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H E A L T H T R A C K I N G
T R E N D S
W E B E X C L U S I V E
17 November 2004
New Signs Of A Strengthening
U.S. Nurse Labor Market?
Younger nurses and men
entering nursing drove the rising numbers
of hospital nurses in 2003, but
the shortage is not necessarily a thing of the past.
By Peter I. Buerhaus,
Douglas O. Staiger, and David I. Auerbach
ABSTRACT:
Wage increases, relatively high national unemployment,
and widespread private-sector initiatives aimed at increasing the number of
people who become nurses has resulted in a second straight year of strong employment
growth among registered nurses (RNs). In 2003, older women and, to a lesser
extent, foreign-born RNs accounted for a large share of employment growth.
We also observe unusually large employment growth from two new demographic
groups: younger people, particularly women in their early thirties, and men.
Yet, despite the increase in employment of nearly 185,000 hospital RNs since
2001, the evidence suggests that the current nurse shortage has not been eliminated.
In a paper published in the
November/ December 2003 issue of this journal, we described trends in employment
and earnings of registered nurses (RNs) from the mid-1990s through 2002; we
focused on determining whether there was any evidence that the current shortage
of RNs was coming to an end.1 We
estimated that total RN employment increased 5.1 percent, or roughly 100,000
RNs, from 2001 to 2002 and that all of this growth had occurred in hospitals.
A number of factors contributed to this growth in RN employment: a hefty 4.9
percent increase in real (inflation-adjusted) RN earnings in 2002 following
a decade of stagnant earnings, the development of private-sector initiatives
aimed at calling positive attention to nursing, and a rise in unemployment
rates across the United States, which affected the job security and earnings
of RNs’ spouses.
Further analysis showed that most of the growth in employment
in 2002 came from two sources: the reentry of older RNs into the workforce
and the new entry of foreign-born RNs. Hospital employment of RNs older than
age fifty rose 15.8 percent in 2002, and most of these RNs were married and
lived in states where the unemployment rate had risen faster than the national
average. We also found that employment of foreign-born RNs grew nearly as fast
(13.8 percent) as the growth in employment of older RNs. Our data indicated
that about half of these new foreign-born RNs had entered the United States
since 1996. In sum, our estimates of the large growth in hospital RN employment
from 2001 to 2002 supported anecdotal accounts that the national shortage of
RNs, which had begun five years earlier in 1998, was possibly coming to an
end.
In this paper we present results of our continuing analysis
of the nurse labor market. Specifically, we seek to determine whether the increase
in RN earnings and employment in 2002 were aberrations or the beginning of
a new trend. We also address whether the recent growth in employment could
erase the current shortage and mitigate the development of a longer-term shortage.
Finally, we examine whether there are any emerging trends in the nurse workforce
and whether initiatives begun a few years ago aimed at increasing the number
of people becoming nurses are affecting the nurse labor market.
Data Sources And Methods
Data source. As
before, we used data from the Current Population Survey (CPS) Outgoing Rotation
Group Annual Merged Files to construct and analyze national estimates of annual
RN employment and earnings, to examine changes in the nurse labor market in
2003. The CPS provides a large representative sample of nurse personnel across
many years, and we have used these data in prior work to analyze trends in
employment earnings and to forecast the future age composition of and supply
in the RN workforce.2
The CPS is a household-based survey administered monthly
by the Bureau of the Census and is widely used by researchers and by the Department
of Labor to estimate current trends in unemployment, employment, and earnings.
The survey covers a nationally representative sample of more than 100,000 people,
and every month one-quarter of the sample is asked detailed questions about
current employment status, hours worked, earnings, occupation, industry, and
other areas. These data offer several advantages over other data commonly used
to analyze the nurse workforce (such as the American Hospital Association Personnel
Surveys and the federal government’s National Sample Surveys of the Population
of Registered Nurses). Specifically, the CPS is the only source of annual data
available on a timely basis (with a three-to-six-month lag) for all nursing
personnel (RNs; licensed practical/vocational nurses; and nurse aides, orderlies,
and assistants) employed in both hospital and nonhospital settings.
