Market Demand for Nurses Skyrocket in Colorado

Nationwide statistics show that the United States holds a 12% shortfall in the amount of needed nurses needed in the medical industry (Colorado Center For Nursing Excellence, 2007). This shortfall has had a tremendous impact on the state of Colorado. Facing shortfalls higher than the national average, wages for nurses continue to rise, new government policies continue to increase demand, and nationwide competition for nursing positions create opportunity advantages for individuals in this field and those wishing to enter it. Currently, estimated growth projects that over the next ten years, in Colorado alone, 2,000 new job openings per year, in nursing, will be needed to be filled.

By the year 2010, Colorado will be estimated to have 17% fewer nurses than needed (Colorado Center For Nursing Excellence, 2007). This shortfall is not for a lack of interest in the industry, currently the Colorado State Board of Nurses show that 1,600 students graduated from Colorado Nursing Schools in 2005 and these graduation numbers are continuing to rise (Colorado Center For Nursing Excellence, 2007). However, with over 2,000 new job openings per year and only 1,600 graduates to potentially fill these positions, shortages will continue to climb.

Factors Influencing Supply and Demand of Nurses

This increase in demand for the supply of nurses in the state of Colorado has had a great effect on the wages offered to nurses. Wage determination for nurses in Colorado, as outlined by Colorado Nurses Association (1999), varied based on education, experience, evidence of competency, and geographic location. These determinations of wages may remain true, but the shortage of nurses plays a wage factor in the supply and demand of this industry. Mankiw (2004) shows us important principles of economics, people respond to incentives and people face trade offs. In making a decision to enter the workforce or educate one's self to specialize in a particular industry, people will compare costs and benefits. If the education cost is relatively low compared to the potential wage to be earned in a particular industry, this industry will attract more people. Because the demand for more nurses has increased, the wage for nurses has also risen. The median base income for registered nurses in Colorado is estimated to be 63,500 dollars per year (Salary.com, 2008). This is 10% higher than wages reported in 2005 where median base salaries averaged 57,000 dollars per year (Colorado Center For Nursing Excellence, 2007). It is also important to note that that this industry requires an investment in human capital (knowledge and skills acquired by workers through training and education). This investment further reduces the amount of supply in the industry. Higher wages offered to nurses are increasing supply in this industry, but shortages still remain and again, projections show that the percentage shortfall will continue to rise.

Tradeoffs faced by people also affect the supply and demand of nurses in Colorado. The nursing profession requires individuals that can commit themselves to long hours, scenes of trauma, investment in education, and in some cases shift work. Some, confronted with these commitments, may tend to focus their attention to different industries that require the same amount of education investment and reciprocating pay, but offer better hours and lack the emotional trauma faced by nurses. An example of competitive and fast growing industries can be seen in the information and technology industry. Average base pay, for lower supervisory roles in Colorado, is estimated at $76,000 dollars per year (Salary.com, 2008). So in this tradeoff, individuals can choose to invest a vast amount of time, energy, and emotion into an industry with good pay and little peer competition for work or it can invest in an industry with better hours, comparable pay, in a more peer competitive industry. In addition to competing industries, nationwide competition for nurses affects the Colorado nurse supply as well. With a national shortage of nurses, competition for a supply of nurses encourages migrations of workers to facilities in other states that offer better pay and incentives.

Many other factors contribute to the increasing demand in supply for nurses. These include nurses retiring, a growing population, requirements for higher education, not enough educator or education facilities, Medicaid and Medicare programs, and, surely, more. Nonetheless, another principle of economics tells us that governments can sometimes improve market outcomes (Mankiw, 2004).

Government Involvement? Solutions?

So, with this shortage in supply and the knowledge that governments can sometimes improve market outcomes, can Colorado find a solution to meet or equalize the market demand? Many would see Colorado's inability to allocate resources to meet supply as market failure. This would deem a necessary situation for government involvement to promote equity. However, government policy has become one of the factors that contribute to the shortage in supply of nurses. Programs like Medicaid, Medicare, and CHP+ allow for those who cannot afford healthcare to receive it by assistance by government agencies. Therefore increasing the demand for medical service and requiring medical facilities to hire medical staff to supply this demand. This may sound like a call to not provide medical care to those who cannot afford it, but it is not. This is only a reflection of how government policies are a factor of supply in this industry. However, without this policy the 545,000 people receiving this assistance in Colorado would help to reduce the demand of supply. Although economically sound, those that need medical assistance should be able to receive it.

Solutions, some not so attractive to the consumer, can be found to help equalize the demand for nurses in Colorado. With increasing wages industry wide, health care providers are forced to raise cost to maintain wage equilibriums. This causes health insurance companies to raise premiums, co-pays, etc... With these costs passed onto the consumer, larger deductibles or co-pays would cause consumers to lessen visits to medical facilities for lesser injuries, colds, etc... Therefore, increasing price areas of health coverage could help equalize the demand of supply. State and federal government agencies could also promote open nurses positions, in the nation and in Colorado, to qualified persons in foreign nations. Moving allowances and other incentives could very well attract a foreign workforce. State agencies could also offer scholarships and grants to students willing to enter the nursing industry. This would appeal to the opportunity cost of students that would otherwise choose another industry.

Solutions for the shortage of nurses in Colorado seem hard to come by, but one needs to be found. Whether we raise prices, increase incentives, promote positions overseas, or restructure current policies, the somewhat unseen shortage could quickly become a crisis. Action on some level needs to be taken to meet the critical supply needs of this industry.

References:

Colorado Center For Nursing Excellence (2007). Supply and Demand Trends. In Colorado's Nursing Workforce 2007 (pp. 1-5). Retrieved May 29, 2008, from http://www.coloradonursingcenter.org/Downloads/PDF/CCNE_Legislative_0107.pdf

Colorado Nurses Association (1999, June). Position Statement on Employment Standards for Registered Nurses. Colorado Nurse. Retrieved May 30, 2008, from http://www.nursingald.com/uploads/newsletters/CO081999.pdf

Mankiw, N. G. (2004). Principles of economics (3rd ed.). Chicago, IL: Thomson South-Western.

Salary.Com. (2008). Staff Nurse -RN- in Denver. Retrieved May 30, 2008, from http://swz.salary.com/salarywizard/layoutscripts/swzl_salaryresults.asp?hdKeyword=nurse&rdbSearchByOption=0&hdOmniNarrowDesc=Healthcare%20--%20Nursing&hdZipCode=80226&hdStateMetro=51&jobcounter=1&hdSortBy=0&hdJobCode=HC07000001&pagefrom=selectjob&hdJobCat