The Effect of Wages on the Retention of Nurses

Abstract

Proposed changes in the U.S. health care system could generate increased demand for registered nurses (RNs). Increased demand could come from: changes in coverage that could add up to 36 million Americans without health insurance to those currently with insurance; the substitution of less expensive classes of labour for more expensive classes--primarily nurses for physicians; and managed care, since nurses are the most likely group to serve as case managers in a managed care system. Even without changes in the U.S. health care system, the aging of the population will generate an increased demand for nurses thrqugh the middle of the next century. The age groups who are the heaviest users of healthcare, those 65 and over, are projected to increase as a percentage of the population from 12% in 1990 to between 25 % and 30% in 2050 (Ahlburg and Vaupel 1990). It is not clear that the projected increased demand for RNs implied by healthcare reform and population aging can be met. The current demand for nursing services exceeds supply. A national study conducted in the early 1980s found that 23 % of hospitals had full time RN vacancy rates of between 15% and 30%, and 15% of hospitals had vacancy rates in excess of 30% (Beyers, Mullner, Byre, and Whitehead 1983). The root causes of nurse shortages are thought to be largely on the supply side: inadequate compensation, wage compression, undesirable work schedules, lack of professional autonomy, and increasing alternative career opportunities for young women. However, there is some evidence to suggest problems on the demand side as well: monopsony power of hospitals; and legislation that dictates job content and thus inhibits efficient substitution of health labour.