Analysis.
We analyzed data on every person in the sample ages 21–64 who reported
their occupation as registered nurse between January 1983 and December 2003
(N = 67,816).
People older than age sixty-five are excluded for consistency with our earlier
work; however, they constitute less than 3 percent of the RN workforce, so
excluding them has no material effect on the analysis.
Hourly wages were calculated as usual weekly earnings divided
by usual weekly hours. The CPS earnings question includes overtime pay but
not bonuses, signing fees, or other nonwage benefits. Thus, although the wage
does not capture all changes in compensation, it should be representative of
overall trends. Wages were adjusted for inflation using the Consumer Price
Index for all goods in urban areas (CPI-U) and are reported in constant 2003
dollars.
To be consistent with our earlier work, employment was
measured as full-time equivalents (FTEs) (that is, the number of full-time
employees plus half the number of part-time employees), where full-time employment
is defined as working thirty or more hours per week. Using hours worked instead
of FTEs leads to similar conclusions in aggregate and slightly higher estimates
of employment growth among younger women (who have increased their working
hours in recent years).3
To make estimates representative of the U.S. noninstitutionalized
population, they were weighted by sampling weights provided by the CPS.4
Because of the large samples being used, all trends reported have standard errors
of less than 2 percent.
Study Findings
RN
earnings and employment, 2001–2003. We
estimate that in 2003, real (inflation-adjusted) RN earnings increased for
a second straight year, although not as much as the increase in 2002. The increase
in real earnings was higher for hospital-employed RNs than for those working
in nonhospital settings (1.8 percent versus 1.2 percent). A second consecutive
year of real earnings growth would be expected to positively influence RNs’ labor-
supply decisions by inducing some who were not working to enter the workforce
and others who were already working to increase the number of hours they worked.
In addition, changes in job security and earnings of RNs’ spouses also
affected RNs’ labor-market activity. In 2003 the unemployment rate averaged
6.0 percent across the United States, compared with 5.8 percent in 2002 and
less than 5 percent between 1997 and 2001.5 Thus,
because nearly three-quarters of RNs are married, the ongoing, relatively high
unemployment rate during 2003, together with the rise in RNs’ own earnings
for a second straight year, offered powerful economic incentives to induce
RNs into the nurse labor market.
In fact, based on the CPS data, we estimate that the U.S.
nurse workforce added 119,000 FTE RNs in 2003 (Exhibit 1), from a base of just
over two million FTEs in 2002. The total growth of 205,000 FTE RNs since 2001
represents the largest two-year growth in RN employment observed since 1983,
when our CPS data began. Most of the growth occurred in hospitals, which expanded
employment of RNs by 99,000 in 2003. Since 2001, hospitals have added 183,000
RNs to their workforce (Exhibit 1). Nonhospital settings (such as long-term
care facilities, home health care agencies, physician offices, and public and
school health clinics) account for roughly one- third of all RNs participating
in the workforce. During the 1990s these settings added RNs at a much faster
pace than hospitals did. Yet since 2001, employment growth in the nonhospital
sector has lagged far behind that of hospitals (Exhibit
1). Prior work suggests
that the slowdown in employment growth in nonhospital settings was driven by
ongoing efforts of managed care and other large insurers to control spending
on home health care.6
Sources of employment
growth. In
our prior work, we found that RNs older than age fifty and foreign-born RNs
accounted for all of the growth in RN employment in hospitals in 2002. Older
RNs continued to supply a major source of the growth in RN employment (Exhibit
2). Since 2001, the nurse workforce has added 130,000 RNs ages 50–64—63
percent of the total growth in RN employment over this period. However, employment
of RNs ages 35– 49, which had increased in 2002, declined in 2003,
thus contributing only a fraction of the total increase in employment in
2003. In contrast, employment of young RNs exploded in 2003, raising the
total employment growth of younger RNs by an estimated 66,000 since 2001.
