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A for-sale sign outside a house in Vancouver.

DARRYL DYCK/The Globe and Mail

Is Vancouver really one of the most livable cities in the world? That depends if you include a decent income in your definition of “livable.”

The economic engine of a city is key to its success, and while Vancouver is regularly touted and ranked as one of the most livable cities in the world, the truth is that it has a long way to go economically. The affordability crisis isn’t just about a lack of affordable homes; it’s also about a lack of decent paying jobs. While certain industries in Vancouver are seeing growth, many residents are struggling from paycheque to paycheque.

That’s part of the reason that Vancouver ranked way down the list, at No. 41 out of 100, on the Resonance Consultancy’s annual list of Best Cities, one of the most comprehensive rankings globally because its criteria include not just standard livability statistics such as crime and education, but also economic indicators. Vancouver gets its middling rank because of its high cost of entry.

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“Always on the lookout for foreign investment, various incarnations of provincial and federal governments made citizenship available to foreigners with sufficient capital, with little oversight on taxing outside funds. As such Vancouver’s housing prices are now mostly hitched to a global context, largely decoupled from local wages,” says the report released earlier this month.

The city scored higher marks for its diversity of people and for promotion, at which it excels.

“It’s quite valid to look at that livability, but the reality we found in our research is that livability does not lead to prosperity,” says Chris Fair, president and chief executive officer. “Vancouver needs to become a great city to do business in, and to make sure there is a wide variety of opportunity here from an economic perspective, and that money doesn’t just come to live here, but it’s the place where money is made.

“We don’t spend enough time looking at Vancouver and why household incomes are so much lower than other comparable cities,” he adds. “I don’t think, realistically, housing prices are going to decline significantly. So the question becomes, how do we attract better paying employment … and how do we create affordable housing or more attainable housing, to make sure this can be a place for all kinds of people to live, and not just people working in the tech sector?”

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It’s the fifth year that Resonance has released its rankings and for the third year running London took top spot, followed by New York, Paris, Tokyo and Moscow. Toronto took 17th spot, Montreal is 45th, Calgary is 48th, Ottawa is 77th and Edmonton is 83rd on the list. Resonance judges each city with a population of more than one million by how it’s viewed by locals, visitors and businesses.

“I think certainly Vancouver is a city whose image and perception globally is higher than what the actual product delivers,” Mr. Fair says. “Vancouver under performs economically for a city of its size. But, that is also rapidly changing.”

Mr. Fair cites the significant increase in new office space and the arrival of major companies such as Amazon to Vancouver, which is bringing an estimated 5,000 jobs to the city, if not more. According to a Globe and Mail story from last year, the e-commerce company, based in Seattle, has a deal for 1.1 million square feet of office space in an office block downtown, leasing two new towers under development and making it the city’s biggest corporate tenant.

“I expect we’ll see that in rankings over the next four or five years, Vancouver will move up in that [prosperity] category and become not just a great lifestyle city, but a great city to do business in.”

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Mr. Fair is a futurist who helps governments and developers gauge future growth and infrastructure and he studies cities in terms of real estate, economic development and tourism. About 80 per cent of his work is in the United States, such as working with the City of Los Angeles on its future needs when visitors to the 2028 Summer Olympics arrive. For the past decade, he’s helped revitalize Calgary’s downtown. He’s also worked globally, consulting for Copenhagen, Barcelona and Edinburgh.

As business picks up in the region, Vancouver’s high housing costs and traffic congestion won’t be a turnoff for those migrating to the city for jobs. Mr. Fair has found that people are quite willing to put up with high prices and some traffic to live in big, vibrant cities. San Francisco, Seattle, New York, Toronto, Sydney, Hong Kong and London are some of the most expensive and congested cities, and yet they are thriving. Mr. Fair has discovered that cities of all sizes see complaints about traffic, even his clients in Tulsa, Okla. And people who migrate to a city for a job generally don’t care about the high cost of housing. Society adapts to the housing situation, he says.

“Housing affordability is a critical issue that all cities struggle with, but businesses and jobs are largely going to places which have poor housing affordability,” Mr. Fair says. “If cheap housing and no commute really were the most important things, we would all be living in small towns, and that’s not the case. In reality, we are making trade offs where there is more opportunity in places where housing is expensive and there is more culture.

“In an ideal world, a city like London would have no traffic and cheap housing, but that is never going to happen.”

