Last week in The Labor Battle Intensifies: Healthcare vs Retail, we wrote about how QHC filed for bankruptcy citing severe labor shortage as the main cause. This week Eagle Senior Living filed for bankruptcy protection and cited “exponential” labor costs as the main cause of their financial woes.
Plunging occupancy during the pandemic and higher wage and supply costs have pummeled the sector, resulting in $1.67 billion in municipal bond defaults for senior living facilities last year.
Bloomberg
As we wrote, America will be increasingly faced with tough choices about what industries will receive labor support. In The Next Civil War Will Be About Labor Not Politics, we made the case that a depletion of 60+ million baby boomers from the labor force and an aging American demographic, society will need to make tough choices. Do we, as a society, support labor for nursing homes or do we provide support for retail outlets to sell groceries because without a huge influx of new labor we can’t have both.
There is no easy way to replace 60+ million people that have reached age of 65 where they can enroll in social security and medicare insurance. As we wrote about in University Apocalypse 2025 and One Million Fewer College Students in 2022, there aren’t enough young people to replace the retiring cohorts.
Retired boomers will continue to consume goods and services but they won’t be participating in the production of those goods and services so the net result will be higher inflation, higher unavailability, long waits, and other misery. Those people that are willing to work will be commanding higher and higher salaries but the work will be hard and perhaps brutal as more will be expected from people that work.
Computerworld recently had an excellent article entitled, In IT, Boomers Are Out Raises are Rising and Change is Coming, that we recommend reading in its entirety. While the article focuses on IT people, it really is a proxy for all things labor related in almost all industries. Here is a quote:
IT professionals are also leaving jobs for reasons beyond just pay. Work-life balance, or the ability to take advantage of flexible work hours and to work from home, has become the top incentive most organizations are offering to retain talent.
Computerworld
It’s possible to take the entire Computerworld article and replace the word “IT Professionals” with almost any other profession and we think it would be a valid view of where we are today. It is clear that people working at nursing homes are the first wave of departing hard jobs for bad pay. As more boomers retire they will leave jobs open and deep pockets will pay more money to fill them. This cycle will repeat itself over and over through the next 10 years.
Stay tuned and stay solvent…