MinnEcon: June 17, 2010 Archive

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Too many nursing grads? Two key views

Posted at 12:00 PM on June 17, 2010 by Paul Tosto (0 Comments)
Filed under: Health care, Jobs & unemployment

We have a great conversation rolling around the question: Are colleges over supplying nurses? The couple posts we've done are generating comments from Minnesota and across the nation with data and insights.

Please keep it going. We're doing a kind of cool, transparent journalism here as we grope for answers, and your vantage point is crucial. Tell us what you're seeing.

Researchers at Economic Modeling Specialists Inc. also continue to dig into the nurse supply issue with us, providing some great insights.

In this post, we'll highlight two important perspectives from experts who do not believe Minnesota colleges are over supplying nurses.

Jane Foote is executive director of HealthForce Minnesota, a public-private effort to boost the number of health care workers. Adam Suomala is director of member relations for Aging Services of Minnesota, a group that includes assisted living and care centers throughout the state.

"Everybody believes we're still going to be short nurses," said Foote, a former dean of nursing at Minneapolis Community and Technical College.

Looking at the data from our first post on the issue, Foote said, "The numbers don't really match up with what industry is telling us the needs are. We ask our employers that -- 'Are we preparing too many?' Their word to us is, 'Don't stop.'"

She characterized the current supply / demand situation as a "lull before the storm" as health care demands rise and Minnesota's aging nursing workforce begins to retire, although she did mention that one community college is scaling back its nursing enrollment for next fall.

The state's public two-year colleges have seen a huge jump in grads the past few years.

Foote, though, says the nursing programs are not money-makers for the state's community colleges and public funding covers about half the costs.

The challenge, she added, is that there's always a lag time between what employers say they need and the community colleges' ability to increase the flow.

Suomala made some great points in responding to our initial post. He wrote:

To date, the focus on the "right number of nurses" in Minnesota has been almost exclusively around positions in the hospital -- I would encourage you to look at the demographic "boom" of older adults hitting our healthcare system, and the many careers available today in older adult services... specifically skilled care centers, assisted living, and home care.

A common hope of emerging nursing graduates may be a day shift at Children's Hospital, but the reality is where Minnesota needs their service most is in the many expanding arenas serving older adults.

Following up, he laid out for us an array of worries about the growing and extending needs the state will face taking care of its rapidly aging population and how that will fall increasingly on nurses and other health professionals.

State officials, he said, refer to the wave as the "silver tsunami." The aging population will want more home and community-based services that may not be available "without a healthy workforce to do that work. "

Part of the challenge there, however, is convincing nurses to come to senior care, rather than hospitals. There is a pay gap with hospitals generally paying nurses better wages and offering more flexibility.

Suomala told us:

I was recently in a room full of unemployed nurses here in the metro. I asked them to raise their hands if they were looking for jobs in hospitals. They all raised their hands. I asked them who was considering a career in an aging services setting (care center, assisted living or home care, etc.). Only two hands stayed up.
Something simply has to change with the mindset of Minnesota nurses in the opportunities out there for jobs. Today and for tomorrow.
I can understand the frustration of a grad who can't get their dream position working the day shift with babies at Children's Hospital after graduation or living the life TV and film paint with shows like E.R. But that doesn't mean there aren't nursing jobs -- good jobs, rewarding jobs -- all over Minnesota today (and certainly in the future) in the field of aging services.

We're still going to dig into data in future posts about the supply and demand for nurses. But Suomala certainly has me thinking.

Could we end up in a circumstance where the system is oversupplying nurses for hospital jobs while less desirable but still vital nursing jobs go unfilled?

Once again, more questions than answers from us. Help us fill in the gaps.

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Consumer price inflation

Posted at 7:02 PM on June 17, 2010 by Chris Farrell (0 Comments)
Filed under: Economic Lookouts

From chief economics correspondent Chris Farrell

Government statisticians reported earlier today that U.S. consumer prices (CPI) fell a second straight month during May. Over the past 12 moths consumer inflation has been running at a 2% pace.

The so-called core rate of consumer inflation--the CPI minus volatile food and energy--is up 0.9%. In essence, consumer inflation is non-existent and that's good news. It relieves pressure on the Federal Reserve to raise rates and reassures investors that neither a steep rise in prices or a sudden drop in prices is imminent.

After all, a key measure of the economy's health is what's happening to the overall price level.

Here's why. What will a dollar be worth in a year, 5 years, 10 years from now? Trusting that a dollar will hold its value--that a dollar today will still be worth a dollar in a year or in ten years encourages us to do all kinds of good things, such as saving and investing. And vice versa, of course.

Statisticians at the Bureau of Labor Statistics calculate the consumer price index by tabulating price quotes on about 80,000 goods and services collected in 87 urban areas and from some 23,000 retail and service businesses. Data on rents come from 50,000 landlords or tenants.

The numbers are adjusted in mathematically sophisticated ways to come up with an index. Still, the CPI does have it flaws.

For one thing, taking quality improvements into account isn't easy. It's not that difficult to compare price changes of books, for example. A copy of Adam Smith's The Wealth of Nations, published in 1776 still looks pretty much the same today. He'd still recognize it as his book. But some products change a lot. A digital camera is a camera, but its really different from an old Kodak or even a Nikon SLR.

The CPI struggles to incorporate the impact of new technologies that attract a lot of consumer dollars and affect our quality of life, such as personal computers, cell phones, and MP3 players.

There's more. Another issue is called substitution bias. The CPI assumes that what we buy doesn't change much. Hah! We all tend to buy less of an item that is rising in price and more if prices are falling. A classic example is going to the supermarket and loading up on chicken when the price of meat goes up, or filling the basket with apples rather than oranges because apples are suddenly cheaper.

Let me add one more layer of complexity. It's called outlet bias. It simply means we shop at different stores than before. When I started buying CDs in the early 1990s I'd go to a record store. By the late 1990s, you could buy CDs on the cheap at big discount stores. Guess where more and more people bought their CDs. But now we download them.

Nevertheless, despite all these problems the CPI is pretty decent measure of the overall price trend. Even better you can get a market-based measure of inflation expectations using Treasury Inflation Protected Securities (TIPS). The yield on TIPS is forecasting that the rate of inflation will be slightly under 2% over the next 5 years and a fraction above 2% over the next 10 years.

Of course, many economists and investors worry about high and rising inflation in the future. Not now, but perhaps in a year or two. Their fear is that inflation will follow the enormous efforts Washington made to stave off a depression over the past two years. The inflation-is-coming crowd is making a huge bet on gold, a traditional haven against the ravages of inflation. The yellow metal closed at $1247.2 on the Comex on June 17, 2010--up about 25% over the past year.

What's the big deal with changes in the overall price level? Not much if the price changes are modest, up 1 or 2 percent, down 1 or 2 percent (that's called deflation). But history shows that society starts breaking down when trust in money deteriorates. In a sense, the inflation rate and the deflation rate is a barometer of the economic and social health of a nation. Both are bad at the extremes.

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