Payroll Costs Rising from the Labor Shortage

Services are increasingly getting more expensive to provide thanks in part to ongoing labor woes, according to the latest Cost of Care Survey from insurer Genworth Financial.

The national median cost of home care pay shot up 6.17% to $21.50 per hour, or $4,099 per month, from 2016 to 2017—the most pronounced increase among other care settings, according to the survey. The cost of home care services, including household tasks such as cooking and cleaning, reached a median of $21 per hour, or $3,994 per month, a 4.75% increase from last year.

Over five years, the median cost growth rate was 2.50% for home health aide services and 3.08% for homemaker services.

This year’s cost increase was particularly notable, according to Gordon Saunders, senior brand marketing manager for Genworth’s U.S. Life Insurance division. Overall, the annual median cost of long-term care services climbed an average of 4.5% from 2016 to 2017, marking the second-highest year-over-year increase for nursing homes and home care since the study began in 2004.

“We have become accustomed to seeing steady increases in the cost of long-term care services, but this year, we saw a marked acceleration in the cost of home care over previous years,” Saunders told Home Health Care News. “This is based on external factors in the marketplace related to supply and demand: increasing demand for long term care services as our population ages versus shortage of workers and rising labor costs.”

By comparison, the national median cost for a one-bedroom unit in a private-pay assisted living community reached $3,750 per month, or $45,000 a year, according to the survey. That’s an increase of 3.36% from 2016 to 2017.

National median rates for semi-private room nursing home care increased 4.44% and hit $7,148 per month, and private room nursing home care reached $8,121 per month, a 5.50% increase.

Labor Woes Crank Up Costs

Though the labor shortage  isn’t the only factor driving up the cost of care, it has impacted all care settings, according to Saunders.

“[U.S. Dept. of Labor] changes have resulted in minimum wage and overtime protections to more domestic service workers who enable individuals with disabilities and the elderly to continue to live independently in their homes,” Saunders said. “Also contributing to the increase in labor costs is the Affordable Care Act (ACA), which requires employers of a certain size to offer some type of health insurance, or pay a penalty.”

For nursing homes, higher labor expenses and tightening Medicare rules have resulted in shorter hospital stays and sicker patients being sent to rehab nursing homes for shorter stays, driving up costs, Genworth noted in the survey.

Room and board for assisted living communities has gone up to accommodate residents who are sick, but not sick enough to require nursing home care, according to the survey. Luxurious amenities commonly found in private pay communities also increased costs of care.

What Agencies Can Do About It

This eBook explains the reasons driving the labor shortage, and how a two-pronged approach can minimize the disruption and extra costs being caused by the labor shortage for agencies.

Download the new eBook and check out the complete library of ebooks for agencies here.

Ending DACA Could Make Labor Shortage Worse

Surveys of DACA beneficiaries reveal that roughly one-fifth of them work in the health care and educational sector, suggesting a potential loss of tens of thousands of workers from in-demand job categories like DSP’s, home aides, and nursing assistants.

Projections by the government and advocacy groups show that the economy will need to add hundreds of thousands of workers in these fields over the next five to 10 years to keep up with escalating demand, caused primarily by a rapidly aging population.

“It’s going to have a real impact on consumers,” Paul Osterman, a professor at the Sloan School at MIT and author of a new book on long-term care workers, said of the DACA move.

Mr. Sheik is the chief executive and founder of CareLinx, which matches home care workers with patients and their families. The company relies heavily on authorized immigrant labor, making the looming demise of the program a decidedly unwelcome development. The move, Mr. Sheik said, would compound an already “disastrous situation in terms of shortages of supply.” He added, “This is a big issue we’re focusing on.”

According to census data Mr. Osterman analyzed, more than one-quarter of home health aides in 2015 were immigrants. The proportion in certain states is far higher, reaching nearly one-half in California and nearly two-thirds in New York.

As a basic matter of economics, removing tens of thousands of workers from occupations that already suffer from a serious labor shortage — the Labor Department predicts the country will need more than 1.25 million home health aides by 2024, up from about 900,000 in 2014 — generally has one unambiguous effect: driving up costs.

