THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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April 20, 2022

Where are all the millennial nurses going?

Daily Briefing

    The pandemic has had a significant impact on nurses, particularly as large numbers of younger workers leave the profession, according to recent analyses published in Health Affairs—and experts say new efforts are needed to sustain the nursing workforce in the long term.

    America can't hire enough nurses. But that's not the only problem.

    How the pandemic has impacted nursing employment

    According to data from the U.S. Bureau of Labor Statistics, there was a decline in overall health care employment during the first 15 months of the pandemic between February 2020 and June 2021—an unprecedented situation that has not been seen in decades.

    The decline in employment varied by sector, with many, including physician offices, outpatient care centers, and home health care, seeing the largest declines in April 2020. Since then, most sectors, aside from nursing homes, have seen their employment rates largely return to pre-pandemic levels.

    Among nurses, unemployment was highest in the third and fourth quarters of 2020. In 2021, the unemployment rates for LPNs and RNs largely declined to their pre-pandemic levels, but they remained elevated for nursing assistants (NAs). In addition, nurses who were Asian, Black, Hispanic, or from other racial/ethnic minority groups continued to see higher unemployment rates than white nurses during the first two quarters of 2021.

    Overall, employment of LPNs and NAs decreased by 20% and 10%, respectively, when comparing the pandemic (April 2020 to June 2021) with the period right before it (October 2018-December 2019). In comparison, RN employment saw just a 1% decrease during the pandemic compared with the period before it. However, this decline was still a significant departure from the steady growth seen between 2011 and 2020.

    According to Health Affairs, the total supply of RNs decreased by more than 100,000 workers over the course of 2021—the largest decline observed in over four decades. In total, the RN workforce decreased by 1.8% in 2021 compared to before the pandemic.

    The decline was largely driven by RNs under 35, who saw the largest reduction in numbers at 4%. RNs over the age of 50 saw the second largest decline at 1%, while RNs between ages 35 and 49 saw the smallest at 0.5%.

    This decline in the nursing workforce was particularly significant when compared with what a model predicted if the pandemic had not happened. In the model, the nursing workforce was projected to grow by 4.4% between 2019 and 2021, rather than declining by 1.8%. This resulted in a difference of approximately 200,000 fewer workers (6.2%) than expected. Among RNs younger than 35, there were 80,000 fewer workers (8.8%) than expected.

    The future of the nursing workforce

    Going forward, the nursing workforce is likely to be impacted by younger RNs leaving the profession, which could significantly decrease the workforce and disrupt the labor market.

    According to Health Affairs, "A sustained reduction in the number of younger age RNs would raise ominous implications for the future workforce. Because RNs typically remain working in nursing over their career, a reduction of younger RNs in the workforce would exert an impact that is felt over a generation, in contrast to a relatively modest reduction in long-run RN supply due to early retirement of the baby boomer RNs working into their 60s and 70s."

    And as more younger RNs leave the profession, there may also be a reduced interest in nursing overall. In fact, the number of applicants to four-year Bachelor of Nursing programs, which is often used as an early indicator of long-term nursing supply, grew just 1.3% in 2020, compared with 4.5% and 8.5% in the two previous years. If the number of applicants further slows or decreases in 2021, the nursing workforce could be further reduced in the future.

    Overall, "[s]ignificantly larger efforts to support and sustain early-career nurses, who have had a trial by fire in their new profession, may be needed, along with more effective strategies to reward those who remain at the front lines and those who are needed to return," Health Affairs writes. (Auerbach et al., Health Affairs, 4/13; Buerhaus et al., Health Affairs, Jan. 2021)

     

    Advisory Board's take

    5 ways to think about addressing the nursing shortage

    Dr. Buerhaus and team's study is a much-needed infusion of information about the clinical workforce—at a time when health care leaders have never been more concerned about staffing. Broadly speaking, the team's findings are consistent with what my fellow experts are hearing from C-suites across the country and care continuum: the health care labor market is on shaky ground, and stabilizing the workforce will be one of the industry's major focuses for years to come.

    But how should leaders make sense of this information? See our five takeaways below.

    Five takeaways for health care leaders

    1. Addressing the growing experience-complexity gap should be every hospital's strategic imperative. In addition to exacerbating RN shortages, the exodus of younger nurses from the (inpatient) workforce rapidly accelerates a problem that existed well before the pandemic: the experience-complexity gap. In other words, a workforce that is increasingly made up of new graduate nurses, who are delivering more complex care. We wholeheartedly agree with Buerhaus and team that organizations must work to retain and re-recruit their young nurses—starting with creating a practice environment that equips new graduate RNs with the space and education they need to move from "novice" to "competent."

       

    2. The true barrier to expanding the nursing pipeline isn't decreasing applications, but a fewer number of clinical and educational experts. Buerhaus rightly raises the alarm on a declining number of nursing school applicants in 2020. What this trend belies is that fact that our nursing education system can't handle more students, even they did receive more applications. Schools have long struggled with a shortage of nursing faculty. And staffing shortages within clinical sites make it difficult to safety increase clinical rotation opportunities. While addressing these structural problems may not be the industry focus right now, leaders will have to turn their attention here in the not-so-distant future to make up for the exodus of younger staff.

       

    3. Widening compensation differentials by site-of-care are setting up a cross-continuum war for clinical talent. Compensation differentials between care sites are not new, particularly between hospitals and skilled nursing facilities. But the widening compensation gap Buerhaus identifies between these sites of care places makes already tenuous nursing home staffing an existential threat, as inpatient staffing shortages create a negative vacuum pressure drawing post-acute clinicians to comparatively lucrative bedside roles. This competition for staff is likely inevitable. But hospitals may have to support their post-acute partners to train or recruit staff regardless, lest they experience debilitating discharge delays due to SNF bed closures.

       

    4. Rising labor costs are here to stay. To be clear, it's great to see wages rise—particularly among LPNs and nursing assistants who averaged hourly rates of just $23.32 and $14.77 respectively in May of 2019. These wage gains are critically important to financially stabilize the clinicians not only underpin care delivery broadly speaking, but who are often the primary caretakers of our most vulnerable: seniors. Given that we expect for these staffing shortages to persist, health care providers should think of these rising wages not as temporary, pandemic-triggered investments, but as permanent changes to their workforce strategy—and readjust their cost structure accordingly.

       

    5. Equity must underpin future workforce strategy. Buerhaus notes that though the labor market is becoming more candidate-centric, these advantages have not been equitably distributed. Specifically, clinicians of colors experienced persistently higher unemployment rates than their white peers. In other words: workforce leaders still have much room to grow to create inclusive work environments reflective of their patient population. Doing so must be a central component of the next phase of workforce strategy, particularly as nurses of color make up a larger proportion of the overall workforce.

    The bottom line: The data we are observing continues to reflect clinical shortages will be an ongoing challenge. Leaders are likely entering a future in which they will need not only to re-shape their organization's employee value proposition, but fundamentally change the way they deliver care so our systems can do so safely and effectively with a fewer number of clinicians.

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