The U.S. economy is in the grip of a labor crunch, with headlines blaring about worker shortages across industries from trucking to hotels to banking. The senior living industry has not been spared from pandemic-related workforce challenges — but the current difficulties might only be worsening a system that was already under immense pressure before Covid-19.
Multiple senior living executives have told Senior Housing News that enhanced unemployment benefits enacted during the pandemic are a major reason why staffing challenges have intensified in 2021, and that conditions will improve once those benefits dissipate. But some senior living employees believe the industry has more systemic issues that stand in the way of hiring, such as stagnant wages, burnout, lack of motivation, and little recognition of the important role they play on the health care continuum.
This is not just happening in the senior living industry. Retail workers, for example, are quitting their jobs in droves in search of jobs that are not as stressful, more in line with their passions or are just something new. In some cases, the pandemic has shifted worker expectations about what a job should — and shouldn’t — be.
These conditions may only exacerbate the senior living industry’s staffing challenges this year and beyond, as providers will have to bulk up their workforces to meet the rebound in demand and occupancy, while meeting the expectations of new hires in the process.
To that end, many operators have explored offering higher wages to better compete when hiring. But doing so is expensive, and even before the pandemic, wages, benefits and other labor-related costs were easily the biggest operating expense, accounting for as much as 60% of the standard operating budget.
Wherever the answer lies, navigating a hiring crisis at the same time as a pandemic will not be easy, given all of the industry’s other headwinds, according to Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care (NIC.)
“There are other pressures on operators right now,” Mace told SHN. “You could absorb higher wages if you had full occupancy, so it’s going to put a squeeze on NOI.”
State of staffing
It’s no secret that the pandemic has led to disruptions across the U.S. labor market, but the health care sector in particular was hit hard. Three in 10 health care workers have considered leaving the field, and 6 in 10 report that they are burned out due to the pandemic, according to a recent Washington Post/Kaiser Family Foundation poll.
Many nursing homes and assisted living communities are still struggling to find enough caregivers as they compete with not only their peers, but also other industries such as retail and hospitality.
A recent survey from the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) sheds light on the scope of the issue. According to the survey, 81% of assisted living providers reported facing recent staff shortages this year.
New NIC data tells a similar story. A recent executive insights survey showed that many providers are still experiencing staff shortages this year, with 64% of the responding senior living companies reporting staffing shortages in more than half of their communities.
Operators also said the single-biggest challenge they are facing this year is attracting community/caregiving staff (45%), followed by low occupancy rates (31%), and staff turnover (14%).
“The single-biggest challenge that is being reported is attracting community and caregiving staff,” NIC Senior Principal Lana Peck told SHN.
As for the reason why staff are hard to hire in 2021, a SHN Pulse survey of senior living leaders in May found that the majority of respondents (71.43%) put the blame on unemployment benefits and pandemic assistance. The survey was not scientific and only captured a small subset of senior living providers, with 15 respondents. However, they represented a range of provider types and sizes, with five responses from operators that have 51 or more buildings. And, the survey results are in line with what senior living executives have told SHN in recent months as well.
In order to attract new senior living workers, providers reported using a variety of tactics, including raising wage rates (67%) and offering more flexible schedules (47%).
American House Senior Living Communities recently participated in a job fair with 300 attendees that resulted in no hires — and CEO Dale Watchowski told SHN that unemployment benefits were the major reason why.
“What we heard at the end of the day was, ‘I can get paid more by staying home.’” Watchowski said. “And believe me, our minimum wage is well beyond what’s being contemplated in various markets.”
Rick Matros, CEO of Sabra Health Care REIT (Nasdaq: SBRA), said that even positions that are usually easier to staff — such as dietary, laundry and housekeeping — are hard to fill at the moment.
“The impediment that we’re seeing with our operators is I think the same thing that we are hearing about every industry,” he said during a recent SHN+ TALKS. “You’ve got 9.7 million jobs out there that people just aren’t even applying to because unemployment benefits were extended.”
