Why Is One Nursing Home Worse Than the Others? A Guest Post

Please welcome our newest guest blogger, the University of Texas economist Daniel Hamermesh. In a long and distinguished career, Dan has written about everything from the economics of suicide to the impact of the “beauty premium.” Because he kept turning up on our blog, including just last week, we thought we’d invite him to come on over and stay awhile. So he’ll start contributing occasional short items here, full of wonder and insight, which will also be cross-posted at Dan’s existing blog Economic Thought of the Day blog. Enjoy. — SJD

My wife is an attorney and she represents a large number of retirement homes and nursing facilities. Nearly half of the legal problems that she has to deal with arise in just one facility. It could be that the management there is just bad, but an economic explanation is always worth considering. It just so happens that the facility is located in an isolated area that’s also a big tourist attraction. As such, the kinds of people who might take unskilled jobs in the retirement home have plenty of employment alternatives in the tourist industry.

The opportunity cost of these workers’ time is high; given the low wages that the retirement home pays, it typically attracts a less skilled, less able group of workers than the other homes my wife represents. It’s not surprising, then, that the performance of the workers in this facility is generally below that of the others, and that their performance causes problems that lead to legal difficulties.