Senior Housing and the Labor Crunch: How to Find Workers and Compete on Labor Costs

Senior housing facilities face an acute labor shortage that’s driving up labor costs. Find out how they are trying to tackle this issue.

Senior housing facilities—such as skilled nursing homes, assisted living facilities and continuing-care retirement communities—face an acute labor shortage that’s driving up labor costs. For skilled workers such as nurses, these facilities compete with hospitals, which offer increasingly attractive packages with perks beyond top pay. For care aides, and maintenance and food staff, they’re vying with various businesses—including fast food chains like Burger King which, one senior housing executive recently lamented, pays workers a dollar more per hour than they can. Other facilities compete with retail stores and even car washes for good workers.

“We pay highest wages in our company for nurses and caregivers (in Bozeman). More so than Chicago… Dallas… California. We’re competing with a car wash. We’re competing with fast food in that town,” Dan Williams, COO of Koelsch Senior Living Communities, told Senior Housing News recently. “Those kinds of pressures will force your hand into doing things that 10 years ago we didn’t have to.”

Understanding what drives this trend, which has reached every region of the country including the Midwest, can help senior housing operators develop solutions for finding and holding onto qualified workers at every level.

Labor Shortage Hits this Top Employer Hard

The senior housing sector has long been one of the strongest job creators in the United States. Argentum, one of the industry’s leading advocacy groups, notes that from 1990 to 2016, the sector added jobs at a rate of 3.9% annually. Total private sector employment rose by just 1.1% for the same period. In the East North-Central region, Argentum found the number of senior living jobs rose 46% during the last decade. Wisconsin led those gains with 59% job growth, followed by Illinois at 55% and Indiana at 51%. Argentum expects job growth to remain at 1.5%, largely due to the tight labor market.

So, why is the market so tight? A set of converging factors deserves credit. First, companies in nearly every sector are scrambling to find workers. Legal changes affecting minimum wage and overtime pay, tightened immigration restrictions, and a “workers’ market,” where qualified individuals have their choice of jobs, all contribute.

As a result, to attract good workers, senior housing facilities are paying higher salaries and hourly wages, including overtime, which squeezes their already thin margins. Analysis of data from the U.S. Bureau of Labor Statistics shows that employees at assisted living communities have seen the strongest wage increases, with hourly earnings growing 3.9% in 2017. In comparison, average hourly wages of all private sector workers rose 2.7%.

Senior housing facilities are increasing the hours that their employees work to compensate for the labor shortage. Bureau of Labor Statistics data indicates that the average hours worked by senior living employees increased 4% annually in 2017, which followed a 2.8% increase in hours worked in 2016.

With rising costs have come rising fees for people who want to live in senior housing. Genworth Financial reveals in its 2018 Cost of Care Survey that from 2004 to 2018, the cost for a private room in a nursing home rose an average 3.16% annually. The cost for one in an assisted living facility rose 3.81% each year. Projecting 10 years out, Genworth estimates that in a market such as Chicago, annual costs for assisted living will rise from an average $57,531 in 2018 to $77,317 by 2028. Likewise, the cost of a private room in a Chicago nursing home will rise from $87,965 to $118,218.

Such formidable fees could reduce the pool of customers who can afford senior housing and lead to a downward occupancy cycle as facilities seek to fill rooms and beds.

Not Enough Nurses

The current nursing shortage adds to the dilemma. Experienced nurses are retiring and there aren’t enough newly trained nurses to fill their jobs. The American Nurses Association indicates that the country will require more than 1 million new registered nurses by 2022 to meet the nation’s healthcare needs, especially as the nation’s population ages. Hospitals and other medical facilities in the Chicago area and nationwide feel the effects of this shortage keenly. They are offering nurses five-figure signing bonuses, free housing, and college tuition for employees and their children.

For senior housing facilities, the consequences of the nursing shortage go beyond labor costs and longer hours for current workers. The risks are greater, especially for nursing homes. In Illinois, staffing levels for nurses and aides rank among the lowest in the nation. For Chicago and the six surrounding counties, 78% of these facilities’ staffs are below the national average, according to Medicare payroll data analyzed by Kaiser Health News. At the same time, the rate of sepsis in Illinois nursing homes is high, with 6,000 residents now admitted to hospitals with the deadly infection each year. Many believe the situation is due in part to too few nurses overseeing patients. Another consequence: Medicare recently lowered its star ratings due to low staffing levels in one out of 11 of the country’s nursing homes (nearly 1,400 total). In Illinois, six nursing homes reported just one nurse for every 100 or more residents.

What Can Senior Housing Managers Do?

When it comes to nurses, the country’s nursing schools are simply unable to graduate enough qualified new nurses to meet demand. Senior housing providers can attract candidates from the current stream of nurses by offering perks including flexible schedules, tuition reimbursement, and career coaching, in order to compete with hospitals.

Nurses want to work where they will best use and hone their skills, and hospital settings provide this. Wisconsin-based Heritage Senior Living offers its nurses more clinical complexity in part by conducting daily flash trainings to sharpen nurses’ and aides’ skills.

In general, Heritage offers a number of attractive benefits to woo candidates for various positions. They mirror the benefits offered by top corporations across industries:

• Medical, dental and vision insurance
• 401(k) plans
• Competitive pay
• Paid time off
• Life insurance or voluntary life insurance
• Long-term disability and voluntary short-term disability
• Perfect attendance bonus
• Mentoring program for new hires
• Ongoing online and in-person trainings

According to Caremerge, which works with major senior living communities across the country, just 3.44% of senior housing communities offer mentoring programs. That one benefit could attract candidates and help prevent costly turnover.

Additional benefits that senior housing facilities can offer include:

• Retention bonuses. Just 22.71% of communities offer cash payments for employees who stay a set period of time. The average required tenure is three years, and the average bonus just over $600.
• Recruitment bonuses. They are most effective when both the new hire and recruiter are rewarded and when the bonus is paid in full after the new employee has worked a set period of time. Bonuses average $572.
• Tuition reimbursement. Just 12.87% of assisted living communities offer this perk.

Facilities that provide staff with cutting-edge technology can make their work lives easier and more satisfying. Adopting a user-friendly system for maintaining electronic health records can decrease the time it takes to update individual support plans and periodic resident assessments.

Employee satisfaction surveys can pinpoint where workers are happy and where they see a need for workplace improvement. Status interviews every one to three months can help keep employees content while clarifying job requirements and ways they want to grow.

Establish mechanisms such as recognition bulletin boards, newsletter articles, announcements at staff meetings, and award programs that laud employees’ accomplishments to their colleagues and supervisors, as well as before residents and their families. These steps can build powerful, positive feelings and a sense of belonging for staffers who work hard at what can be emotionally difficult tasks.

Learn from your best staff members. Ask them what motivates them and incorporate those points into staff-retention programs and training. Finally, conduct exit interviews with employees who are leaving to understand their reasons. Was it their benefits, wages, hours, responsibilities or something else that has caused their leaving?

Be a Bright Spot

It can help senior housing facilities to see themselves as potential new hires and current employees see them. If they take steps to stand out as an excellent place to work—one that makes employees a priority as much as residents—then offsetting the labor shortage and its related costs can come more easily.