MedBest, an executive search firm that operates exclusively in the senior living industry, has also heard from its clients in recent months that unemployment benefits are making hiring harder. Although MedBest doesn’t recruit line staff, Workforce Architect Katie Piperata often hears from the companies she works with that enhanced unemployment benefits have negatively impacted their ability to hire housekeepers, dietary aides and entry-level CNAs.
Wage competition from other senior living providers is also exacerbating hiring challenges in 2021. So, too, is competition for workers from other industries, such as hospitality or retail.
“You’re not only having that problem on the nursing side, but you’re having that problem on the housekeeping and dietary side, and in getting staff due to competing with salaries and unemployment benefits,” Piperata told SHN.
NIC’s Mace has heard a few different schools of thought that might explain the senior living staffing crisis in 2021. They include enhanced unemployment benefits, workers staying home to watch their children, workers who have simply retired, and workers who are still afraid of going back to work due to the Covid-19 pandemic.
“And there’s probably truth in all of that,” Mace said.
Whatever the reason, it is a problem that the senior living industry must confront head-on, given the pressing need to rebuild occupancy as the pandemic recedes.
“If you have 10 patients or residents that you’re going to admit over the next week or two, you have to have enough staff to be able to accommodate those folks and provide the right level of care. You may only be able to take six of them,” Matros said. “The operators who do it right are going to self-monitor that stuff.”
The good news for senior living operators, according to Mace, is that capital providers seem to be waking up to the idea that it will take money and time to tackle these issues.
“I think what the pandemic has done is caused a better flow of conversation between capital providers and the operators to really get more sensitized to some of these issues,” Mace said.
‘Dysfunctional from the top down’
Some senior living executives believe that workforce challenges will lessen when enhanced unemployment benefits are phased out, an outcome that has yet to occur in some states that cut jobless benefits.
But there may be more systemic issues at play, considering the fact that the industry was plagued by high turnover well before Covid-19 struck and unemployment benefits were bolstered.
Among full-time frontline staff, the departure rate was 29%, compared with 18% for hotel and retail, 13% for grocery stores, and 10% for hospitals, according to 2019 Activated Insights data.
The high pre-pandemic turnover rate is one major signal of pervasive labor issues that have only been highlighted and exacerbated by the enhanced unemployment benefits, according to some frontline workers who spoke with SHN.
Take Anna, a frontline caregiver for a large senior living provider in the Pacific Northwest who did not want to use her last name for this story.
Though Anna did not collect unemployment during the pandemic, she said that she sympathizes with employees who do so instead of immediately jumping back into the job market. The problem to her is not the fact that some workers can earn a living wage staying home — instead, Anna said it has everything to do with the fact that many of these frontline workers are paid too low to begin with, and are not recognized enough for their hard work.
“In addition to higher pay and built-in raises, they need to really emphasize paid sick time and paid vacations,” Anna told SHN.
She also noted that turnover and hiring is not only tough for frontline workers, but also for management roles such as executive director positions.
“If it’s dysfunctional from the top down, there’s something wrong with the foundation and not just with the caregivers,” Anna said.
Solving this dysfunction is far from a simple proposition, but Anna and other workers point to wage rates as the necessary starting point.
That is evident in a recent research report conducted by Kare, a senior living staffing app that connects senior housing and care communities with workers who need shifts; and Bear Wise Consulting, in conjunction with the Texas Assisted Living Association (TALA). The survey, which tracked responses from 227 caregivers and 164 managers who work with Kare, found that pay was indeed the top motivator for senior living workers seeking a permanent role in a community, and also the biggest reason why they might choose to quit.
In terms of factors that would make an employee want to work permanently at a community: caregivers rated pay rate as a 9.14 in importance, on average. Managers also put pay rate at the top of their 1 to 10 scale with an average rating of 8.93.
The inverse was also true, with caregivers rating low pay as the top reason they would quit their job with an average rating of 8.09 out of 10. For managers who were asked that same question about their employees, that number was 7.51 out of 10 on average.
Teresa Smith, a licensed vocational nurse who works among about 10 communities through Kare, told SHN that pay is indeed a major motivator for many caregivers. Although she is pleased with her employment situation due to the flexibility and ease of scheduling that Kare brings, she sees more general issues in how industry providers approach staffing.
