By Elizabeth G. Olson, contributor
FORTUNE – Just a few years ago, if you asked a soon-to-be college graduate what career she had her eyes on, you’d be sure to hear usual suspects like management consulting, investment banking, maybe law school. One option you would not hear? Nursing. Not so today.
Nursing, once viewed as an important but not necessarily upwardly mobile field, has made a comeback, as younger people have come to view it as a safe, secure path.
In the last decade, the number of young people (most of them women) between 23 and 26 years old to enter the field jumped by 62%, says David Auerbach, a health economist at RAND Health in Boston. “This is a striking trend,” says Auerbach, who conducted RAND’s study. “We are now growing the supply of nurses, and not worrying about a decline.”
The findings point to a turnaround after a several-decade decline in interest in nursing. In fact, nurses from other countries were recruited to the U.S. to meet care-giving needs as health-care providers faced real-time shortages and estimates that shortfalls would reach 20%, or 400,000 registered nurses, by 2020.
Currently, those who earn a nursing baccalaureate — meaning four years of college — have more than a 60% hiring rate at graduation, which is almost 2.5 times the rate of general college graduate hiring, according to figures from the Bureau of Labor Statistics.
Hospitals across the country are hiring about 5,000 people a month, although not all are necessarily health care givers. Nearly 14.2 million health care jobs were tallied in October 2011, according to a December report by Bureau of Labor Statistics. That was up from almost 13.9 million jobs a year earlier, and 84,000 were in hospitals and 173,000 in physicians’ offices and other health care locations.
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And, “community hospitals can afford to be choosy, and they are choosing to hire baccalaureate nurses, as opposed to associate nurses [who have two-year degrees],” says Peter McMenamin, a labor economist at the American Nurses Association.
The average hospital staff nurse earns between $65,000 and $70,000, according to federal figures. Other health care organizations pay upwards of $70,000, but jobs such as school nurses pay less, an average of $53,000 annually.
The profession hit a low point in 2002, when only 102,000 23 to 26-year-olds entered the profession as full-time registered nurses. But the number of entering nurses in that age group increased to 165,000 in 2009, according to RAND’s study, which examined 35 years of Census Bureau data. That represents the largest growth rate for the profession since the 1970s, according to the study.
“In the 1980s, women had other choices, and there were concerns that there would not be enough new nurses to replace the ones who were retiring,” says McMenamin.
By 1998, the proportion of registered nurses under 30 years old had fallen from 30% to 12%, according to federal data, prompting worries about the field’s future and sparking nation-wide efforts to raise awareness of career opportunities in nursing. More efforts were made to offer two-year associate degrees at community colleges and other schools, as well as accelerated nursing degrees.
As other employment possibilities, including manufacturing jobs, vanished, the federal government stepped up its financial support for training and retraining of nurses — to fill vacancies in the growing health-care sector. Some of these newly trained nurses will step into places vacated by those who have put off leaving the workforce to build their retirement savings. Currently, government figures show that about 40% of nurses are over 50 years old.
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Major changes are in the offing, though, as many of the major elements of the Patient Protection and Affordable Care Act will become active in 2014, giving millions of additional people access to health care. Even so, a shortfall in the number of nursing baccalaureate programs could “narrow the future pipeline of nurses below optimal levels,” says Auerbach, in his study, which was recently published by Health Affairs.
Last year, 55,000 qualified applicants were turned away from entry-level baccalaureate programs, up from 16,000 in 2003, according to the American Association of Colleges of Nursing. That occurred despite a hike in the number of educational slots in the past decade, to 65,000 last year, compared to 45,000 in 2000.
The current and unexpectedly large pool of U.S.-educated nurses may not resolve the nursing shortages, according to a study issued this month by researchers at New York University. The report, also published this month in Health Affairs, cites a survey of newly licensed registered nurses in 15 states that found that 53% work within 40 miles of where they attended high school.
This localization and lack of mobility hampers the ability to meet increased care needs, concludes Christine Kovner, a professor at the College of Nursing at New York University and the study’s author. She urges for more financial aid and incentives to educate registered nurses and assign them to underserved areas.
In addition to mobility, forecasts for nurses’ future careers are also complicated by studies claiming that the persistently weak economy and higher insurance premiums are driving down patient demand for services, and that reduced government spending will slice deeply into Medicare, which takes up about 15% of the federal budget and provides health care to some 48 million elderly and disabled people.
In a January 2011 report on the future of nurses, the Institute of Medicine urges that nursing education needs to be reformed to reach the goal of 80% of four-year degreed nurses. More also should attain masters and doctorate degrees, to improve patient care and “to succeed in this complex and evolving health care system,” the study recommends.
Despite the evident need and the encouragement to embrace nursing as a career, Auerbach warns, “I wouldn’t go so far as to say that the trend of more nurses will continue. It’s possible that the trend could stop in its tracks. There are so many factors involved.”
Would he advise a son or daughter to go into nursing?
“I would say go for it,” says Auerbach. “And then go on to become a nurse-practitioner. That is the future of primary care.”
Editor’s note: A previous version of this story incorrectly suggested that that there were 102,000 full-time registered nurses in 2002 and 165,000 full-time registered nurses in 2009. Instead, those two figures refer to the number of 23-26-year-olds registered nurses who entered the profession during those respective years.
