Recent Trends in the Registered Nurse Labor Market in the US: Short-Run Swings on Top of Long-Term Trends

Peter I. Buerhaus, PhD, RN, FAAN; David I. Auerbach, PhD; Douglas O. Staiger, PhD

Disclosures

Nurs Econ. 2007;25(2):59-66. 

In This Article

Summary and Introduction

Summary

An economic analysis of the nursing labor market reveals the short-term effects of changes in nursing wages and the overall level of unemployment on the number of nurses willing to participate in the workforce and the number of hours they are willing to work.

Using data from the Current Population Surveys, the number of employed RNs has risen steadily for several decades, then, rose rapidly during 2002-2003, and declined in 2004-2005.

In 2002-2003, nursing wages increased significantly while national overall unemployment reached a recent high of 6%, causing positive substitution and pure income effects.

Foreign-born nurses account for 30% of the growth in RN employment over the past few years, but their numbers peaked in 2004 and dropped significantly in 2005 perhaps due to visa expirations.

While economic and non-economic factors will continue to effect short-term participation, long-term projections predict a workforce of increasingly older and foreign-born RNs.

Introduction

Since the Current Shortage of registered nurses (RNs) began in the United States in 1998, the performance of the nurse labor market has attracted growing scrutiny by a wide range of industry and professional organizations, policymakers, researchers, and the media (Altman, Clancy, & Blendon, 2004; American Hospital Association [AHA], 2002; Antonazzo, Scott, Skatun, & Elliott, 2003; Buerhaus, Staiger, & Auerbach, 2000b; Institute of Medicine, 2004; Joint Commission on Accreditation of Healthcare Organizations, 2002). The current shortage peaked in late 2001 when average national hospital RN vacancy rates were estimated at 13% and hospitals reported 126,000 unfilled full-time equivalent RN positions (AHA, 2001; First Consulting Group, 2002). Although national vacancy rates dropped to an estimated 8.5% in late 2005, many hospitals continue to struggle with shortages of RNs (AHA, 2006). In fact, independent national random sample surveys conducted in 2004 and 2005 found that a majority of RNs (82%), physicians (81%), hospital chief executive officers (68%), and chief nursing officers (74%) perceived a nursing shortage in the hospitals where they admitted patients or were employed (Buerhaus, Donelan, Ulrich, DesRoches, Norman et al., 2007). Survey respondents also perceived the shortage had negatively impacted various indicators of care delivery processes, hospitals' capacity to provide services, RNs' ability to provide patient care, and on the Institute of Medicine's six aims for improving the quality of health care systems.

In this article, we describe recent trends in the nurse labor market in the United States. Because RNs compose the largest group of nurses in the nursing workforce, we concentrate on the labor market activity of the current supply of RNs. Additionally, we focus on hospitals where the majority of RNs are employed. Among our findings, we identify and discuss changes in RN earnings and employment over the past 4 years, and provide updated information on the long-term trends involving the growth in employment of older and foreign-born RNs.

Drawing from labor economics, we begin by providing background information that is intended to provide both the context for and a deeper understanding of recent observed changes in the nurse labor market. Specifically, we distinguish between the short and long-run supply of RNs, and then explain how economic forces determine RNs' decision to be active in the labor market. This is followed by a brief description of the data used to determine trends in RN earnings and employment. Next, we present and explain these trends, and conclude by offering some discussion about how the nurse labor market may change in the coming years.

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