The economic problem is twofold. First, state governments, through Medicaid, often pays the salaries of DSP’s, meaning that escalating wages could blow a hole in state budgets (assuming the State increased funding!). If the states refuse or are unable to increase funding, then the labor shortage will get worse as for-profit organizations such as fast-food and Amazon warehouses raise wages.

Second, an acute shortage of DSP’s could force many older and disabled Americans out of their homes and into care facilities, where costs are roughly two-to-three times the cost of home care for a full year. The government typically picks up that tab as well.

For clients who rely on immigrant workers, “if that person is gone, can’t get renewed, it’s not a cute thing,” Professor Osterman said. “A home health aide is what lets you stay at home.”

Attracting and Retaining Millennials at Your Agency

Does Your Agency Have a Plan for Hiring and Retaining Millennials?

According to LinkedIn’s 2015 Talent Trends Report, millennials will comprise 50% of the workforce by the time 2020 rolls around. In less than 10 years, millennials will make up 75% of the workforce. Yet many agencies, despite hiring and retention problems, have not considered the unique opportunities and problems of attracting and retaining this growing segment of the workforce. But who are millennials, and how do agencies make themselves more attractive places for millennials to work?

Who Are Millennials?

There are no precise dates for when the millennials cohort starts or ends. Demographers and researchers typically use the early 1980s as starting birth years and the mid-1990s to early 2000s as ending birth years.

In reality, there are strong similarities between millennials and the generations that have preceded them: they want security and variety in their career, they want to be stretched and challenged, they want to work for a company of which they can be proud, and they have every intention of being loyal.

But there are many ways in which this growing proportion of the workforce is different. They have strong beliefs and expectations that extend to the workplace.

Where Millennials Want to Work

Data suggests millennials are driving a shift towards the public service sector. In 2010, Myers and Sadaghiani published research in the Journal of Business and Psychology stating heightened participation in the Peace Corps and MeriCorps as a result of millennials, with volunteering being at all-time highs. Volunteer activity between 2007 and 2008 show the millennial age group experienced almost three-times the increase of the overall population, which is consistent with a survey of 130 college upperclassmen depicting an emphasis on altruism in their upbringing. This has led, according to a Harvard University Institute of Politics study, six out of ten millennials to consider a career in public service.

A 2014 Brookings publication shows a generational adherence to corporate social responsibility, with the National Society of High School Scholars (NSHSS) 2013 survey and Universum’s 2011 survey, depicting a preference to work for companies engaged in the betterment of society. Millennials’ shift in attitudes has led to data depicting 64% of them would take a 60% pay cut to pursue a career path aligned with their passions, and financial institutions have fallen out of favor with banks comprising 40% of the generation’s least liked brands.

In 2008, author Ron Alsop called the millennials “Trophy Kids,” a term that reflects a trend in competitive sports, as well as many other aspects of life, where mere participation is frequently enough for a reward. It has been reported that this is an issue in corporate environments. Some employers are concerned that millennials have too great expectations from the workplace. Some studies predict they will switch jobs frequently, holding many more jobs than Gen Xers due to their great expectations. Psychologist Jean Twenge reports data suggests there are differences between older and younger millennials regarding workplace expectations, with younger millennials being “more practical” and “more attracted to industries with steady work and are more likely to say they are willing to work overtime” which Twenge attributes to younger millennials coming of age following the financial crisis of 2007-2008.

Political Views

Surveys of political attitudes among millennials have suggested increasingly social liberal views, as well as higher overall support for classical liberal economic policies than preceding generations. They are more likely to support same-sex marriage and the legalization of drugs. The Economist parallels this with millennials in the United States, whose attitudes are more supportive of social liberal policies and same-sex marriage relative to other demographics. They are also more likely to oppose animal testing for medical purposes than older generations.

