Statastico appreciates nurses. They know when to apply pressure, whether to put ice (or is it heat?) on a sprain, even how to keep someone conscious who might otherwise go into shock. With a rapidly aging American population and massive cost increases in the medical industry, it’s hard to understand why there is constantly talk of nursing shortages.
Sure it seems a little simplistic, but aren’t nurse wages subject to the same supply and demand forces as other wages? If there aren’t enough nurses, don’t salaries just go up to attract more young folks into the profession? Somewhat.
Nursing has historically benefitted from a captive labor market: women. Women in the post-war years had scarcely any choice besides teaching or nursing. No longer. Women now make up 48.5% of our future doctors, and earn 47.5% of the law degrees. While the next generation of women has expanded into new occupations, nursing has remained decidedly behind the times, as seen in Chart 4.
So the nursing population is aging. But is it underpaid? It depends where you are. There are indeed shortages in rural areas and numerous states have implemented programs such as loan forgiveness to lure nurses to less desirable areas.
An economic concept called monopsony may help explain why nursing shortages persist in some of these areas. Whereas a monopoly company can dictate prices to consumers because it’s the only business in town (e.g. cable TV), a monopsony is the only employer in town for a particular industry. This means that a single hospital in a smaller town might be able to dictate wages to nurses who are unwilling to relocate.
But is there a really a looming nursing shortage? In a 2001, Douglas Staiger, an economics professor at Dartmouth predicted “a 400,000-nurse shortage in 20 years.” Despite expert projections, Statastico is going out on a limb and predicting that the shortage won’t occur.
Why? The market is already reacting. From 2000 to 2004, average inflation-adjusted nursing salaries went up by 12.8%. That’s real salary, not nominal, folks. Salaries for teachers and nurses were about equal in 1986. Now full-time nurses average $60,000 annually, while teachers make about $48,000. In fact, over the last 20 years, registered nurse salaries have risen faster than teachers, professors, architects, engineers, ubiquitous lawyers, even physicians.
The high percentage of (ahem) “seasoned” nurses does tend to skew salary averages upward. But assuming that the National Labor Relations Board doesn’t scare new recruits away from nursing by preventing unionization, we’ll surely find an unanticipated source. Currently, men make up only 5.7% of registered nurses. Perhaps more lucrative salaries will lure them to the field, reducing the taboo of the male nurse.
Gender equality may yet reach the medical profession.
Notes: Teachers include primary and secondary school teachers. Academia includes all full time college faculty. All data are median salaries except for registered nurses and teachers which are average salaries.
Sources: Teacher salaries 1996-2005: National Education Association
Teachers (national) salaries 1986-1995: Pennsylvania State Data Center
Academia, physicians, lawyers, engineers & architects 1986-2005: American Association of University Professors; Original source for Figure 3: ‘‘Median Weekly Earnings of Wage and Salary Workers Who Usually Work Full Time, by Detailed Occupation and Sex, 1983–2002’’ and ‘‘Median Usual Weekly Earnings of Employed Full-Time Wage and Salary Workers by Occupation, 2000–04,’’ unpublished tables, U.S. Bureau of Labor Statistics, January 2006.
Registered Nurse salaries 1984-2004: U.S. Department of Health and Human Services; 1986 and 2005 estimated by statastic. 1986 was calculated by averaging real salaries from 1984 and 1988. 2005 was estimated to continue the 3.1% real annual increase that occurred between 2000-2004.
CPI-Inflation statistics: Federal Reserve