Recession Affects Nursing Shortage

When it comes to the longstanding nursing shortage in the United States, researchers have good news and bad news. The good news is that the nursing shortage is over, with the economic forces of the recession mainly accounting for this positive trend. The bad news is that this trend is temporary.

A recent report published in The New England Journal of Medicine identifies and analyzes both trends. According to researchers, the healthcare industry is countercyclical in terms of employment. This means that job gains occur faster in recessions than during more prosperous times. For example, during the 18-month recession that began in December 2007, the national economy lost 7.5 million jobs. The healthcare industry gained 428,000 jobs, hiring about 243,000 full-time registered nurses in hospitals alone.

Several recession-related factors may account for this increase in hiring, which is the largest in any two-year span in the past 40 years:

  • When financial times are hard, the demand for healthcare continues.
  • Personal or family economic uncertainties persuade nurses to fill existing job vacancies.
  • Fewer alternative job opportunities make nursing positions even more attractive when nurses face financial uncertainties.
  • About 7 out of 10 nurses are married women. Many of them may return to work—or switch from part-time to full-time nursing—to shore up their household income and financial security.

The Ying and the Yang

The Congressional Budget Office predicts that by 2017 the U.S. unemployment rate will drop to 5.2%. With that and health care’s countercyclical nature in mind, analysts foresee that many nurses who joined the workforce during the recession will leave their jobs when the economy recovers, causing the nursing shortage to resurface.

To help employers anticipate how many nurses may choose to leave the workforce, analysts developed a model based on the annual unemployment rate and the size of the nursing workforce for the past 40 years. They found that a high unemployment rate was associated with a larger-than-expected nurse workforce. In other words, the nurse supply increased more than expected when the unemployment rate rose and decreased more than expected when the rate fell. Specifically, a 1% increase in unemployment was linked to a 1.2% increase in the nurse workforce.

In recent years, the relationship was even more striking. Between 2005 and 2010, the number of full-time nurses increased by 386,000. Based on the model, more than one-third of this increase was due to the 4.5% increase in national unemployment—from 5.1% to 9.6%. Based on the model, this rise in the nurse workforce is probably a temporary bubble that will deflate in the next few years.

If the unemployment rate falls to 6.1% by 2015, as economists expect, about 118,000 full-time nurses will likely leave the workforce. On top of this, a wave of baby-boomer nurses is expected to retire, further reducing the workforce. The analysts’ model suggests that between 2010 and 2015, the growth of the nurse workforce will be the smallest five-year expansion than that of any five-year period in the past 40 years. 

As a result of the Affordable Care Act, 32 million more Americans are expected to obtain health insurance coverage by 2015, boosting the demand for health care. Although the number of new nurses entering the field increased dramatically in the past decade, the actual effect on the size of the nurse workforce may not be felt until after 2020. So the growing demand for nurses is likely to outpace the growth in the workforce, again leading to a nursing shortage in the near future. Based on these findings, analysts recommend that policymakers begin planning now to counter the post-recession nursing shortage and to use incoming and outgoing nurses as efficiently as possible.

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