Bernie Sanders, a self-proclaimed democratic socialist and democratic candidate in the 2016 United States presidential election, was the most popular candidate among millennial voters in the primary phase, having garnered more votes from people under 30 in 21 states than the major parties’ candidates, Donald Trump and Hillary Clinton, did combined. In April 2016, The Washington Post viewed him as changing the way Millennials viewed politics, saying, “He’s not moving a party to the left. He’s moving a generation to the left.” Bernie Sanders referred to millennials as “the least prejudiced generation in the history of the United States”.[90]

Millennials are expected to make up approximately half of the U.S. workforce by 2020. Millennials are the most highly educated and culturally diverse group of all generations, and have been regarded as hard to please when it comes to employers. To address these new challenges, many large firms are currently studying the social and behavioral patterns of millennials and are trying to devise programs that decrease intergenerational estrangement, and increase relationships of reciprocal understanding between older employees and millennials. The UK’s Institute of Leadership & Management researched the gap in understanding between millennial recruits and their managers in collaboration with Ashridge Business School.[134] The findings included high expectations for advancement, salary and for a coaching relationship with their manager, and suggested that organizations will need to adapt to accommodate and make the best use of millennials. In an example of a company trying to do just this, Goldman Sachs conducted training programs that used actors to portray millennials who assertively sought more feedback, responsibility, and involvement in decision making. After the performance, employees discussed and debated the generational differences they saw played out.

Average incomes for millennials have fallen at twice the general adult population’s total drop and are likely to be on a path toward lower incomes for at least another decade. A Bloomberg L.P. article wrote that “Three and a half years after the worst recession since the Great Depression, the earnings and employment gap between those in the under-35 population and their parents and grandparents threatens to unravel the American dream of each generation doing better than the last. The nation’s younger workers have benefited least from an economic recovery that has been the most uneven in recent history.”

In 2014, millennials were entering an increasingly multi-generational workplace. Even though research has shown that millennials are joining the workforce during a tough economic time, they still have remained optimistic. About nine out of ten millennials surveyed by the Pew Research Center said that they currently have enough money or that they will eventually reach their long-term financial goals.

Use of Technology

In their 2007 book, authors Junco and Mastrodicasa expanded on the work of William Strauss and Neil Howe to include research-based information about the personality profiles of millennials, especially as it relates to higher education. They conducted a large-sample (7,705) research study of college students. They found that Next Generation college students, born between 1983–1992, were frequently in touch with their parents and they used technology at higher rates than people from other generations. In their survey, they found that 97% of these students owned a computer, 94% owned a mobile phone, and 56% owned an MP3 player. They also found that students spoke with their parents an average of 1.5 times a day about a wide range of topics. Other findings in the Junco and Mastrodicasa survey revealed 76% of students used instant messaging, 92% of those reported multitasking while instant messaging, 40% of them used television to get most of their news, and 34% of students surveyed used the Internet as their primary news source.

One of the most popular forms of media use by millennials is social networking. In 2010, research was published in the Elon Journal of Undergraduate Research which claimed that students who used social media and decided to quit showed the same withdrawal symptoms of a drug addict who quit their stimulant. Marc Prensky coined the term “digital native” to describe “K through college” students in 2001, explaining they “represent the first generations to grow up with this new technology.” 

Millennials use social networking sites, such as Facebook, to create a different sense of belonging, make acquaintances, and to remain connected with friends. In the Frontline episode “Generation Like”, there is discussion about millennials, their dependence on technology, and the ways the social media sphere is commoditized.[164]

Along with being educated, millennials are also very upbeat. As stated above, about 9 out of 10 millennials feel as though they have enough money or that they will reach their long-term financial goals, even during tough economic times. They are also more optimistic about the future of the U.S. in general. Additionally, millennials are also more open to change than older generations. According to a Pew Research Center 2008 survey titled Millennials in Adulthood, millennials are the most likely of any generation to self-identify as liberals and are also more supportive of progressive domestic social agenda than older generations. Finally, millennials are less overtly religious than the older generations. About one in four millennials are unaffiliated with any religion, which is much more than the older generations when they were the ages of millennials.

