ANTHOLOGY Nurses' Earnings, Monopsony, Compensating Differentials, and Comparable Worth CHARLES A. REGISTER Kent State University When thinking of the peculiar economic institution known as monopsony, the nursing profession often comes to mind, given that a vast majority of nurses are employed by hospitals and the near monopoly position of many hospitals. The purpose of this research is to consider the existence of monopsony in the nursing market while also shedding light on other determinants of nursing incomes. When considering the factors which could determine nursing incomes, several possibili- ties quickly come to mind: monopsony, compensating differentials, market conditions, and discrimination. The data is taken from the 1980 Census and the American Hospital As- sociation's 1980 survey and covers the nation's 100 largest SMSA's. To determine the ex- planatory power of each of these suspected determinants the following model, where the dependent variable is the log of the median 1979 earnings of full-time nurses in the SMSA, is specified. Y= a~ + a2INC + a3AGE1 + a4SUP + asAGE + a6CR + aTMALE + a8BLACK (1) INC is the median income of employed individuals in the SMSA. Expecting nurses to be paid more where average incomes are higher, a positive sign is expected. The out- come was as expected and highly significant (well beyond the .05 level). A GEl is the median age of the population in the SMSA and, assuming the demand for hospital care rises with age, AGE1 should serve as a proxy for nurse demand. SUP is the ratio of nurses in an SMSA to the number of inpatient days and, thus, should proxy for the relative supply of nurses. Con- sequently, positive and negative signs, respec- tively, are expected. The estimation shows that, while the signs are correct, only the coefficient on SUP is significant at the .05 level. To account for differences in work expe- rience between regions, AGE, the median age of nurses in an SMSA, is included. As pre- dicted, the sign on this coefficient was positive but, unfortunately, insignificant. CR is the proportion of inpatient days accounted for by the eight largest hospitals in an SMSA and proxies for monopsony. Sur- prisingly, the coefficient on this variable was positive, though insignificant. Finally, MALE (BLACK) is the proportion of nurses in an area who are male (BLACK). Thus, a positive (negative) sign was expected. A positive and significant sign (.05 level) was found for MALE, suggesting that one reason for the traditionally low wages of nurses is that the sector is female dominated, a result clearly consistent with arguments advanced by proponents of comparable worth pay schemes. Surprisingly, however, the coefficient on BLA CK was positive and significant (.1 level). While unex- pected, this may reflect the phenomena of the "positive effect of the double negative" in that almost all black nurses are also female. It would appear that our predisposition to suspect monopsony in the determination of nursing earnings may be questionable. While the "loss" of the monopsony angle is a significant research loss, the finding relative to the comparable worth argument should cause nurse earnings studies to become of more, not less, interest. 86

Nurses' earnings, monopsony, compensating differentials, and comparable worth

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ANTHOLOGY

Nurses' Earnings, Monopsony, Compensating Differentials, and Comparable Worth

CHARLES A. REGISTER Kent State University

When thinking of the peculiar economic institution known as monopsony, the nursing profession often comes to mind, given that a vast majority of nurses are employed by hospitals and the near monopoly position of many hospitals. The purpose of this research is to consider the existence of monopsony in the nursing market while also shedding light on other determinants of nursing incomes.

When considering the factors which could determine nursing incomes, several possibili- ties quickly come to mind: monopsony, compensating differentials, market conditions, and discrimination. The data is taken from the 1980 Census and the American Hospital As- sociation's 1980 survey and covers the nation's 100 largest SMSA's. To determine the ex- planatory power of each of these suspected determinants the following model, where the dependent variable is the log of the median 1979 earnings of full-time nurses in the SMSA, is specified.

Y= a~ + a2INC + a3AGE1 + a4SUP + asAGE

+ a6CR + aTMALE + a8BLACK (1)

INC is the median income of employed individuals in the SMSA. Expecting nurses to be paid more where average incomes are higher, a positive sign is expected. The out- come was as expected and highly significant (well beyond the .05 level).

A GEl is the median age of the population in the SMSA and, assuming the demand for hospital care rises with age, AGE1 should serve as a proxy for nurse demand. SUP is the ratio of nurses in an SMSA to the number of inpatient days and, thus, should

proxy for the relative supply of nurses. Con- sequently, positive and negative signs, respec- tively, are expected. The estimation shows that, while the signs are correct, only the coefficient on SUP is significant at the .05 level.

To account for differences in work expe- rience between regions, AGE, the median age of nurses in an SMSA, is included. As pre- dicted, the sign on this coefficient was positive but, unfortunately, insignificant.

CR is the proportion of inpatient days accounted for by the eight largest hospitals in an SMSA and proxies for monopsony. Sur- prisingly, the coefficient on this variable was positive, though insignificant.

Finally, M A L E (BLACK) is the proportion of nurses in an area who are male (BLACK). Thus, a positive (negative) sign was expected. A positive and significant sign (.05 level) was found for MALE, suggesting that one reason for the traditionally low wages of nurses is that the sector is female dominated, a result clearly consistent with arguments advanced by proponents of comparable worth pay schemes. Surprisingly, however, the coefficient on BLA CK was positive and significant (.1 level). While unex- pected, this may reflect the phenomena of the "positive effect of the double negative" in that almost all black nurses are also female.

It would appear that our predisposition to suspect monopsony in the determination of nursing earnings may be questionable. While the "loss" of the monopsony angle is a significant research loss, the finding relative to the comparable worth argument should cause nurse earnings studies to become of more, not less, interest.