to be paid today — and where and how customers spend their money is somewhat abstract, but I think for many business owners, potential class identification takes precedence over actual lost revenues.
Before the pandemic, I was one day sitting in a bar, talking with the bar owner. This was in the midst of Stephen McNeil’s war with the teachers union, and the bar owner was going off on an anti-union rant. I happened to know some of the other customers who were just then in the bar, and I pointed them out to the owner. “See those people over there? They’re teachers. That table over there? They work for the city. Why would you want the people who spend money in your bar to have less money to spend here?”
Sure, that’s anecdotal, so let’s look at what the organizations that purportedly represent small businesses are saying.
Consider the Canadian Federation of Independent Businesses (CFIB), whose primarily goal seems to be to oppose increases to the minimum wage, focusing on the employee cost side of the ledger while completely ignoring the customer spending side of it.
On its website, the CFIB has an “advocacy” page, which lists three main areas of concern: “lower taxes,” “better [i.e. fewer] regulations,” and “stronger business environment.” The CFIB asks visitors to sign petitions; for Nova Scotians, there are two — a pandemic relief petition and a “Labour shortages stifling Canadian business” petition.
The latter reads:
Despite all our efforts, businesses like mine are struggling to find employees. It’s killing our ability to grow, serve customers, meet deadlines, and generate sales. It’s a major roadblock to our recovery!
I need your governments to implement these measures to help tackle the labour shortage: (check all that apply)
• Introduce a payroll tax holiday for all new hires (e.g. EI, CPP/QPP, WCB premiums, Employer Health Tax, etc.)
• Introduce a training tax credit that recognizes on-the-job training
• Improve the education system to better prepare students for the job market
• Improve and streamline the temporary foreign worker and immigration processes to get more workers that small businesses need into Canada faster
• Create a tax incentive for hiring underrepresented workers (such as seniors, youth, etc.)
Not a word about housing costs for either employees or customers.
Now the Halifax Chamber of Commerce, which likewise has on “advocacy” page on its website. The Chamber asks its members to join various tasks forces, none related to housing.
The Chamber does address housing issues in some of its documents, but entirely from the perspective of its members in the building industry: reduce regulations, etc. It notably does not call for the creation of off-market housing, which of course would compete with its builder members’ interests.
And that’s what’s required: off-market housing. Housing inflation is a global issue, so reducing regulations on the housing market, or even eliminating them completely, will have negligible effect on local housing costs. But building lots and lots of non-market housing — think the Victory Houses built during and after WW2 and the Housing Cooperatives organized up to the 1970s.
For their own reasons, business owners, in particular, should be demanding that governments massively fund off-market housing.
Stephen Kimber looks at the province’s decision to hide and then release Yarmouth ferry passenger numbers, the lack of affordable housing among recently announced housing initiatives, and the pay of Nova Scotia power execs.
Click here to read “Random thoughts on a random day in a random June.”
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I’m at the Mass Casualty Commission proceedings in Truro, so this is an abbreviated Morning File.
Board of Police Commissioners (Monday, 12:30pm) — virtual meeting
Advisory Committee on Accessibility in HRM (Monday, 4pm) — virtual meeting
North West Community Council (Monday, 6pm) — virtual meeting
Halifax and West Community Council (Tuesday, 6pm) — virtual meeting
Veterans Affairs (Tuesday, 2pm, Province House) — Seamless Canada: Overview of Organization, with Col. Stéphane Boucher; also Agenda Setting
Art Gallery Exhibition Tour with Frances Dorsey (Tuesday, 11am, Dalhousie Arts Centre) — from the listing:
Join Plant Kingdom curator Frances Dorsey for a tour of the exhibition at Dalhousie Art Gallery, followed by a walk through the new corresponding pollinator garden across campus. Dorsey will discuss some of the ideas that prompted the exhibition and the works included. The tour will highlight the ways that the different artists approached their artworks and the ways they interact with the plant world through both theme and material. This tour will be partially outside so please dress accordingly for the weather. No registration is necessary.
Ecosystem Triangle Planting (Tuesday, 11am, behind Shirreff Hall) — Volunteers will be working with Dalhousie MREM graduate, Samantha Ceci, and Facilities Management to install a new Ecosystem Triangle in a naturalized area behind Shirreff Hall.
PhD thesis defence: Interdisciplinary PhD program (Tuesday, 1pm, online) — Matthew Perkins-McVey will defend “Thinking with the Body: How Morphine, Alcohol, and Other Intoxicants Intersected Bodies and Minds in the Emergence of the Biological Subject.”
Jordan River Anderson, the Messenger (Tuesday, 1pm, Sobey 255) — free film screening & discussion of Alanis Obomsawin’s 2019 film
In the harbour
06:00: Tropic Hope, container ship, arrives at Pier 42 from Philipsburg, Sint Maarten
10:00: NYK Romulus, container ship, arrives at Fairview Cove from Caucedo, Dominican Republic
10:30: Grande California, arrives at Autoport from Valencia, Spain
16:00: Asterix, replenishment vessel, sails from Dockyard for sea
16:00: Contship Leo, container ship, arrives at Berth TBD from New York
16:30: East Coast, oil tanker, sails from Irving Oil for sea
17:00: Lagrafoss, container ship, arrives at Pier 42 from Reykjavik, Iceland
18:00: Tropic Hope sails for sea
21:30: Grande California sails for sea
22:00: Lagrafoss sails for Portland
11:00: Algoma Mariner, bulker, transits through the causeway to Aulds Cove quarry from Contrecœur, Quebec
13:00: Nobleway, oil tanker, arrives at Point Tupper from FPSO John Evans Atta Mills, Ghana
You can follow me on Twitter where I am live-tweeting from the Mass Casualty Commission.
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I’m assuming that Rentals.ca are not including their short-term summer rental rates in that overall uptick in rent prices. Should be apples-to-apples comparison.
This captures it nicely: “Why would you want the people who spend money in your bar to have less money to spend here?” Too many businesses don’t understand that their employees are other businesses’ customers, and vice versa (or they know perfectly well, but plan to profit in the short term).
We haven’t seen anything yet with rents, although I’ll note that Rentals.ca doesn’t index a lot of cheaper units, and there are some ludicrously expensive rentals on there pulling the average up.
Really great article on housing costs. Small businesses and literally everyone else should be advocating for off-market housing. It begs the question about who benefits from the lack of it.
Landlords and Developers. The latter have a very outsized influence on municipal and provincial politics. And a lot of people in the business and political communities have second income streams as landlords. Clear conflicts of interest at all levels.