12 Tips to Attract Millennials to Your Agency

There are a number of key steps employers can take to address the needs and preferences of millennials. Consider these 12 tips to ensure your agency is millennial-friendly:

  1. Emphasize your mission! 64% of millennials want to make the world a better place. This is a great opportunity for agencies who communicate their mission. A purpose-driven organization should be more attractive to purpose-driven people like millennials. This should give agencies a hiring and retention advantage with millennials over retail and other competing employers. Get these employees connected to your agency’s higher purpose and prove you’re ready to help them achieve their bigger-picture ambitions, too. Most millennials would rather make a difference than make a ton of money. Encourage them to see the agency as an opportunity to give back to the community. Invite millennials to fundraisers and offer volunteering opportunities. Show them that they can have a positive impact on the world at your agency.
  2. Focus job postings on the greater good. Millennials are particularly keen on societal mission and contribution to the global good, so putting their work in this context inspires them. Job postings should focus on the value of work and importance to the organization and society.
  3. Keeping in touch with millennials is key, whether it’s during the recruiting process or while they’re employed with your organization. Be helpful and maintain open communication. Millennials enjoy using communication systems, media, and technology. Avoid using paper forms with them, and instead use email and texts to follow up with applicants. Provide post-interview feedback opportunities. According to LinkedIn’s Talent Trends Report, 95% of millennials want to hear what you thought about them after the interview.
  4. Use technology! While older employees may be more comfortable with paper timesheets, schedules, and documentation, millennials definitely will not. They are the generation identified with the smartphone, texting, and online internet activity. If it’s not online, millennials will find it hard to take seriously. Millennials enjoy automated digital alert systems like next shift reminders, review notifications, birthday and anniversary greetings, etc. Make sure your timesheets, schedules, documentation, PTO, training, and everything else you can think of is online and accessible. Millennials will want the ability to check their schedule or look for an open shift online, preferring organizations that use technology effectively to achieve their mission. Agencies that appear backward or unwilling to adapt will not be attractive places for millennials to work.
  5. Be a mentor. Offering help and guidance is a way to create trust and loyalty with millennials. Send updates every three days from the hiring manager to applicants in the application process to court millennial workers. If your agency has a mentorship program, call attention to that during the interview process.
  6. Get organized and document your procedures! For some, part of the learning process is to learn by doing — to figure out a process that others in the organization already know. But millennials have a different approach to problem solving. They don’t want to “go figure it out” (why do I want to spend two hours figuring out what you already know? Send it to me, and I can spend that two hours moving forward.) Set aside the perception that 10 minutes of downloading information is laziness. Allowing them to take it forward will challenge and excite them.
  7. Make work fun, challenging, and exciting! For millennials, work is supposed to be fun. For this generation, there’s a free-flowing intersection between work and life. Keep millennials engaged and challenged by giving them additional responsibilities, especially when offering a pay raise isn’t an option. Millennials want to feel they’re moving somewhere, being challenged. Millennials love change, so mix it up for them. Also keep in mind that a millennial’s timeframe for accomplishing goals is 18 months or less – anything beyond that is incomprehensible.
  8. Provide frequent feedback. Millennials have a need for instant gratification, which means they’re always on point to deliver rapidly. As a manager, provide frequent feedback to fill this need.
  9. Facilitate collaboration and creativity. Create an environment — both through location and culture — for collaboration. On the culture side, managers should encourage staff members to propose alternatives and new ways of doing things. From a physical standpoint, agencies should create smaller interaction spaces (a cozy conference room versus a 20-person boardroom).
  10. Offer individual recognition. While collaborative approaches are meaningful, millennials still expect and want individual attribution. They will embrace the challenge of an individual task that is an essential part of a larger team-oriented project. When they are successful, call them out for a job well done. This is very important.
  11. Create a work environment that is conducive to work-life balance. This is one of the things this young generation desires most. Emphasize benefits like PTO. Improving the quality of life both in and out of the office — with social events, benefits, and flexible schedules — will appeal to people looking for more than just a salary. It’s what many progressive companies are doing.
  12. Avoid an excessively rigorous hiring process. Millennials are informal. Your agency may be weeding out high-potential millennials on a regular basis. It might be a good idea to loosen things up a bit. In place of the usual two-or three-round interviews, you can hold informal professional development classes, conduct informational sessions, or show potential candidates around the facilities. Host open days. Through these, you can let the candidates decide for themselves whether they fit your company’s culture or not.