This entry of younger RNs into the workforce is consistent with reports of
sizable gains in enrollments at nursing schools since 2001, and it may represent
the first wave of two-year program graduates.7
Our
analysis reveals that foreign-born RNs continued to contribute an important
source of employment growth in the nurse workforce. Each year between
1994 and 2001, the growth of foreign-born RNs increased an average 6.0 percent,
compared with 1.5 percent among all RNs. However, growth of foreign-born
RNs doubled to an average 12.5 percent in each of the past two years
(Exhibit
2). In fact, the rapid growth in employment of foreign-born RNs
accounts for nearly one-third of the total growth of RN employment in the
U.S. nurse labor market during the past two years, which means that the trend
toward increased reliance on foreign-born RNs has accelerated. Because the
CPS data do not allow the identification of a subset of foreign-born RNs
who received their nurse education outside the United States, employment
growth in this group does not solely reflect growth in the number of nurses
immigrating to the United States. Finally, employment rose more than 14 percent
among married RNs between 2001 and 2003, compared with 4.8 percent among
unmarried RNs (data not shown). This evidence suggests that continued job
insecurity among RNs’ spouses may have contributed to these RNs’ increased
presence in the workforce.
Emerging trends. The
increase in total employment growth of more than 200,000 RNs since 2001 has
undoubtedly brought a good measure of relief to many hospitals and other organizations.
This two-year growth is perhaps the largest increase in RN employment
since just before the Medicare program began, in 1965, when hospitals were
provided with new financial resources to help them resolve a severe nurse shortage
reflected by a national average vacancy rate of nearly 20 percent in hospital
RN positions.8 While
RNs older than age fifty have provided much of the expansion of hospital
employment since 2001, it is striking that in 2003, employment of younger RNs
grew by nearly 90,000, reaching the highest level observed for younger RNs
since 1987. The percentage of the RN workforce under age thirty-five
has been declining steadily over the past twenty years (Exhibit
3). In 1983,
half of the workforce was composed of younger RNs, whereas in 2002 younger
RNs accounted for only 22 percent. Given forecasts of a large reduction in
the future supply of RNs in the workforce, the growth in employment of younger
RNs in 2003 represents a potentially important development.9 We
also found that the proportion of the RN workforce who are men has
been growing at an appreciable and steady rate during the past two decades
(Exhibit
4). Closer inspection of the data indicates that this growth was somewhat
bimodal: 47 percent were in their 30s, particularly ages 35–39, and
39 percent were older than age 50.
Who
are these younger nurses? Our analysis shows that 72 percent of the total
growth of younger RNs in the workforce in 2003 was accounted for by nurses
born in the United States (Exhibit
5). All of the growth in employment
of foreign-born RNs occurred among younger people (the vast majority were
employed in hospitals). However, the growth of both younger domestic and
foreign-born RNs was far greater among those ages 30–34 than among those under age
30. In addition, 71 percent of younger RNs graduated from associate-degree
programs, particularly those ages 30–34 (Exhibit
5).
However, the men who entered the nurse workforce last year
were not disproportionately graduates of associate-degree
programs (data not shown).
Discussion And Policy Implications
It is not surprising that the combination of
a second consecutive year of wage increases, relatively high national
unemployment, and the continuance of private-sector initiatives
aimed at increasing interest in nursing resulted in another year
of strong RN employment growth. What is surprising is that despite
the increase in employment of nearly 185,000 hospital RNs since
2001, there is no empirical evidence that the nurse shortage has
ended. To the contrary, national surveys of RNs and physicians
conducted in 2004 found that a clear majority of RNs (82 percent)
and doctors (81 percent) perceived shortages of RNs in the hospitals
where they worked or admitted most of their patients.10
Our analysis reveals that older and, to a lesser extent,
foreign-born women continue to account for a large share of FTE employment
growth among RNs. In addition, unusually large employment growth from 2002
to 2003 occurred among two new demographic groups: younger people, particularly
women in their early thirties, and men. Both of these groups are probably
responding to higher wages and opportunities in nursing driven by publicity
about the nurse shortage, and many have just graduated from associate-degree
nursing education programs.