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However, there are increasing options for those that do want out of the concrete jungle. The growth of second-tier cities that operate just outside the hub of “superstar cities” is going to escalate in the next decade, he forecasts. In the case of Vancouver, second-tier cities already well underway include Victoria and Kelowna, where there are already tech job markets. Those cities are poised to grow even more, because of short commutes to Vancouver.

“They are also exploding and they are offering the goldilocks scenario of not too hot, not too cold, but just right, where you can have economic opportunities but more affordable housing, shorter commute time to work and hop on a plane and be in Vancouver in 45 minutes if you want to access the city for the weekend. We see that happening around New York, Chicago, Dallas, in these large cities where they are not going to solve the housing affordable problem.”

As a way of life, cities are booming and Canada is one of the most urbanized countries on earth, with 80 per cent of the population living in urban areas, Mr. Fair says. The primary factor for Canadian growth is international immigration and a population that is well educated and highly skilled. Toronto is the fastest growing city in North America because of immigration, according to a 2019 report from Ryerson’s Centre for Urban Research and Land Development, based on Statistics Canada data.

Immigration and diversity of people is not a universal feature of a city, and Toronto and Vancouver are outliers because of their diversity, Mr. Fair says. Vancouver’s multicultural landscape has helped drive the jobs market and he says we can thank U.S. President Donald Trump for that. As a result of our pro-immigration policies, the film industry, tech, engineering and professional services jobs are growing in Vancouver. Vancouver ranked sixth on the list in terms of diversity of people.

"I think we think that’s normal, but it’s actually quite exceptional. There aren’t that many U.S. cities that perform well in the people category – even Seattle is 31st. They just don’t have the same level of immigration and diversity that Canadian cities do. And when you look at Trump’s immigration policy – and this is anecdotal, an opinion – but one of the best things that ever happened to Vancouver’s economy was Trump getting elected, because [tech companies] can put employees here, just two hours from their headquarters in Seattle and they can get visas for international talent and bring them into Vancouver.”

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Jill Tipping, president and chief executive officer of tech industry association BC Tech, agrees that an open-door policy has played a key role in attracting skilled workers to Vancouver, which has helped grow the tech sector by about six per cent a year for five years. The average salary for a tech worker has climbed to $83,200, far higher than the average income earner. Tech workers want to be in creative, entrepreneurial environments. She says some of the most interesting tech work in the world is happening in Vancouver.

“Typically, a tech worker earns 40 to 50 per cent more than the median worker, so they are well paying jobs,” says Ms. Tipping. “For a tech company whether it’s Amazon or a local startup, the most important thing is getting the highest quality talent you can get, so you have to pay them fairly or they leave.”

She also concurs that the high cost of housing does not turn workers away, although the shortage of rental housing in Vancouver is of major concern.

“In many ways the struggle to get affordable rental housing for tech workers is affordability issue No. 1 for the tech sector in Vancouver.

“But the thing that’s interesting is if you look at the most successful tech eco systems around the world whether that’s San Francisco, Amsterdam, Berlin, Shanghai, they are all high cost of living cities, so it goes with the territory. The tech industry focuses in places where there are high clusters of highly intelligent, demanding-of-lifestyle people and those places tend to be expensive, because they are very attractive. It isn’t a barrier to growing a successful tech sector because we see lots of tech sectors all over the world in the most expensive places in the world.”

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But Vancouver needs to step it up. Vancouver’s tech sector, while growing, isn’t keeping pace with comparable cities, she adds.

“It is slower than the growth of tech sectors in other comparable cities … and the reason is, if you ask any tech company in Vancouver or across the province, it’s the availability of talent. It’s at every level.”

As for Mr. Fair’s outlook on Vancouver and its future, he says the city should be careful what it wishes for. As it grows into an economically booming city, government has to plan accordingly for that growth.

“Vancouver has done a fantastic job of planning and positioning and promoting itself to the world, as well, if not better, than any city on the planet over the last 30 years and now we have to live up to it.”

He says quality of life and livability could decline, as well as the socioeconomic diversity of the people who live here. Low to mid income groups have already been hit hard by soaring housing costs, a crisis that has transformed the city.

“Vancouver is now on the map. … The perception of this city internationally is as good as it can get, so mission accomplished there. Now the hard part is, how do we live up to it, to make sure all the things that make Vancouver great aren’t negatively impacted by that growth?”