By Tom Gresham
From a global pandemic to record inflation, recent years have been marked by volatility and disruption. The reverberations are still being felt – and will continue to be felt in the years ahead. As a new year dawns, Argentum has taken a close look at what to expect in 2024 in a new research paper, “The 2024 Forecast Report: Industry Trends in Workforce, Food and Utilities,” analyzing data to examine where critical trends in both the senior living industry and the United States at large are headed next. The report shows both rich opportunities and daunting challenges. In the words of the report, “While the future isn’t as bright as the sun, it also isn’t as dark as night. Instead, there will be progress and setbacks – two steps forward and one back.”
Here are 10 crucial takeaways from this year’s report.
The U.S. economy is expected to cool
The United States avoided the economic downturn that was widely expected in 2023. However, growth did slow in response to the Federal Reserve’s interest rate hikes, and interest rates are expected to remain elevated in 2024 and to dampen economic activity. While an economic slowdown is probable this year, a recession is far from inevitable. In fact, the national economy is now expected to weather the storm it has seen and not suffer a major downturn in 2024. Ultimately, Argentum projects GDP to rise at a rate of 1.0% this year – which likely will include a quarter or two of flat to slightly negative growth.
Employment flourishes but future growth likely will be more subdued
Employment levels surpassed pre-pandemic readings by more than 4.5 million jobs in 2023, buoyed in part by the addition of 2.5 million jobs during the year. Job growth has varied across the country since February 2020 with states such as Idaho (+11.7%), Utah (+10.1%) and Nevada (+8.8%) thriving in contrast to states that lost jobs such as Hawaii (-4.4%), Vermont (-2.5%) and Rhode Island (-2.4%). In fact, 11 states and the District of Columbia had not yet recovered to pre-pandemic employment levels as of October 2023. The Pacific region had the highest unemployment rate (4.4%) in the country in 2023, while New England had the lowest (2.7%) – the national rate was 3.9% as of September 2023.
More modest increases in both personal income and inflation are ahead
A healthy labor market helped spur household income to projected 4.0% growth in 2023. However, expected slower job growth this year is likely to dampen the increase in aggregate income. On the other hand, consumers should face a helpful easing of inflation in 2024. After an 8.0% inflation rate in 2022, inflation dropped to a projected 4.0% in 2023, and Argentum estimates a 2.5% inflation rate in the new year. Overall, consumer price levels will remain elevated in historical terms, challenging the ability of households to maintain their spending levels.
West South Central region leads projected job growth, Mountain paces in population
At a regional level, the western and southern parts of the U.S. are expected to lead the country in both population growth and labor growth in 2024. Leading the way in job growth is the West South Central region (Arkansas, Louisiana, Oklahoma, Texas), which is expected to expand payrolls at a 1.1% rate – slightly higher than the projected 0.8% increase that is expected nationally. Meanwhile, the Mountain region is home to the country’s largest expected population growth at 1.1%. The top four states in the country for projected population growth – Nevada (1.6%), Idaho (1.5%), Arizona (1.4%) and Utah (1.3%) – are all located in the Mountain region. Total population growth in the U.S. is projected at 0.4% for the new year.
Households
According to data from the U.S. Census Bureau, median household income was $74,580 in 2022, a dip of 2.3% from 2021 when adjusted for inflation, likely as a result of the expiration of income support programs associated with the pandemic. Median household income, in fact, was 5% below the peak registered in 2019, adjusted for inflation. In addition, average household expenditures increased 9.0% in 2022 following a 9.1% gain in 2021 – the strongest annual increases since the data series by the Bureau of Labor Statistics started in 1984. Older households registered the largest percent increase in spending for the year as average expenditures for adults aged 75-and-older jumped 16.7% in 2022. As a result of the drop in median household income and the steep rise in household spending, household savings rates fell below pre-pandemic levels, depleting the financial cushion that many households had built, and debt levels trended sharply higher.
