How Senior Living Providers are Taking On Wage Challenges

Some of the toughest challenges hitting the senior housing industry this year relate to staffing. And industry leaders are working on navigating different solutions to deal with all of the changes while still keeping their businesses afloat.

A few of the largest challenges facing those who run senior housing communities include strategizing around minimum wage hikes and overtime rule changes.

The new overtime rule, which was finalized in spring and set to take effect Dec. 1, is being questioned and opposed by many in the industry as well as leaders in government. Earlier this week, 21 states’ attorneys general, the U.S. Chamber of Commerce and a number of national and Texas business groups filed lawsuits to challenge the new rule.

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All companies can’t bank on the lawsuit changing the rule again, so industry leaders are seeking other solutions to navigate the overtime rule as well as other wage challenges. Though, one solution does not fit for all companies. The size of company as well as location of communities can have a huge impact, especially since each state can have different minimum wage rules.

Handling the minimum wage

In the face of minimum wage increases, leaders are taking steps to increase wages to avoid hurting their business. A $15 minimum wage is becoming more commonplace. This past spring California and New York approved the $15 per hour minimum wage.

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Senior care provider, Juniper Communities, based in Bloomfield, N.J. has a plan to get to $15 per hour by 2020. Juniper owns and operates a total of 16 communities, which offer a combination of assisted living, skilled nursing, short term rehabilitation and memory care services in New Jersey, Florida, Colorado and Pennsylvania.

“We’re all in it together and we’ve always been asking about living wages,” Lynne Katzmann, president of Juniper, said Wednesday at the Senior Care Human Resources Executive Summit (SHINE) 2016 in Chicago. “But minimum wage is not the same thing as livable wage. We’ve done a lot of work to try to figure out what a ‘living wage’ really is.”

Juniper started the process last year and found the extra funds after changing some rates and moving around expense items, Katzmann explained.

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“You have to be really creative to find the extra money in money you already have,” she said. “We are already at $14 in many buildings.”

But in Seattle, where Era Living is based, wage increases have become a little less in control of the company, explained Matthew Bromen, human resources director. 

Era Living offers eight continuing care retirement communities around the greater Seattle area that feature assisted living, independent living, memory care and nursing care.

“In less than two years, Seattle’s minimum wage has gone up to $13 per hour and is going up to $15 in 2017,” he said. “But Seattle has a booming economy on its side with less than 4% unemployment.”

The increases in minimum wage have led to 60% of Era’s expenses dedicated to employee wages. But that money still needs to come from somewhere. Both Juniper and Era made mention of looking at how to reorganize and structure internal funds to be able to sustain higher wages.

“We’re not doing it because it’s the right thing to do,” said Katzmann. “Many of our employees work two or three jobs to make ends meet. How are they supposed to care for other people if they don’t even have time to care for themselves?”

Beyond increased wages, Juniper is also taking steps to help staff with self-care. They have implemented an english as a second language (ESL) program and are in the planning stages of a meal service for staff members to help ease the burden of having to cook dinner after a long day of work.

For Denise Rabidoux, president and CEO of EHM Senior Solutions, formerly, Evangelical Homes of Michigan, wage pressures are even more tricky due to the number of executive level employees. EHM runs eight communities across Michigan that offer assisted living, independent living and memory care.

“Our older employees have 48 years at the company, which is part of our wage issue,” she said. “We are trying to take a look at what wages may look like with younger talent if some of the older employees move on.”

Overtime rule challenges

Changes continue to take place with the recent implementation of new overtime rules. This past spring, the U.S. Department of Labor increased the number of salaried workers eligible for overtime. This has led to fears that labor costs could soar in senior housing.

At Juniper, all employees are now required to keep track of their time regardless of whether they are being affected by the overtime rules or not. But of the company’s 1,300 employees, only 10% are affected by the new overtime rules, Katzmann explains.

In Era Living communities, all employees, regardless of seniority level, have been clocking in and tracking their hours from the beginning. Era also has a very limited number of workers who are impacted by the new rules.

“Out of our employees, 8% of our staff are exempt and of the 79 who are exempt, there are only five who are impacted,” Bromen said.

Even if the impact of these overtime rules is not tremendous, providers are not resting easy given the shifting political climate.

The task of dealing with the number of challenges is an ongoing process that will be sure to shift even more once a new president is elected, Katzmann explained.

Written by Alana Stramowski

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