Senior Living Providers Brace for Labor Cost Surge

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.

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