Specifically, Smith believes that, if senior living providers want to hire more frontline staffers, they should start by paying them more. She added that, in her city of residence, Austin, Texas, CNAs are usually paid a starting wage of around $12 to $14 an hour. But, she thinks that providers in her area should raise that amount to at least $15.50 or $16.
“People strain their backs,” Smith told SHN. “Pay has to come up.”
Anna said that, where she lives, a starting employee at Taco Bell can earn $13.75 an hour, which is 25 cents more per hour than she currently makes. Other businesses pay similarly higher rates — Target and Costco to name two. And in her mind, if some frontline workers are already treated like glorified fast food employees, what’s stopping them from making the switch if the pay is better?
“Management frets about nobody applying,” Anna said. “But when some retail, grocery stores or fast food are paying more than [senior living communities], young people are going to apply to retail, grocery, and fast food.”
Industry leaders do acknowledge the importance of pay rates. Some providers, such as Brandywine Living, raised their wages to the $15-an-hour range years ago. And Matros was blunt on the issue, saying this is the most pressing question on his mind:
“What do we have to do to have a wage base that allows everybody in our workforce to live good lives? They don’t work two jobs, and could be with their families at the end of the day, just like the rest of us can. That’s the big one to me.”
But raising wages is not a simple matter. While typical operating margins in senior living range from 30% to 40%, those numbers are deceptive because of what they do not account for, according to Maxwell Group CEO Donald Thompson:
“That’d be like saying that my house, if I ignore my mortgage cost and ignore my capital expense cost of keeping that house, that the cost to keep my house is my utility bill, my water, and sewer bill, my cost of the insurance, ignoring all the cost of the money to buy the house, to pay the mortgage, and to fix and replace things as they go bad, or just to fix the iterative items that occur,” he said.
Someone making a 30% margin might not be making much money, he proposed, saying that in the continuing care retirement community (CCRC) sector, a 25% operating margin might be the baseline to have any return on capital at all.
This brings up the issue that Mace raised — senior living owners may need to adjust their expectations and put up capital to address this issue in a sustainable way.
For instance, technology holds promise in driving staff efficiency, which theoretically could reduce turnover costs, perhaps supporting higher wages. But current misalignment between owners and third-party operators often does not incentivize investments in this type of technology.
“They may be willing to invest in CapEx to expand a facility or to renovate a building, things like that, but not technology. We haven’t seen it,” Matros said, referring to private investors. “So I think it’s a real problem.”
A radical shift
While wage rates arguably are at the root of a dysfunctional senior living staffing model, low pay is not the only problem. And resolving these problems may require not only more alignment between capital and operations, but a shift in mindset.
Smith, the worker with Kare, also said that senior living providers need to have a better handle on culture and confront issues such as favoritism, micromanagement and lack of recognition or respect. Offering better schedules for workers is another area where she believes providers can and should improve.
“Some of these places are so desperate that they will get their best employee and work them to death,” Smith said. “If they burn out, then you never know what’s going to happen next — are they going to get ill? Are they going to find another place to work?”
Smith describes her ideal senior living job — if she were to take a single position rather than work through Kare — as one that gives her flexibility in scheduling. One model that appeals to her is the 3-12 model, where employees work three 12-hour shifts per week.
“I don’t like to be at work every single day all week,” Smith said.
Anna noted that the work-life balance at her community is at times nonexistent, with caregivers frequently being called to work on their days off. She added that caregivers are also occasionally asked to handle tasks that are beyond their skill level or pay grade.
“Sometimes in assisted living, a resident declines and goes on hospice, and I have to do extra work with them, like repositioning them every two hours to prevent bed sores,” she said.
There is also a problem of recognition.
In her eyes, frontline workers are the lifeblood of any senior living community and play an important role in the health care continuum. It is a commonly held belief that senior living communities can keep older adults from going to the hospital — and to that end, senior living frontline workers should be considered part of the public good, like teachers or nurses, she said.
“There needs to be a radical shift in the way that senior living executives view their employees,” Anna added. “I think that they need to start viewing their employees as public servants and not fry cooks.”