"Market Meddling" artificially suppressing nursing wages

  1. I found these comments at the Star Tribune website, and felt they were worth sharing.


    "In a letter to the New York Times, Dr. Richard Amerling suggested that the shortage was the result of serious market meddling and would resolve if the market were allowed to set prices(i.e. wages)."

    "The Amerling letter was published 4/10/01 in the NYT. I wish someone with a background in economics would flesh his idea out a little (any takers?)

    You're absolutely right about the wrong-headed productivity standards applied by hospitals and HMOs. As one nurse so elegantly told Paul Wellstone and Mark Dayton during their recent public hearing on nursing issues, we're not making widgets; we're healing people.

    One of the most depressing things I ever read was David Strand's opening remarks to the Abbott Northwestern/Phillips Eye Institute negotiations. I think he truly intended to compliment the nurses by saying that patients and families appreciate the "little" things we do-the touch, the shared moments at bedside, etc. Nursing is about therapeutic relationship, and the time spent with patients is not a little thing. It is the human thing that is systematically being ground out of nursing by the march of business. Bathing someone takes no talent. Bonding with a patient and instilling in him a sense that there is hope and his life is worth living despite the devastating loss of the ability to care for himself is the miracle that is nursing at its best. Bean counters see the bath and can't comprehend why I can't do six or seven of them in a day instead of two." _-Connie Ferdinand (Nursing Shortage startribune.com editor)

    Well stated Connie!

    [ June 01, 2001: Message edited by: PeggyOhio ]
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  2. 9 Comments

  3. by   PeggyOhio
    This is another article that makes similar claims and even accuses collusion.

    The Migration and Incorporation of Filipino Nurses
    Paul Ong and Tania Azores
    Paul Ong, et al. Editors, The New Asian Immigration in Los Angeles and Global Restructuring. Philadelphia: Temple University Press, 1994.


    The dis-equilibrium in the nursing labor market is not merely the result of the dynamic mismatch between supply and demand.

    The shortage is tied to wages that have remained below market level because hospitals, which employ about 70 percent of the nurses, have colluded to set rates.

    Under monopsonistic conditions, which exist when there is one buyer of labor and many sellers of labor, a firm can maximize profits by setting wages below the market rate.

    Consequently, there is excess demand, or its equivalent, labor shortage, at the prevailing wages, and the value derived from the employees is greater than the wage bill.

    When there is more than one firm, monopsony outcomes are achieved through employers acting in unison to set wage rates. Both empirical and legal evidence show that hospitals have indeed operated in such a fashion (Cleland, 1989, 166167; Yett, 1975).

    Hospitals have been able to collude because their product market is local in scope; thus the number of buyers of labor is sufficiently small that employers can act as a cartel. For example, facilities in southern California operated through their local hospital association to keep wages down (Hunter, 1986, 132).

    The ability to pursue such actions has been enhanced by the recent trends in mergers in the health care field, which not only increase corporate profits (Woolley, 1989) but also facilitate monopsonistic behavior in the labor market by shrinking the number of hospitals per local market.

    Nursing wages are further depressed by sex-based wage discrimination at the occupational level. One of the realities of the United States's labor market is a significant degree of segregation by gender, which produces many occupations that are predominantly male or female. Through both economic and institutional mechanisms, the gender composition of an occupation influences wage levels independent of personal and other structural characteristics, with wages falling as the female proportion increases (Sorensen, 1989).

    Wage levels in nursing, which remains overwhelmingly female, have been kept low through this form of sex discrimination. Although alternative job-evaluation models yield widely varying and sometime conflicting estimates of the impact of occupation-based discrimination, the results for registered nurses consistently show that their wages should be increased to achieve equity, by anywhere from a low of 14 percent to a high of 68 percent (Aaron and Loughy, 1986, 3335).


    Granted this is an old article, 1994, but my paycheck hasn't changed dramatically since then.

    I wonder if there is any new information on this topic out there?
    Full Article

    [ June 01, 2001: Message edited by: PeggyOhio ]
  4. by   Charles S. Smith, RN, MS
    Originally posted by PeggyOhio:
    <STRONG>This is another article that makes similar claims and even accuses,

    The Migration and Incorporation of Filipino Nurses
    Paul Ong and Tania Azores
    Paul Ong, et al. Editors, The New Asian Immigration in Los Angeles and Global Restructuring. Philadelphia: Temple University Press, 1994.


