Worst Might Be Over: Nursing Home Labor Improves With Strong August Job Growth

Nursing home labor shortages appear to have finally bottomed out, as this year has been defined by sequentially higher increases in the workforce. Most recently, nursing and residential care facilities in August saw a jump in employment of 12,000-plus jobs, with health care adding 412,000 jobs over the year.

That’s quite the leap from an estimated 3,700 increase in SNF new hires in July, according to data from the Bureau of Labor Statistics (BLS) employment situation summary, released on Friday.

“ … Nursing home employment appears to have bottomed,” stated commentary from Hedgeye Risk Management, an investment research and financial media firm.

SNF labor data falls in line with overall data for the health care sector, as July and August suggest demand is good and wage growth is better controlled, Hedgeye analysts said. Total employment and aggregate hours – two markers of demand and utilization – inched higher sequentially.

While the nursing home employee count has ticked up modestly since the beginning of the year, the number is still nowhere close to what the industry saw 10 years ago – about 21% of the sector’s workforce has not returned.

Average hourly earnings are climbing for health care workers overall, but Hedgeye analysts expect “continued abatement of Covid-related pressures” will be the biggest factor in terms of future labor rates.

The updated data correlates with what Skilled Nursing News has heard from larger operators and real estate investment trusts, including several speakers at SNN’s RETHINK event, held in Chicago on Sept. 1.

Still, the industry is battling labor challenges even as operating costs remain high; the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) has projected that more than 400 SNFs could close this year, with nearly 240,000 job openings as a primary driver.

As of June, about 94% of nursing home operators said they face staffing shortages, according to a AHCA/NCAL survey.

Labor shortages continue to be the number one barrier to gaining occupancy as well, with facilities limiting referrals based on staffing.