I'm sure this is not the first time this question has been posed.

n_g · Feb 21, 2009

It's called supply and demand. Nursing education can be done quickly, therefore supply is higher than demand and hence lower salaries.

core0 · Feb 21, 2009

Maybe this is too trite to be in a new thread, but reading through these posts I have to ask. When will nursing professionals stop allowing themselves to be used and abused in such a way that an advance practice nurse, with a masters degree, 2 licenses, and hundreds of hours for credentialing, has to wonder if they are going to make less money than a staff nurse?
Are nurses just so used to being undervalued? I sound like I'm ranting and I don't mean to...I understand that patients and their families value us usually. I understand that we are in this profession for more than just money. But please let's face it, a nursing professional is underpaid and undervalued at any level of the hierarchy...with the exception of few fields, I imagine.
My question is...what are we really doing about it other than finding reasons why it is the way it is. It reminds me of how librarians in my area were expected to have a minimum of a masters degree for a 30k/year job. Though, it's not exactly a great analogy since librarians and nurses share very little in terms of levels of responsibility.
It really makes me angry to think that we are truly the backbone of the multi-billion (if not close to trillion) dollar industry of healthcare, and for the level of education that is expected, licensure, and for the amount of responsibility that is in our hands...we see nurses making little more than someone with a high school diploma in some places.
I know I'm not making any ground breaking statements here, but isn't it a little tiring to have to wonder if an NP will make less money that a staff nurse? Or that a BSN makes a couple bucks more then an LPN? Or that an LPN makes a couple bucks more than an Aide?
And I'm not trying to put down healthcare staff that does not have a college education in ANY way. I have much repect for anyone in our profession. I am only saying that it feels like there is less correlation between education and paycheck for nurses than in any other career I can think of.
I am thankful for this site because it brings nurses together where they might have a voice. I don't care how we got here, but I really would like to know how to overcome it.

The simple answer is that its economics. The longer answer is that the nursing pay differentials show that the value of nursing is not in the degree.

You state that there is no correlation between education and paycheck. This is true but not in the way that you appear to state. Compared to other associates or bachelors holders RNs are paid more. The average associates degree holder earns around $37k. The average ADN earns $51k according to nursing magazine. The average BSN earns only $4k more. To prove the point further the average certificate nurse earns more than the average ADN or BSN (although this probably reflects longevity in nursing). So from a purely economics standpoint, the ADN is overpaid if all associates degrees are considered equal. Again from a purely economics standpoint the BSN is valued equal to other bachelors degrees. Again this is from a purely economics standpoint, not to say that nurses don't deserve what they earn.

The second concept is relative scarcity. There are other associates degrees such as those in computer sciences that also earn pay compareable or greater than nursing. This pay is based upon the relative scarcity of people with those degrees vs available jobs. Nursing is similar but in an artifically constrained market. Hospitals in particular need a certain number of nurses. Therefore depending on the supply there is usually a relative shortage driving up pay. Note however, the requirement is not for degree but for the RN license. Therefore there is really no premium given for the bachelors. Instead the value is in the license.

The purest form of relative scaricity can be seen in California. When you limit the amount of work that the RN can do artificially (by mandating patient ratios) you drive up the price of nursing. The flip side can be seen in rural areas that have a relative oversupply of nurses. The combination is usually locally produced nurses, lack of other job opportunities, and lack of desire for relocation. In these areas you see a combination of low pay and bad working conditions. In a perfect economic system (if people were goods) nursing would flow to the areas of high pay and good working conditions until all pay was relatively equal. This points out the other social issues that come with the nursing job market.

So if the RN salary is relatively well priced at the bachelors level why should an RN take a pay cut to become an NP? This shows the value of longevity. Again from an economics standpoint an experienced RN is worth more than a new grad. An experienced nurse is more efficient, requires less support and is less likely to make mistakes that cost the company money (according to nurse efficiency experts at least). This experience differential is not linear and is born out by the relative plateauing of nursing salaries after five to seven years. How does this relate to NPs? Because a new grad NP is just that a new grad all over again. The same inefficiencies and training needs exist. Therefore the new grad NP has less value (in economics theory) than an experienced NP. If the bottom of the new grad NP pay scale and the top of the experienced RN pay scale overlap then you have a situation where you take a pay cut to work as an NP. Note it would be incredibly rare for an inexperienced RN transitioning to the NP role to take a pay cut. The pay cut results from the proportionally smaller value that is placed on the RN experience in the NP role. Note also that in situations where there is market distortion through unions or other contracts it would be very rare for this situation to occur since the pay scale of the NP is placed in a rigid hierarchy without overlap.

The final piece of this picture come in the difference in how RNs and NPs are paid. RNs are considered part of the hospital costs and their pay is caculated as part of the overall hospital bill. This also allows the hospitals to shift costs somewhat in times of relative scarcity (given that payroll is the largest hospital cost and RNs are the largest part of payroll). The same forces can be seen in the LTC environment. This is a more capitated environment with largely a single payor. The decreased pay of RNs in this environment can largely be attributed to the LTCs inability to negotiate reimbursement and inability to cost shift.

NPs on the other hand are paid based upon their reimbursement by insurance companies. This reimbursement is relatively fixed although open to some extent to negotiation with insurance companies. Most employers of NPs are either small or large businesses which enjoy relatively little opportunity to cost shift. In addition the majority of NPs are employed in primary care which has the worst reimbursement of all the medical specialties. This is probably the major reason for the pay disparity. The movement from from the area of nursing with the highest reimbursement (inpatient) to the area of NP work with the lowest.

No simple answer, rather the product of many forces.

David Carpenter, PA-C