The Nursing Shortage: Factors Affecting Supply and Demand

The Nursing Shortage: Factors Affecting Supply and Demand

This is part four of a four-part series about the nursing shortage. Part one provided a historical perspective and examined conflicting predictions about the scope of the shortage. Part two looked at the ways in which professional experience levels factor into shortages. Part three focused on the role of the education pipeline in meeting industry demand for nurses in various specialties.  Since industry trends tend to influence health policy decisions—as well as YOUR career choices—it’s important to understand the forces at play in today’s nursing labor market.

In a free market, labor supply generally keeps up with job market demand over time, as higher wages and the promise of greater job security attract people to an in-demand profession. So why is this not the case with nursing, if we are indeed plagued with perennial labor shortages?

First of all, let’s remember that predictions about the nursing labor market (see part one of this series) are not necessarily destined to become fact. These forecasts are tools that industry leaders use to guide policy-making at the national, local, and organizational level. Many factors affect supply and demand within the nursing labor force, and these fluctuate constantly.

Economists consider the nursing job market to be countercyclical in respect to the overall economy. This means employment goes up during recessions, rather than down. Why? During economic downturns, the demand for healthcare does not decline, and hospitals must remain staffed. Nurses who left the workforce during more prosperous times are easily able to move into existing job openings during lean times, to help provide for their families. Of course, this relates closely to the demographics of the nursing workforce: over 70 percent of nurses are married women. They may put a career on hold or move to part-time employment several times in their lives, as family, children, and other interests take precedence over work. All of this makes the nursing workforce relatively volatile. There are about 2.7 million registered nurses working in the U.S., according to the Bureau of Labor Statistics, and nearly another 500,000 who hold a license but are not currently working in the field, according to a 2010 government report.

Unfortunately, job satisfaction plays a heavy role in a nurses’ decision to leave the workforce or cut back on hours. A survey from 2013 found that 35 percent of respondents said they “often feel like resigning” while another 33 percent said if they had a choice, they “would not be working in their current job a year from now.” Over half said they felt their jobs had adversely affected their health—and this appears to be backed up by an NPR news investigation that cited over 35,000 musculoskeletal injuries per year among nurses. Turnover is especially high among young nurses: nearly 18 percent of newly licensed RNs leave their first nursing job within the first year, and about 34 percent leave within two years, according to a study in Policy, Politics & Nursing Practice. It seems clear that issues with retention have a significant impact on the nursing labor supply.

Our ability to educate more nurses has consistently been a roadblock in alleviating shortages. As discussed in part three of this series, nursing schools lack sufficient faculty to increase student enrollment. But geography also comes into play. Some regions simply need more nurses, due to population density and demographics. Rural areas may have a disproportionately difficult time attracting nurses, particularly in certain specialties. Policy interventions like loan forgiveness programs are an attempt to correct nursing shortages among these and other underserved populations. These regional disparities may actually be making the nursing shortage appear worse than it really is—in fact, a report by the U.S. Health Resources Services Division predicted only 16 states would see shortages by 2025, due to a distributional imbalance.

While factors like educational capacity, nurse demographics, geographic distribution, overall job satisfaction within the industry, and a booming economy may arguably be working to suppress the number of nurses in the workforce currently, the demand for healthcare is generally on the rise. The Affordable Care Act has expanded access to care, the population as a whole is aging, and chronic conditions are becoming more common.

Despite all this, an optimistic analysis in Nursing Economics found that the current supply of nurses is probably well balanced with overall job market demand, although there will likely be regional shortages. The author concluded this way:

A small shortage of RNs could quickly be remedied by wage increases, which would draw more licensed RNs to work. Nurse leaders should track their local labor market and think about how they can creatively utilize the nursing resources available to them, while advocating that nursing graduations are maintained so the retiring Baby Boomer cohort will be adequately replaced.

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