MSU study shows nursing labor market tightened, wages rose during first 15 months of pandemic

BOZEMAN — A new study from a Montana State University researcher and his colleagues provides evidence that the labor market tightened for the nursing workforce throughout the first 15 months of the COVID-19 pandemic, a period marked by falling employment and rising wages across the industry.

The paper, “Nurse Employment During the First 15 Months of the COVID-19 Pandemic,” was published today in the January issue of the journal Health Affairs. Using data from the Bureau of Labor Statistics and the Current Population Survey, which is administered monthly by the U.S. Census Bureau, the study identified and described the immediate economic impact of the pandemic on registered nurses, licensed practical nurses and nursing assistants across the U.S. from April 2020 through June 2021.

“There has been so much written about the pandemic’s impacts on nurses, but this is the first analysis of the economic impacts using national data,” said Peter Buerhaus, the paper’s lead author, a professor in MSU’s Mark and Robyn Jones College of Nursing and director of the MSU Center for Interdisciplinary Health Workforce Studies.   

Buerhaus’s co-authors include Douglas Staiger at Dartmouth College; David Auerbach, external adjunct faculty at MSU; Max Yates, a recent MSU graduate; and Karen Donelan of Brandeis University.

The researchers wrote that the COVID-19 pandemic has had dramatic impacts on health care delivery organizations and the nurse workforce they employ. Although the research team focused on the nursing workforce, their results also shed light on overall employment in major sectors of health care delivery. They found that overall employment throughout health care delivery systems – including hospitals, outpatient facilities, home health care agencies, physician offices and nursing homes – experienced an “unprecedented” decline after the COVID-19 virus was identified and began spreading throughout the country. But as employment gradually resumed in most settings, the health care labor market shifted. Overall employment in hospitals, home health and physician offices had nearly bounced back to pre-pandemic levels by June 2021 with two exceptions: Employment in outpatient facilities not only bounced back but exceeded pre-pandemic levels by October 2020, and nursing home employment continued a steady decline over the study period.

For nurses specifically, the researchers found that in the early months of the pandemic, unemployment shot up in hospitals, physician offices, home health care and outpatient clinics as patients canceled appointments and these organizations greatly reduced their operations. Between the first and third quarters of 2020, unemployment rates peaked. At their highest, approximately an additional 100,000 registered nurses, 25,000 licensed practical nurses and 90,000 nursing assistants were unemployed compared to pre-pandemic numbers.

The authors noted that unemployment has rarely been a problem for nurses in health care. For example, over the past several decades, the unemployment rate for RNs has rarely exceeded 1%.

"These findings are especially striking regarding the total supply of registered nurses,” Auerbach said. “We have gotten used to the workforce growing year after year - yet these data suggest we may be experiencing a plateau right now. That would have huge implications for delivery of health care.”

Auerbach noted that nursing unemployment during the first 15 months of the pandemic varied by settings, with increases in unemployment higher in non-hospital settings.

Furthermore, unemployment spikes in the second quarter of 2020 were higher among registered nurses and nursing assistants of color than among white, non-Hispanic registered nurses and nursing assistants.

In addition, the researchers found that the pandemic seems to have positively affected nurses’ earnings. After a decade of virtually no real wage growth, wage increases during the first five quarters of the pandemic were 9.5% for licensed practical nurses, 5.7% for nursing assistants and 2% for registered nurses. Wage increases were highest in hospital settings and also higher among the lowest-paid registered nurses, licensed practical nurses and nursing assistants.

“These data confirm anecdotal reports of rising wages among nurses and nurse aides in response to staffing challenges in both hospitals and long-term care facilities. It’s important to note regional and state variation in these effects as the pandemic flares locally and regionally in this time period,” Donelan said.

Looking ahead, the researchers plan to continue analyzing monthly data on the nurse workforce through 2021. The team also plans to make new projections of the supply of the registered nursing workforce through 2030, taking into account two factors that could greatly impact the registered nursing workforce in coming years: interest in nursing as a career and retirement plans of older nurses.

“Regarding entry into the nursing workforce, it is unclear whether the pandemic will lead to increased or decreased interest,” Buerhaus said. “With regard to exit from the workforce, an estimated 660,000 baby boom nurses are still working during the pandemic, the vast majority of whom are expected to retire by 2030. If substantial numbers of these older registered nurses exit the workforce earlier than they had planned, the size of the nursing workforce could decrease more quickly and disrupt nursing labor markets throughout the country.”

The exit and entry questions bear careful watching, Buerhaus added.

The paper is online at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2021.01289.

The research was funded by The Johnson & Johnson Foundation, The John A. Hartford Foundation, UnitedHealth Group and The Robert Wood Johnson Foundation.