Nurse shortage linked to compensation

The study, titled Solving the Nursing Shortage through Higher Wages, by the Institute for Women’s Policy Research, says that the basic economic principles of supply and demand suggest that hospitals are not offering high enough pay to fill their nursing positions. The study was funded by the Service Employees International Union.

Hospitals employ three-fifths of all registered nurses and must compete for staff with doctors’ offices and other employers, where working conditions may be more satisfying.

According to a news release, the study uses data on 18,300 hospital nurses from the U.S. Bureau of Labor Statistics’ September 1995 to April 2005 Current Population Survey and provides state and metropolitan data and comparisons on nurse wages.

The report finds that when nurses’ pay rises, so does the number of hospital nurses. Nurses’ real wages were flat from 1996 to 2000, although hospitals had begun complaining of a nurse shortage by 1998.

In fact, hospital nurses made 1.5 percent less in inflation-adjusted wages in 2000 than in 1996. When nurse wages were increased in 2001, by 2.4 percent after inflation, hospitals were able to increase their nursing staffs by 9.2 percent in 2002. Further wage growth in 2002 (an increase of 7.6 percent) was met with additional hiring the next year (hospitals employed 9.4 percent more nurses in 2003 than in 2002).

When wages stagnated and then dropped in 2003 and 2004, however, the hospital nurse work force responded immediately, with a 2.8 percent decline in employment from 2003 to 2004.

Most analyses of the nurse work force ignore the link between pay and nurse supply, according to the report. Only 11 of 49 recent studies, by groups ranging from federal agencies and state commissions to industry and university researchers, propose an increase in pay as a strategy for attracting more bedside nurses.

Unionization

The study also finds that unionization is a successful strategy for raising nurses’ wages.

At the state level, hospital nurses who are union members have a 13 percent higher wage than those are not. Hawaii, the state with the highest union density, also has the highest median hourly wage for hospital nurses, at $28.35 ($58,968 annually).

The benefits of unionization are even greater when comparing individual cities because employment markets are very specific to individual locales.

The institute’s analysis finds that unions yield an average 28 percent boost in nurses’ wages across 67 of the largest metropolitan statistical areas in the United States.

There also may be a link between unions and nurse-patient ratios. Nurse/patient ratios in the most unionized cities are 19 percent higher than in cities with the lowest level of nurse unionization. Oakland, Calif., a highly unionized MSA, has a nurse/patient ratio of 1.33 (or nearly seven nurses to every five patients), whereas Louisville, Ky., one of the least unionized MSAs, has a nurse/patient ratio of 0.61 (three nurses for every five patients).

Recommendations

The report recommends that hospitals use competitive wage-setting practices to pay nurses their worth, help maintain adequate staffing levels, and improve patient care.

It also calls for raising nurse educator wages to expand the country’s nurse training capacity; state and federal staffing ratio initiatives; and further research on how nurse working conditions impact public health care costs and patient outcomes.