Older nurses. The
growth in employment of older RNs reflects a fundamental, structural shift
in the RN workforce that has been taking place during the past three decades:
the aging of the large baby-boom cohorts who became RNs in unprecedented numbers
in the 1970s and 1980s. The average age of the RN workforce (42.1 years in
2002) has been rising steadily since the mid 1980s, and by 2010 it is projected
to rise another three years (to 45.4). Consequently, the employment of RNs
older than age fifty is growing faster than among any other age group.11 It
appears that these older RNs are sensitive to economic
incentives, particularly to changes affecting their spouses’ incomes
and job security.12 Thus,
as long as unemployment rates remain high and hospitals
continue to raise RN wages, older RNs will likely remain in the workforce.
However, should unemployment rates decrease, it is unclear whether RN wage
increases alone will be enough to retain all of those older RNs who recently
became employed. Moreover, it will not be many years before these RNs will
retire and leave the work- <->force
altogether.
Foreign-born nurses. Along
with older RNs, employment of foreign-born RNs continues to expand. Even if
only half of these foreign-born RNs immigrated to the United States
in the past few years, their growth (66,000 since 2001) dwarfs the usual yearly
immigration of 3,000–4,000 RNs during previous shortages. As the demand
for RNs continues to grow and the RN workforce in the United States ages and
eventually shrinks in size, hospitals and other providers will increasingly
rely on foreign-educated RNs. Because the United States is one of the countries
dominating the global nurse labor market, U.S. policymakers can anticipate
facing vexing political, ethical, economic, and regulatory issues, in addition
to questions about the technical and cultural competence of foreign nurses.13
Younger
nurses. Importantly,
our analysis reveals new trends involving the growth
of younger RNs and men. The sudden burst in employment
of nearly 90,000 RNs under age thirty-five occurred
primarily among U.S.- born nurses. This development
may signal the end of a two-decade decline in younger
cohorts entering the RN workforce. However, it is
unlikely that this recent increase in the propensity
to become an RN among younger cohorts will provide
enough new nurses to solve the projected long-run
shortage. When we use these new data to update our
previously published forecasts of RN supply, assuming
that future cohorts will have a higher propensity
to become RNs as the most recent data suggest, the
workforce is projected to peak at a size of 2.3 million
in 2012 and shrink to 2.2 million by 2020—a
modest increase of roughly 60,000 RNs over forecasts
without the new data.14
This total pales in comparison to the latest government
forecast of 2.8 million FTE RNs that will be required
in 2020.15 This
is partly because half of the total increase in younger
RNs came from the cohort ages 30–34; these
RNs will provide fewer years in the nursing workforce
than younger graduates will. Should the growth in
younger RNs continue for several years, however,
then there would be good reason for adopting a more
optimistic view of the future supply of RNs.
Associate
versus baccalaureate degrees.
Our analysis also reveals that the cohort of younger
RNs is particularly attracted to nursing education
programs that take the least amount of time to complete;
three- fourths of the growth of younger RNs are recent
graduates of two-year associate- degree programs.
However, recent research by Linda Aiken and colleagues
shows a reduction in inpatient mortality in hospitals
with higher proportions of nurses educated at the
baccalaureate level or higher.16 Although
this study provides correlation, not causation, and
measures education as the highest education received
by the nurse (not entry-level education), it raises
questions about the impact of these new entrants
into the nurse workforce on certain patient outcomes;
these questions require further investigation.
