SAN DIEGO — Labor issues are critical considerations for senior living operators and developers when assessing markets, National Investment Center for Seniors Housing & Care Chief Economist Beth Burnham Mace told those attending an educational session on Friday, the final day of the organization’s Spring Conference.
Some labor-related factors to ponder when looking to build or buy, she said:
- Cost of living. “Can your labor market survive there in terms of the costs?” Mace said. “You hear that in the Northeast a lot, or on the West Coast. It’s so expensive that people can’t afford to be there. For seniors housing, this is a big issue, because we’re having a hard time getting the labor to service all of our properties.”
- Labor supply. “I know a number of operators and developers that have walked away from a market because they look around and they don’t think they have a sufficient labor supply there,” Mace said. “That’s increasingly a drag, and in my view, it’s going to continue to be a drag in terms of overall development opportunities.”
- Labor market conditions. A tight labor market and skills and geography mismatches between what is needed and what is available in any given location put pressure on wage rates for operators in several markets, Mace said. As of December, she noted, the unemployment rate was below 3% in Austin, TX; Boston; Chicago; Cleveland; Louisville, KY; Riverside, CA; San Francisco; Stockton, CA, and Washington, D.C. “If I have a portfolio of properties, it’s important for me to understand the wage rates and how they compare from one geography to the next and across occupations,” she said.
The current and future retiring of workers in the Baby Boom generation, members of which now are aged 54 to 73, will affect operators and developers across the country. Baby boomers in general had fewer children than members of the generations recently preceding them, meaning that there will be fewer workers to take care of baby boomers when they move into senior living, Mace said.
“This year, there are seven adult children, defined as those who are 45 to 64, for everybody who is over 80. By 2030, that shifts to 4:1, and by 2050, it shifts to 3:1,” she said. “So it’s changing, and we have to pay attention to that, because the system can’t handle it. There are just too many older people to be taken care of.”
Canada and many European countries are facing similar demographic trends as the United States, but America can learn lessons from Japan, Mace said.
“They’re changed the narrative about what it is to get older, and they have the old taking care of the older, and the older taking care of the oldest,” she said. “They’ve changed what it means to retire, so when you retire, you give back — that same narrative is starting here in this country.”
Japan also is using robots to offer companionship to older adults and to help with transfers, Mace said. “There’s a lot of interesting technology that’s being used, but a lot of it is in the robotics area,” she said.