Prospects for older staff improve as industry faces ‘uphill battle’ for workers

While labor issues have been more of a concern for older operators during the Covid-19 pandemic, there may be light at the end of the tunnel for some as positive results emerge.

Even though staffing is still a large part of the company’s budget, pressure on the workforce is starting to ease as the agency cuts staff costs and overtime, according to MBK Senior Living president Jeff Fisher, as communities bounce back from disruptions. caused by the pandemic.

“We’re looking at every possible option, and it’s not easy to cut these costs,” Fischer said this week during a webinar hosted by Marcus & Millichap.

Fischer said MBK added community recruiting resources and has since made modest profits by filling open positions across the company.

While there has been a steady rise in agency staff costs in the past year, San Clemente, Calif.-based CareTrust REIT senior vice president of investment Eric Gillis said agency work for the company’s operating partners peaked in the third quarter of 2022, which “helped spending even as it grew. wage”.

One of the thorns in the side of the operators was the reduction in wages on margins, and for some operators this caused serious problems. At Anthology Senior Living, payroll costs have consistently increased from 5% in 2021 to 9.5% in 2022, according to Anthology Senior Vice President of Capital Markets Joe, “in line with inflation.” Marinelli.

“This has allowed us to compete for staff in a tough job market and match rate increases with pay increases to compensate as much as possible and keep profits,” Marinelli said. “We have successes on the labor front.”

Anthology has been successful in hiring experienced senior staff at all levels of care, as well as increasing the number of young people entering the profession for the first time. The company’s confidence in the world of work could also lead Anthology to expand its market footprint, Marinelli said, noting that the company is looking to grow in regions that complement its existing portfolio and in new regions that “support demand fundamentals and have easier labor markets. ”

The U.S. Bureau of Labor Statistics predicts that between 2021 and 2031, the number of health care professions will grow by 13%, much faster than other professions during that period.

“Probably one of the most important things affecting the senior housing market is what’s happening to jobs in general,” Marcus & Millichap senior vice president of research John Chang said, adding that the country ” fully restored” the number of jobs. jobs lost during the pandemic, bringing back 23 million jobs.

According to the BLS, 4.5 million jobs were added in 2022, the second highest number of jobs added in a single year in U.S. history after 2021. But one of the biggest hurdles to future job growth is the possibility of a global recession. while Chung noted that Marcus & Millichap predicts the market will add “only 700,000” new jobs.

“We are considering a slight recession this year,” Chang said. “But, nevertheless, we are still seeing a really positive trend. There are far more jobs being created in some areas than others, and nursing homes are still… facing uphill struggles.”

Demand forecast strong

Given the high demand for older people’s lives, the webinar leaders saw even greener pastures ahead, based on the seismic demographic shifts expected in older people’s lives in the coming years.

Chang said older people’s lives were “at the forefront of the curve” as demographic shifts and the U.S. population age over the next two decades.

“With the arrival of a wave of demand, there will eventually be an imbalance between supply and demand, especially given the recent downturn in development,” Chang said.

Regarding the CareTrust REIT, Gillis said the trust is targeting a growing demand for operators with older generation experience and local market knowledge. Marinelli also talked about the 18 new Anthology Senior Living communities built over the past six years.

“We want to partner with forward-thinking operators, and we want to work with them to develop programs for the next generation,” Gillis said.

In the coming year, Fisher said, MBK will continue to modernize and refurbish communities to bring them in line with new services and amenities for residents in anticipation of the arrival of baby boomers.

“When you look beyond the horizon, there are demographic-driven opportunities in front of you,” Fisher said. “We will become stronger and the industry will not go anywhere.”

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