Replacing the large cohorts of
RNs born in the baby-boom generation who will retire
between 2010 and 2020 will require a rapid expansion
in output from both two-year programs and baccalaureate
programs, whose graduates are typically younger (in
their twenties) and thus likely to contribute more
years in the workforce. Yet nurse education programs
continue to report turning away thousands of qualified
applicants because of shortages of faculty, classroom
space, and clinical sites for students.17 Overcoming
these capacity constraints calls for decisive action
and resources, and we believe that Congress should fund a study to investigate
the prevalence and severity of capacity constraints and determine
the best ways to quickly resolve them.
Men in the nurse
workforce. Another
new development is the rising numbers of men in the
nurse workforce between 2002 and 2003. We observe that a considerable
proportion are not young men but rather older men, perhaps looking for
better employment options and economic security as traditional jobs for
people with high school or some college education have disappeared.18
Thus, policymakers should focus on assessing the likelihood
of offering mid-career retraining programs and conducting
studies to determine the reasons why older men are
entering nursing. We have observed this development
with only one year of data, but if men began to enter
the nursing profession at the same rate as women,
this could quite possibly prevent the anticipated
long-term shortage of RNs.
Private-sector
initiatives. Finally,
the two-year growth in overall RN employment coincides
with the development of private-sector initiatives
aimed at calling positive attention to nursing. Many
hospitals have seriously begun addressing problems
in the workplace environment; corporations and civic
groups have provided scholarships to nursing students;
and Johnson and Johnson launched a multimillion dollar
Campaign for Nursing’s
Future focused on bolstering the image of nurses,
educating the public on the opportunities offered
by a career in nursing, improving retention of nurses
in clinical positions, raising funds for scholarships
and grants, and addressing nurse education programs’ capacity
problems.19 The
recent surge in RN employment also is related to
these initiatives, and those involved in orchestrating
them should be encouraged by the recent trends in
the nurse labor market.20 The
early success of these initiatives suggests that
they should continue so that overall employment growth,
as well as the emerging trends of increased employment
of younger RNs and men, can be sustained and expanded
in the years ahead.
The views expressed in this paper are those of the authors and should
not be interpreted as those of the Congressional Budget Office, Johnson and
Johnson, the Robert Wood Johnson Foundation, or the National Bureau of Economic
Research. The authors appreciate the suggestions provided by reviewers who
commented on an earlier draft.
NOTES
1. P. Buerhaus, D. Staiger, and D. Auerbach, “Is the
Current Shortage of Hospital Nurses Ending? Emerging
Trends in Employment and Earnings of Registered Nurses,” Health Affairs 22,
no. 6 (2003): 191–198.
2. P. Buerhaus and D. Staiger, “Managed
Care and the Nurse Workforce,” Journal
of the American Medical Association 276, no.
18 (1996): 1487–1493;
P. Buerhaus and D. Staiger “Trouble in the
Nurse Labor Market? Recent Trends and Future Outlook,” Health Affairs 18,
no. 1 (1999): 214–222; and P. Buerhaus, D. Staiger, and D. Auerbach, “Implications
of a Rapidly Aging Registered Nurse Workforce,” Journal
of the American Medical Association 283, no.
22 (2000): 2948–2954.
3. To be more specific, the total
workforce grew 4.3 percent in 2002 and 5.7 percent
in 2003, according to our FTE-based calculations.
Using hours instead, we find growth of 4.1 percent
in 2002 and 6.0 percent in 2003. By age group, it
is true that older RNs appear to be working fewer
hours. Thus, growth among older RNs is slightly lower
in 2002 and 2003 when using hours rather than FTEs,
and the extraordinary growth among the young RNs
that we report in 2003 is even greater using hours:
19.7 percent compared with 18.1 percent using FTEs.
4. Because of revisions made by the
CPS in 2003 involving occupation codes, estimates
of RN employment in 2002 differ slightly from those
reported in our earlier work (Buerhaus et al., “Is the Current Shortage of Hospital
Nurses Ending?”). The new coding, based on
the Standard Occupational Codes used in the 2000
Census, resulted in approximately 5 percent of those
identifying as RNs under the previous coding not
identifying as RNs under the new coding.
