How much nurse pay is rising—and why

By Karl Whitemarsh

It was inevitable that we would get to this point: baseline nurse compensation on a clear upward trajectory. Inevitable because this boils down to laws of supply and demand. Amid a clear nursing shortage, organizations are being forced to raise baseline compensation to compete for increasingly scarce qualified nurses. This is true in nearly every market, even for those considered to be 'destination employers.'

If anything, what's most surprising in the data from Premier is the moderated increase of around 4%. From a worker's perspective, that's not even covering cost of living increases due to inflation. However, amid this new data, it's important to keep two things in mind:

Two considerations for health care leaders

1. New data only captures baseline compensation.

   Differentials—which organizations must standardize and expand across shifts, specialties, and even settings—plus overtime put baseline compensation much higher. Not to mention lucrative sign-on bonuses, that members tell us are increasingly table stakes in their markets. In general, we don't recommend this type of incentive that does nothing for retention. You're better off investing those resources in baseline compensation as well as beefing up your RN bonus plan to incentivize retention.



2. There is a new floor for wages (and it's only going up from here).

We're witnessing the creation of a new floor for wages, and it's most likely only up from here. We have yet to see any indication that the supply woes will right themselves anytime soon with a historic injection of new nursing talent, so there's no reason to expect wages will do anything but increase steadily in the coming quarters.  

Open questions (and important indicators) we are assessing

• What happens to wages for entry-level clinical roles? As the shortage of RNs persists, organizations will need to make a shift to team-based models of care, and those are only possible with a stable workforce of entry-level personnel. Right now, that part of the health care workforce is anything but stable. When you consider their work and their wages in comparison to out-of-industry players that pay the same or better, that's a clear area where investment is required.

   

• Will the share of nurses working permanently with travel agencies return to pre-pandemic levels? That's to say, what will those RNs who experienced the traveler lifestyle and pay value more moving forward: the flexibility and premium pay or stability of permanent employment? Even if this number stabilizes a couple percentage points above pre-pandemic levels, that will aggravate provider's sense of shortage.

There have been concerns for years about looming supply and demand imbalances in the nursing workforce. The shortage is no longer looming. It’s here now, and it’s a crisis. In the current workforce landscape, nursing staff are not in the geographies, sites of care, or roles where they are needed most. This context is untenable and requires a different approach from the C-suite than previous cyclical workforce supply-demand imbalances.

Join us on December 16th for an executive briefing on the mindset shifts required to address the six hard truths we must accept.