Study Says Attracting Nurses Is Easy: Pay More

A new study by the Institute for Women's Policy Research (IWPR) finds that increasing nurses' pay is the most direct way to solve the hospital nurse shortage.

According to the study, "Solving the Nursing Shortage through Higher Wages," basic economic principles of supply and demand suggest that,

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 nurse 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 (see Table at right).

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 workforce responded immediately, with a 2.8 percent decline in employment from 2003 to 2004.

Most analyses of the nurse workforce 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.

The study also finds that unionization is a successful strategy for raising nurses' wages. At the state level, hospital nurses who are union members enjoy a 13 percent wage boost compared to those who 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). Tennessee ranks among the bottom 10 states for union density and for hospital nurses' median hourly wages, at $20.21 ($42,037 annually).

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

IWPR's analysis finds that unions yield an average 28 percent boost in nurses' wages across 67 of the largest metropolitan statistical areas (MSAs) in the U.S. Oakland, Calif., one of the most unionized MSAs for hospital nurses, also has the highest median hourly wages for hospital nurses: $38.85 ($80,808 annually). Memphis,Tenn., is one of the least unionized MSAs and has the lowest median hourly wages for hospital nurses, at $19.56 ($40,685).

Unions also increase hospitals' staffing ratios, which in turn boosts patient care.

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, Ken., one of the least unionized MSAs, has a nurse/patient ratio of 0.61 (3 nurses for every 5 patients).

"On International Women's Day, we should take note of the hard work and worth of our nurses. The risks they take in terms of injury and illness, and the time they devote to developing their skills, should lead not only to fair wages, but also the opportunity for wage growth," says IWPR President Dr. Heidi Hartmann. "Unions have long proven an effective strategy for improving women's earnings across a variety of fields, and the same is true for nurses."

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.

The study was funded by the Service Employees International Union.

"Understanding the link between pay and employment is the key to solving nurse staffing concerns," according to Dr. Vicky Lovell, report author and IWPR study director for employment and earnings. "Hospitals can take the 'high-road' approach to meeting their patients' needs, without overworking the nurses they've got or subjecting patients to lower quality care. When hospitals compensate nurses fairly, it's easier to recruit and retain skilled staff."

The Institute for Women's Policy Research conducts rigorous research and disseminates its findings to address the needs of women, promote public dialogue, and strengthen families, communities, and societies.

IWPR focuses on poverty and welfare, employment and earnings, work and family, health and safety, and women's civic and political participation.

To access this report or for more information about IWPR, visit www.iwpr.org.