It seems that too many people are avoiding the discussion of what is going to happen to labor costs, and the future impact on cash flow.
Unfortunately, most Labor Day weekends I am toiling away trying to finish the September issue of The SeniorCare Investor. Not this year. Labor Day was so late I was able to finish it up so you would have something to read for the weekend. Really. But then I got to thinking, about labor that is. I see all these acquisitions, and all these pro forma cash flows, and I wonder how labor is going to impact things in the next few years. It is the biggest line item, and the one that may see the most changes. I don’t profess to know how many employees in seniors housing and care are paid the minimum wage, or just above it, but with the movement toward a $15 per hour minimum, or something short of that, growing, it will not be a pretty sight for some P&Ls. Add to this some of the recent moves by the National Labor Relations Board, which has been moving so far left and anti-business with nary a word about it in the media, that one has to wonder how many heads are buried in the sand. Summer’s over, and it’s time to lift our heads out of the sand, look around, and get ready for what is going to hit, and hit hard.
When asked recently at a senior housing forum: “What keeps you up at night?”, I replied “The coming labor shortage.” It goes across the board – it is currently hard to find good managers, marketing people, and department heads – this only gets worse as development ramps up. As to the hourly workers; increases minimum wage, union organization and new regulations will also exacerbate the tough situation. As always, there will need to be creative solutions and the operators who have them will succeed.