Do wages matter? An econometric analysis of the nurse labor participation in California.
The current nurse shortage is a significant public health problem that hinders the delivery of health care, and is associated with poor health outcomes, poor patient satisfaction, poor working conditions and greater administrative costs. Although the number of nurses working is increasing, the demand for nursing care is increasing even faster, and the shortage of nurses is worsening. It is predicted to reach 340,000 by 2020. According to economic theory, in times of shortage, wages go up and motivate greater labor participation.
The primary purpose of this research project was to increase the understanding of the effect of wages on the level of participation of staff nurses working in California. The secondary purposes were (a) to describe nurse wages across the state and (b) to assess their effect on the number of hours worked, accounting for gender, age, race/ethnicity, marital status, other income, level of education, location of education, location of employment, position held, and region of residence within the state. In order to achieve these goals, cross-sectional analyses were conducted using secondary data collected by the California State University, Chico on behalf of the California Board of Registered Nursing in 2004. Data were collected via an anonymous survey submitted to a random sample of nurses with active licenses in the state.
Using analysis of variance, mean wages were compared across the 10 regions of the state. Post-hoc comparisons found that the Bay Area Region had significantly higher wages than the other regions, while North Counties had significantly lower wages. Using multiple regression and Two-stage-least-squared regression with instrumental variables, wage effects were calculated for the entire sample (n=1638) and for 28 subgroups within the sample. Wages were found to have a non-significant effect on the number of hours nurses work once they are licensed and employed. Findings corroborate the conclusion drawn in previous studies. Theoretical and analytical models need to be broaden in order to more fully represent the decisions made by the nurse population about the number of hours worked.