Between minimum wage hikes occurring across the country and the prospect of extending overtime pay to currently exempt workers, senior living providers are facing wage pressures that could take a direct toll on their bottom line.
Most senior living communities already pay more than minimum wage levels by an average of $0.75 to $1.50 per hour, according to Moore Diversified Services (MDS), a Texas-based organization that provides operations analysis, marketing development and investment advisory services. But even a modest increase could result in lower net operating profit margins and more conservative cap rates.
A recent White House proposal aims to increase the minimum pay for overtime-eligible employees from $455 a week to $970 a week, according to the Obama administration. If the proposal goes into effect, salaried employees making up to $50,440 a year will become eligible for overtime compensation. Currently, only hourly and salaried employees making less than $455 a week or $23,660 a year can generally be compensated for hours worked over 40 each week.