Senior living employment is approaching pre-pandemic levels
Between February 2020 and January 2022, the senior living industry lost 106,500 jobs or 10% of its employment base. However, the size of the industry’s workforce now is finally approaching pre-pandemic levels. As of October 2023, senior living employment had reached 964,000 – 12,500 jobs below the pre-pandemic level. Senior living employment growth was 6.3% for the year, as of October, putting 2023 on pace to be the largest workforce expansion in the industry since the data series started in 1990. Senior living employment is expected to increase at a rate of 2.4% in 2024, double the expected growth rate in total U.S. employment. Within the industry, the recovery has not been uniform. Assisted living facilities have restored all the jobs lost during the pandemic, while employment levels at continuing care retirement communities remain more than 30,000 jobs below their pre-pandemic peak. Utah, Georgia and Minnesota are the only states with more senior living jobs than they had in 2019, while Oklahoma (-19.5% from 2019) and Delaware (-16.0%) face the largest deficits.
Work weeks in senior living return to normal
Senior living workers saw their work weeks return to pre-pandemic norms in 2023. In 2020, senior living workers worked an industry-record 33.5 hours a week. During the first nine months of last year, that number had dropped to 32.5 hours a week, slightly below the average work week in 2019. For continuing care retirement community workers, the average work week was 31.8 hours in 2023 (compared to 32.4 hours in 2019), and the average work week for assisted living facilities was 32.9 hours (33.2 hours in 2019). Even as individual workers’ hours have declined, total labor hours are on pace to increase at a rate of 4.2% in 2023, thanks to job growth.
Wages continue to surge for senior living workers
Pay for senior living workers has surged with hourly earnings growing 5.2% in 2020, 6.0% in 2021 and 8.9% in 2022 – each representing a new record high in the field. Senior living wage growth has exceeded growth in the private sector as a whole for eight straight years. As of September 2023, annual growth for average hourly earnings for senior living employees was at a robust 4.4%. Overall, average hourly earnings of employees at continuing care retirement communities are up 28% from 2019 levels, and assisted living facilities’ average wages are up 26% from 2019. Argentum projects average hourly earnings will rise 4.0% for senior living employees in 2024.
Job openings are historically high, though the labor pool has bounced back
Nearly four years after the onset of the pandemic, there remains an imbalance between labor supply and demand. The labor force participation rate of 62.7% in September 2023, remained below February 2020’s 63.3%. Unfilled job openings in the U.S. were nearly 10 million in mid-2023 compared to the monthly average of 7.2 million in 2019, according to the Bureau of Labor Statistics. Within the health care and social assistance sector, which includes the senior living industry, monthly openings totaled 1.8 million in September 2023 – well above the 1.2 million the sector saw in January 2020. The health care and social assistance sector’s annual turnover rate of around 40% in 2022 remained well above the 34% it experienced in 2019. Meanwhile, the overall economy’s turnover rate of 47% was closer to its 45% reading in 2019. The turnover in the health care sector could be traced to employees leaving on their own with the quit rate of 31.2% far exceeding 2019’s 23.9% quit rate. While the labor pool declined early in the pandemic, the U.S. civilian labor force had recovered to 168 million by October 2023 – more than 3 million more people than early 2020. The Bureau of Labor Statistics projects the U.S. labor force to expand by nearly 6.5 million people between 2022 and 2032 – growth of 3.9% that contrasts with the 6% increase seen in the previous decade.
Food prices remain elevated, while utility prices figure to fall in 2024
In 2022, average wholesale food prices grew 14.7% – the highest annual increase since 1974. Growth dropped to just 1.4% in 2023, according to the Bureau of Labor statistics. Price changes varied widely across commodity types. For instance, while processed poultry saw prices fall 20.0% for the year, frozen vegetable prices were up 22.3%. Meanwhile, consumers saw an increase in prices of 6.2% in the food at home category and 7.7% in the food away from home category in 2023. On the utility side, electricity prices are expected to decline 0.4% in 2024, according to the U.S. Department of Energy. Meanwhile, natural gas prices are projected to fall sharply by 14.0%, following a drop of 5.7% from 2022 to 2023.
The “The 2024 Forecast Report: Industry Trends in Workforce, Food and Utilities” available here, complimentary for Argentum members and $295 for non-members.
