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Seniors Housing Labor Shortage: A Challenge for Some, an Opportunity for Others

Seniors Housing Labor Shortage: A Challenge for Some, an Opportunity for Others

Challenges and opportunities abound—in business, in life and in seniors housing. As 2016 unfolds, operators, developers and capital providers involved in the seniors housing and care sector face a number of relatively new challenges that did not exist or were simply less obvious just a few years ago. Some of these challenges are cyclical in nature, while some are more systematic and secular. However, each new challenge presents opportunities for those in the know and for those businesses that are nimble, clever and creative. In this commentary, I highlight one of these challenges, but it is also a challenge that can be treated as an opportunity to create significant competitive advantages.

Labor shortages ahead. Concerns about labor shortages, as well as the rising cost of labor, are starting to become reality for some businesses. Operators are beginning to report challenges at all levels of the labor force—from line staff working closely with residents to trained nurses and health care providers to executive directors managing the operations of individual properties. With a national unemployment rate of 4.9 percent as of February 2016, and with the quit ratio of health care workers rising to its highest level since 2008, operators of seniors housing and care properties are finding it more difficult to hire and retain good employees. Additionally, competition from other service sectors such as the health care, retail and hospitality industries is also encroaching on the seniors housing and care sector.

Moreover, in the longer term, a University of California San Francisco study published in the June 2015 issue of Health Affairs projected the broad need for 2.5 million more long-term care workers by 2030—14 years from now. This estimate includes both institutional care and home-based care and an estimate of more than one million additional jobs for home health and personal care aides. The study notes that 20 percent of all Americans will be 65 years or older by 2030 and that 19 million adults will need long-term care services by 2050, up from 8 million in 2000. A separate study by Argentum estimates that the seniors housing and care sector alone will need to recruit 1.2 million new employees by 2025—nine years from now.

Opportunities and solutions. For savvy operators, this challenge, while seemingly daunting, can present a number of opportunities to create a workplace environment that will be sufficiently attractive and desirable to maintain a strong workforce and create a competitive advantage to secure strong growth and promote NOI enhancements. As Richard Branson, founder of the Virgin Group, has said “Train people well enough so they can leave, treat them well enough so they don't want to.”

Indeed, the opportunity for operators is to create and implement innovative approaches to both recruit and retain employees. And the timing of this opportunity is now, in order to get ahead of the wave and learn from practical experience. One size may not fit all, and there will be a need to test and experiment with innovative solutions.

Culture, environment and programs. Workplace environment, training and educational programs, benefit packages, and integrative support and comradery systems are among the solutions that operators can implement to alleviate some workforce challenges. Relationships are also important. This includes relationships between staff and residents, relationships among staff and relationships between managers and staff. Less tangible, but equally important is an employee’s sense of purpose, especially in this sector, defined largely by service and care. The latter is something that can be created by corporate culture and corporate mission, which needs to be driven from the top.

In addition, creating staff redundancy and implementing systems that can mitigate a single source of failure in the operation is becoming a paramount consideration among business leaders. The creation of assistant executive director programs, for example, is one solution being implemented to help protect the operation from the loss of an experienced and well-regarded executive director, a position often viewed as an operator’s single most important and critical resource for a property’s success.

Local markets and labor availability. Beyond the day-to-day operations, labor considerations are being addressed in site selection opportunities as well. Increasingly, site selection decisions for development opportunities include careful analysis of local labor market conditions to ensure that an adequate labor pool exists for operating functionalities and efficiencies. No longer do feasibility studies merely assess the resident demand potential; they now include labor force supply potential as well.

However, despite these and other efforts by business leaders to address sector-specific labor challenges, a bigger solution regarding labor shortages is needed (to address the workforce for the agriculture and construction sectors as well). And this bigger solution may be a political issue (at least initially) because it may require changes in U.S. immigration policies toward those entering legally into the United States. This is particularly the case for the seniors housing and care sector since many of today’s hands-on, front-line labor force are new or relatively new immigrants into the United States.

Beth Burnham Mace serves as chief economist with the National Investment Center for Seniors Housing & Care (NIC).

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