British Columbia·Analysis

Amazon's creation of 3,000 well-paid jobs could simply displace 3,000 other people

The debate over housing in Vancouver is so heated that what would have been considered a great news story years ago is now another worrying sign for affordability, according to some commenting on Amazon's decision to expand in the city.

Thousands of extra workers will need homes in Vancouver, a city already stretched for affordable units

Amazon says it will add another 3,000 jobs in British Columbia by 2022, centred around a new base of operations at the old Canada Post site in Downtown Vancouver. (Paul Sakuma/Associated Press)

Three years ago, the announcement that one of the world's biggest companies would be bringing 3,000 high-paying jobs to Vancouver would likely have drawn applause from virtually all corners.

But when the benchmark price of a home increases by 67 per cent in those three years, as is the case in B.C.'s Lower Mainland, everything gets viewed through the lens of affordability.

Which is why, in light of Amazon's decision to expand its Vancouver operations, people consider the ramifications of thousands of extra workers needing homes in a city already stretched for affordable units.

"It's a supply issue, and it's going to exacerbate the housing crisis," said Joe Bowser, a software developer with Adobe. "You have more people, making more money, who are going to displace people making less money," 

Bowser has worked in the region for a decade but lives in Burnaby because he can't afford property in Vancouver. He acknowledges Amazon's decision is good for people in his industry, but worries what the net effect will be in a region where vacancy rates are so low.

"Interns [at Amazon] make 75 or 80,000 a year, still in school making this money, and they're going to displace people [from the rental market] making 40 to 50,000 ... they're going to be paying the rent that went up that you're no longer able to afford," he said. 

"If you're not keeping up with these wages, you're not going to be able to afford Metro Vancouver anymore."

Trickle-up effect on wages

How much Amazon employees in Vancouver will make is a matter of conjecture: while the company discloses the median salary of workers ($28,446 US in 2017), the vast majority are warehouse workers, making it difficult to get a precise figure for white-collar workers. 

But conventional wisdom, gleaned from media reports and online wage-comparison sites, is that the median salary will be somewhere around $100,000 US. And considering the average wage for a software engineer in Vancouver was approximately $60,000 US in 2017, that will create upward pressure on wages in the city's tech sector.  

Part of Vancouver's presentation to Amazon during its failed pitch for the corporation's second headquarters was data showing how low tech salaries were in the city compared with other regions. (City of Vancouver)

"For people who are already in Vancouver, most understand that the salaries are low, especially given the housing market," said Allen Pike, CEO of Steamclock Software, a Gastown-based app design and development studio with 11 employees. 

He said Amazon's increased presence will not only increase the average salary, but also act as an incubator for the city's tech scene.

But Pike said who else it will help is an open question.

"Given the housing bubble we have in Vancouver, salaries overall need to rise in order for people to live here. But obviously, if only some people's salaries rise, that can potentially increase the cost for people who don't work for Amazon."

'Affordability has 2 sides'

Absent the real estate bubble bursting or tens of thousands of social housing units coming out of thin air, it seems like an unsolvable paradox: for people to live in Vancouver at current housing prices, the city needs more jobs at higher salaries.

But if those jobs create more incentives for renovations and higher-end housing developments, then it increases the exodus of working-class people from the city.

"It's going to present a lot of opportunity for more people to afford housing," said Sean Elbe, the manager for the technology sector of the Vancouver Economic Commission, a city-run organization, during an interview with Gloria Macarenko, the host of CBC's On The Coast. "Affordability has two sides. It's our ability to pay and also the cost of housing," 

He used the example of a "good friend" of his in Vancouver going back to university for a computer science degree. Amazon coming, Elbe said, was an opportunity for him to get a higher-paying job than he could before.

What percentage of these new jobs, Macarenko wanted to know, would go to people already in Vancouver and how many would go to people who don't live here? 

"That's a really good question. I don't have that data for you," said Elbe. "However, our understanding of what we've seen locally, that even amongst ...."

The telephone line went dead and the radio interview was suddenly over. Just one more query to add to the growing list of unanswered questions about Vancouver's housing market.

A sketch shows what Amazon's new Vancouver office, located on top of the Canada Post building at Hamilton and Georgia, could look like. (Amazon)

If you are interested in housing affordability, check out CBC's new podcast, SOLD! Host Stephen Quinn explores how foreign investment in real estate divides community, class and culture. Find it at CBC Podcasts or Apple Podcasts.

About the Author

Justin McElroy

@j_mcelroy

Justin is the Municipal Affairs Reporter for CBC Vancouver, covering local political stories throughout British Columbia.

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