The dark clouds may be parting for the senior living labor market, but persistent pain points are causing operators to temper their enthusiasm regarding 2023.
“I’m going to surprise people,” Discovery Senior Living CEO Richard Hutchinson said on stage at the 2022 Senior Housing News BUILD conference in Chicago last month. “I actually like our labor environment. I think it’s fine. We’ll figure it out.”
Hutchinson isn’t alone. Leaders with Lloyd Jones, Sunshine Retirement Living and Anthology Senior Living believe the labor market could be softening around the edges, but they stressed that compressed margins, high salaries and a lack of qualified certified caregivers are still issues the industry will have to grapple with.
“It’s starting to get better,” Sunshine Retirement COO Sadek Nassar told Senior Housing News. “We are starting to see a little bit more applications coming in.”
But despite that optimism about staffing, there is also a real sense that labor costs may have settled into a new normal. Operators hoping for a significant reduction in labor spend in 2023 might have to rethink their expectations, according to Tod Petty, who is COO for Lloyd Jones’ Aviva Senior Living brand in the Southeast.
“I think that labor costs associated with having talent in the building will not return to pre-pandemic levels,” Petty told SHN. “I’m referring to the wages necessary to keep the team in place — paying people what they probably should have been paid.”
Headwinds linger despite optimism
Across the U.S., senior living operators have reported that labor headwinds don’t seem as strong now as they were last year. But the industry is definitely not out of the woods yet in that regard, and many operators are still grappling with high levels of agency staffing usage in their communities.
For example, Bend, Oregon-based Sunshine had about 50% more applicants applying to open positions at its independent living communities during the month of November compared to the prior months.
Applicants for its assisted living and memory care communities were also higher, but “we’re not receiving the qualified applicants we’re still hoping for,” Nassar said.
Anthology Senior Living is also experiencing pain as it looks to fill open positions for higher-acuity units, according to President Justin Dickinson. He noted that Anthology’s applicant pipeline isn’t where it needs to be just yet, and that the company is still “working through the math” of how many applicants it should seek to get for each position.
He noted that openings for positions such as caregivers, hosts, cooks and other jobs are still “putting a strain on the system,” he noted.
“We’re still seeing extremely high agency use numbers, and that’s because the shortage of nurses really hasn’t changed,” Dickinson said. “It was there before and it’s there now.”
Dickinson rejoined Anthology as president in October after a stint leading operator Pathway to Living, where he took a similar focus on improving staffing. He said Anthology uses a decentralized applicant tracking system where community leaders are responsible for those outcomes.
Other operators, like Sunshine, are still grappling with competition from other businesses, particularly restaurants and bars.
“We’re primarily fighting for servers right now,” Nassar said.
Sunshine operates 42 senior living communities.
“The age group that we are employing is typically anywhere from 18-25 years old,” he added. “They are typically still entering their careers … they usually have another job as well.”
Still, while these headwinds linger, Nassar added that the company is moving in the right direction with regard to its applicant pool. He noted that the labor situation Sunshine faced was notably worse last year.
Even so, he does not believe the industry is close to getting the upper hand over its retail, restaurant and hospitality competitors. He pointed out that fast food brands like Chick-fil-A and In-N-Out Burger are offering new applicants as much as $18 per hour — and that’s a price operators must often pay for workers.
“We’re entering a market where everyone has elevated the amount of entry-level pay that they’re offering,” Nassar said.
At the tail-end of 2022, Sunshine is paying about $1 to $2 per hour more than minimum wage for frontline workers.
“That is demolishing our margins,” he said. “And not just in California.”
And that is taking into account the fact that Sunshine raised rates for the second consecutive year by a factor of 7% to 10%.
Nassar estimated that Sunshine is paying servers as much as 70% more than they paid this time last year.
“It’s helped, obviously, to get [workers] back in our buildings, but we’re paying dramatically for it,” he said
Sunshine’s rate increases has helped the company offset labor costs, but Nassar wonders how long that practice can continue. While the residents understand the reason behind the increases, they “are on a fixed income and they could run out of money,” Nassar said.
‘Stop with the guilt’
Both Petty and Hutchinson see a real need to pay workers what their contributions are worth, even if that means a higher baseline for staffing costs.
During the BUILD conference, Hutchinson suggested the industry could do a far better job in that regard.
“I think we’re going to stop with the guilt and realize that we’ve got to compensate our people better,” Hutchinson said.
In addition to upping staff pay, Lloyd Jones is paying for 75% of its resident assistants’ health care premiums. The company is also giving workers an extra day off that can be used for civic engagement such as volunteering or protesting. The company also is adding a full-time recruiter.
To pay for this, Lloyd Jones, like Sunshine and so many others, upped the resident fees it will charge in 2023. That will help fund further recruitment and retention efforts throughout the company’s senior living portfolio, including creating the aforementioned talent acquisition manager role.
“It’s not an HR position,” Petty said. “It’s about going to the highways and byways and compelling people to come in.”
Discovery is creating career paths for employees through a program called “Discovery University.” that will begin creating a program that will certify and credential its employees for their abilities. And Employees can earn credentials through the program and in the process increase their pay, according to Hutchinson.
Lloyd Jones also emphasizes career advancement, not only as a benefit for working there but as a way to bolster retention efforts.
“I want to make sure [our staff] knows they have a pathway to advance in the senior housing space, probably better than anywhere else,” Petty told SHN.
Unlike careers in the medical or legal fields wherein a specific advanced degree is needed, workers looking to further their careers in senior living “can come from a “variety of backgrounds such as hospitality, health care and marketing,” he added.
Looking ahead, operators including Lloyd Jones are working to reduce the usage of agency-sourced labor entirely. And while Petty believes a wage correction is underway, he doesn’t think agency staffing is a fixed cost.
“I think agency goes by the wayside, except for circumstances that are true emergencies beyond our control,” Petty said of 2023 and beyond.
Part of the Covid-19–induced labor issues were related to the perception that working in communities was medically unsafe, a notion that Petty believes is all but gone.
“Much of the public was fearful that … the threat of Covid-19 was exacerbated by working in communities,” Petty said. “I’m seeing that is gone as fast as it came.”