Labor issues have plagued older operators more acutely during the Covid-19 pandemic, but any positive developments could shine a light at the end of the tunnel.
Staffing still accounts for a large portion of the company’s budget, according to MBK senior living president Jeff Fisher, but as communities normalize from the disruption caused by the pandemic, cuts in agency labor costs and overtime work will result in , labor pressure is beginning to ease.
“We are looking at all options, but reducing these costs is no easy task,” Fisher said at a webinar hosted by Marcus & Milichup this week.
Fischer said MBK has added recruiting resources for the community and has since made a small profit by filling open positions across the company.
While agency labor costs rose steadily last year, Eric Gillis, senior vice president of investment at CareTrust REIT, based in San Clemente, Calif., said agency labor costs are expected to increase to 20% in the third quarter of 2022. The company said it has reached a peak for its operating partners. wage. ”
One of the pain points for operators is the compression of wages against margins, which is a major challenge for some operators. According to Joe, Anthology Senior Living’s vice president of capital markets, Anthology Senior Living expects labor costs to rise consecutively in 2021 and last year, rising 5% in 2021 to 9.5% in 2022. % increase was “in line with inflation”. Marinelli.
“This has allowed us to compete for staff in a tight labor market and match wage increases with rate increases to offset and preserve our margins as much as possible,” Marinelli said. increase. “We are successful on the labor side.”
Anthology has successfully recruited experienced geriatric employees at all levels of caregiving and has been able to increase the number of young people entering the career field for the first time. The company’s confidence in its workforce could lead to Anthology expanding its market reach, Marinelli said, noting that the company is looking to expand into regions that complement its existing portfolio, as well as regions that “support demand fundamentals and expand the labor market.” “We are aiming for growth in new regions where it is easier to ”
The U.S. Bureau of Labor Statistics reports that the healthcare occupation is projected to grow 13% between 2021 and 2031, much faster than any other occupation during that period.
“Perhaps one of the most influential things affecting the senior housing market is what’s happening across employment,” said John Chan, senior vice president of research services at Marcus & Milichup. He added that the country had “fully recovered” that number. The number of jobs lost during the pandemic has regained 23 million jobs.
4.5 million jobs will be added in 2022, the second-most job addition in U.S. history after 2021, according to BLS data. Chang noted that Marcus & Millichap expects to add “only 700,000” new jobs to the market.
“We are pricing in a bit of a recession this year,” Chan said. “But despite that, we are still seeing some really positive momentum. Some areas are gaining more jobs than others, and senior housing is still… We are facing an uphill battle.”
strong demand outlook
As the demands of senior life grow, webinar leaders witness greener pastures based on the dramatic demographic changes expected in senior life over the next few years. bottom.
As demographics change over the next 20 years and the U.S. population ages, senior life will be “on the edge of the curve,” Chang said.
“When demand waves come, especially with the recent development slump, there will eventually be a demand-supply imbalance,” Chan said.
For CareTrust REIT, Gillis said the trust is eyeing a growing demand to see operators with senior living experience and knowledge of the local market. Marinelli also promoted his 18 new communities in the anthology Senior Living completed over the past six years.
“We want to partner with forward-thinking operators and work with them to develop programs for the next generation,” said Gillis.
Over the next year, MBK will continue to renovate and refurbish the community in anticipation of the arrival of baby boomers in order to rapidly improve the community so that it can provide residents with new services and amenities, Fisher said. .
“Looking across the horizon, there’s a demographic opportunity,” Fisher said. “We are stronger and the industry is going nowhere.”