5. Bureau of Labor Statistics, “Household Data, Annual Averages,” 2004, www.bls.gov/cps/cpsaat1.pdf (22
October 2004).
6. Buerhaus and Staiger, “Trouble
in the Nurse Labor Market?”
7. American Association of Colleges
of Nursing, “Thousands of
Students Turned Away from the Nation’s Nursing
Schools Despite Sharp Increase in Enrollment,” www.aacn.nche.edu/Media/NewsReleases/enr103.htm (5
October 2004).
8. D. Yett, An Economic Analysis of the Nurse Shortage (Lexington,
Mass.: D.C. Heath and Company, 1975).
9. Buerhaus et al., “Implications
of a Rapidly Aging Registered Nurse Workforce.”
10. P. Buerhaus et al., “Physicians Assess the Nursing Shortage” (Unpublished
paper, institution? date?); and K. Donelan et al., “Nurses Assess the
Nursing Shortage and the Hospital Workplace Climate” (Unpublished
paper, institution? date?).
11. Buerhaus et al., “Implications of a Rapidly Aging Registered
Nurse Workforce”; and Buerhaus et al., “Is
the Current Shortage of Hospital Nurses Ending?”
12. C. Link and R. Settle, “Financial
Incentive and Labor Supply of Married Professional
Nurses: An Economic Analysis,” Nursing
Research 29, no. 4 (1980): 238–243; M. Bognano, J. Hixson,
and J. Jeffers, “The Short-Run Supply of Nurse’s
Time,” Journal
of Human Resources 9, no. 1 (1974): 80–93; and F. Sloan
and S. Richupan, “Short-Run Supply Responses
of Professional Nurses: A Micro-analysis,” Journal of Human Resources 10,
no. 2 (1975): 241–257
13. L. Aiken et al., “Trends
in International Nurse Migration,” Health
Affairs 23, no. 3 (2004): 69–77; and B. Brush, J. Sochalski,
and A. Berger, “Imported Care: Recruiting Foreign
Nurses to U.S. Health Care Facilities,” Health Affairs 23,
no. 3 (2004): 78–87.
14. Buerhaus et al., “Implications
of a Rapidly Aging Registered Nurse Workforce.”
15. Please add source for HRSA projection.
16. L. Aiken et al., “Educational
Levels of Hospital Nurses and Surgical Patient Mortality,” Journal of the American
Medical Association 290, no. 12 (2003): 1617–1623.
17. American Association of Colleges
of Nursing, “Thousands
of Students Turned Away.”
18. F. Levy and R. Murnane, The New Division of Labor:
How Computers Are Creating the Next Job Market (Princeton,
N.J.: Princeton University Press and Russell Sage
Foundation, 2004).
19. Johnson and Johnson Health Care
Systems, “Discover
Nursing,” www.discovernursing.com (22
July 2004).
20. P. Buerhaus et al., “Nursing Students’ Perceptions
of a Career in Nursing and Impact of a National Campaign
Designed to Attract People into the Nursing Profession,” Journal of Professional
Nursing (forthcoming.)
Peter
Buerhaus (Peter.buerhaus{at}vanderbilt.edu) is the Valere
Potter Professor and senior associate dean for research,
Vanderbilt University School of Nursing, in Nashville,
Tennessee. Douglas Staiger is a professor of economics,
Department of Economics, Dartmouth College, in Hanover,
New Hampshire, and a research associate with the
National Bureau of Economic Research in Cambridge,
Massachusetts. David Auerbach is an associate analyst,
Health and Human Resources Division, Congressional
Budget Office, in Washington, D.C.
DOI: 10.1377/hlthaff.var.526
©2004 Project HOPE–The People-to-People Health Foundation, Inc.
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