    The dis-equilibrium in the nursing labor market is not merely the result of the dynamic mismatch between supply and demand.

    The shortage is tied to wages that have remained below market level because hospitals, which employ about 70 percent of the nurses, have colluded to set rates.

    Under monopsonistic conditions, which exist when there is one buyer of labor and many sellers of labor, a firm can maximize profits by setting wages below the market rate.

    Consequently, there is excess demand, or its equivalent, labor shortage, at the prevailing wages, and the value derived from the employees is greater than the wage bill.

    When there is more than one firm, monopsony outcomes are achieved through employers acting in unison to set wage rates. Both empirical and legal evidence show that hospitals have indeed operated in such a fashion (Cleland, 1989, 166167; Yett, 1975).

    Hospitals have been able to collude because their product market is local in scope; thus the number of buyers of labor is sufficiently small that employers can act as a cartel. For example, facilities in southern California operated through their local hospital association to keep wages down (Hunter, 1986, 132).

    The ability to pursue such actions has been enhanced by the recent trends in mergers in the health care field, which not only increase corporate profits (Woolley, 1989) but also facilitate monopsonistic behavior in the labor market by shrinking the number of hospitals per local market.

    Nursing wages are further depressed by sex-based wage discrimination at the occupational level. One of the realities of the United States's labor market is a significant degree of segregation by gender, which produces many occupations that are predominantly male or female. Through both economic and institutional mechanisms, the gender composition of an occupation influences wage levels independent of personal and other structural characteristics, with wages falling as the female proportion increases (Sorensen, 1989).

    Wage levels in nursing, which remains overwhelmingly female, have been kept low through this form of sex discrimination. Although alternative job-evaluation models yield widely varying and sometime conflicting estimates of the impact of occupation-based discrimination, the results for registered nurses consistently show that their wages should be increased to achieve equity, by anywhere from a low of 14 percent to a high of 68 percent (Aaron and Loughy, 1986, 3335).

    Granted this is an old article, 1994, but my paycheck hasn't changed dramatically since then.

    I wonder if there is any new information on this topic out there?
    Full Article

    [ June 01, 2001: Message edited by: PeggyOhio ]</STRONG>
    Thanx Peggy for the information. As I have repeatedly stated in numerous posts, the economic principles of supply and demand must be understood and embraced by nurses. Most nurses do not realize that WE have the power to create our own demand for nursing services and at the same time increase our livable compensation. Nurses must learn some business skills in order to defeat the monopsony power of hospitals and other healthcare settings and to prevent the type of wage collusion that is couched in the all too frequently heard statement "our hourly wages are in step with the other hospitals in the area". If you want to learn how to gain business skills, email me or go to our company website. I certainly believe with all my heart that Independent Practice for Professional RNs is the best way to have a fulfilling and financially rewarding healthcare career.

    best regards
    chas
  5. by   Jay-Jay
    Thanks so much for posting this, Peggy! Most of us had NO IDEA how royally we're being screwed as far as wages go! This article spells it out in detail!

    Makes me wonder why the heck I stay in this profession....
  6. by   Jay-Jay
    No, Peggy, that certainly wouldn't work!! I was referring to your post only...wanted to know more about what you were thinking when you made it. Please elaborate...sounds interesting!
  7. by   Charles S. Smith, RN, MS
    Originally posted by PeggyOhio:
    <STRONG>I'd prefer a "class action"..
    Any takers?</STRONG>
    Class actions are usually mired in legal wrangling that takes an exorbitant time to complete...sometimes years. Many of the solutions are available to us today. Why wait?
    chas
  8. by   PeggyOhio
    Why let it continue?
  9. by   PeggyOhio
    I'd prefer a "class action"..
    Any takers?
  10. by   Jay-Jay
    You mean a class action, in preference to going into independent practise, Peggy? Would such a suit have a prayer of being taken seriously?
  11. by   PeggyOhio
    Jay-Jay
    Now I'm the one who's confused. Your Canadian, are you not? Who would you sue your government?

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