Avoid These Mistakes When Evaluating Travel Nursing Pay

Travel nursing pay packages can be daunting. They have more variables than permanent pay packages and different agencies pitch their pay packages in different ways. The complexities make for a lot potential pitfalls. In this blog post, we’ll discuss some of the most common mistakes when evaluating pay and how to avoid them.

How many hours are in the travel nursing contract?

You might be wondering why we’re even discussing the number of hours in a contract when we’re supposed to be dealing with the subject of travel nursing pay. Well, the number of hours in a contract is one of the fundamental components of a pay package. In fact, properly evaluating a pay package is impossible without considering the contract hours.

Imagine being offered a choice between a job paying $2000 per week for working 20 hours and a job paying $2100 per week for working 40 hours. Now I don’t know about you, but I’d take the $2000/20 hour offer in a heartbeat. I’m certain I could make well more than $100 with the 20 hours per week I’d be saving.

You might be thinking that travel nurses are never faced with hypothetical decisions like this, but in fact they are routinely faced with these decisions. Contracts are commonly for 36, 40, or 48 hours per week for 8 or 13 weeks. However, there are many other possible variations. These variations have a profound impact on pay packages.

For example, a traveler might be faced with a choice between a contract paying $1700 per 36 hour work week and a contract paying $2000 per 48 hour work week. $300 per week is a lot of money, but it means the additional 12 hours is only worth $25 per hour. That doesn’t sound so good.

Travel nurses should understand that agencies LOVE contracts with more than 36 hours per week. Obviously, more billable hours means more revenue for the agency. But it also represents an opportunity for the agency to increase their margins (the percentage of money they keep). There are three primary reasons that this opportunity exists for the agency.

First, travelers are used to seeing rates for standard 36 hour contracts. So when they see the pay for 40 or 48 hour contracts they have a tendency to compare it to the pay for 36 hour contracts. Ultimately, this oversight leads to the other two reasons that allow agencies to secure bigger margins for themselves on contracts with more hours.

Second, the recruiter can bandy about a bigger weekly dollar amount when there are more hours in the contract. “This contract pays $2100 per week” sounds a lot better than, “This contract pays $1800 per week.” Recruiters know that a solid percentage of travelers will be so enticed by the larger number that they’ll accept it without question.

Third, fixed costs become a lower percentage of the overall value of the pay package when there are more hours in a contract. This is because the agency will be billing for more hours and therefore generating more revenue. For example, let’s say the cost of agency provided housing is $2000 per month for a particular contract. This will cost the agency $6000 over the course of the 13 week contract regardless of how many hours are worked. But, all else being equal, the more hours that are worked, the less the expense becomes as a total of the revenue generated over the course of the contract. Bottom line, all else being equal, a 48 hour contract should have a higher pay rate than a 36 hour contract if properly negotiated.

To avoid this pitfall, travel nurses should always determine a contract’s blended rate. We know this can be a confusing and difficult task, but it can net you a fair amount of money in the long run. You can review our cheezy travel nursing pay video, or you can read our series on blended pay rates and comparing pay packages for several sample calculations. Moreover, travelers should expect a higher blended rate for contracts with more hours. If the blended rate is the same, or lower, then the agency has increased margins.

Don’t focus on the taxable base rate

Focusing on the base rate is another common pitfall that travelers run into when evaluating pay. It is very common for nurses to scoff at a pay offer when they hear the base rate is $20 per hour or some other figure that seemingly indicates low pay. The problem is that the pay package is comprised of many different variables all of which are going to make their way into your bank account.

There are several reasons that travelers might focus on the base rate. First, there is the notion that the rest of the compensation package is merely there to cover the nurse’s expenses. Second, there is the notion that “the stipends” are a fixed amount that all agencies pay the same way. Finally, there is a tendency to compare the base rate to the pay for a permanent job.

However, the stipend payments often exceed the cost of the items they’re intended to cover. Moreover, agencies can pay out stipends in any amount they’d like as long as the payments do not exceed the amount allowed by the US government. Finally, comparing travel pay to permanent pay isn’t so simple. After all, your permanent employer doesn’t pay for your meals and entertainment expenses or your housing.

Again, the solution here is to always take a comprehensive approach to travel nursing pay packages by blending the rate. You will often find that the agency with the lower base rate actually has a more lucrative pay package.

Don’t overlook the startup costs for a travel nursing contract!

Every contract is going to have some startup costs and factoring these costs into your pay evaluation is important. For starters, if you’re comparing two compensation packages in remotely different locations, then the cost of getting to them could make a difference in your decision over which assignment to accept.

You also need to make sure you have enough money to meet the startup costs involved with a contract. These days, it’s rare for agencies to shell out much cash before an assignment starts. You can review our blog post on startup costs for travel nurses to get detailed information on the subject.

Watch out for arbitrary tax percentages when calculating net pay!

It’s very common to hear a travel nurse complain that they’re receiving less money from their weekly pay deposits than they had anticipated. This is most often due to the use of arbitrary tax percentages when calculating the estimated net pay of a contract. And it’s most often the travel nurse’s recruiter who provided the estimate.

Recruiters will often run a quick estimate to determine the net pay of a contract. To do so, they’ll use some arbitrary percentage, like 20%, to estimate the amount of money that will be withheld for taxes. Errors can have a profound impact on the calculation. For example, if taxes are just 5% higher on $1000, then you’re looking at a difference of at least $50 per week. And recruiters have a tendency to use a lower tax rate in order to make the net pay sound better. Of course, they’ll always qualify it by saying it’s just an estimate to cover themselves.

To avoid this problem, travel nurses should use online paycheck calculators to accurately determine the anticipated tax burden. You can review our blog post on calculating net pay to find out exactly how to do this. Of course, you could also require your recruiter to perform this task for you. You’d have to trust him/her though.

Be sure to compare apples to apples!

It’s very important to make “apples to apples” comparisons when comparing pay packages. This means considering every compensation variable that’s part of each package you’re comparing. Failing to do so is a common pitfall. And it’s more common when two travel nurses compare their respective compensation packages to one another.

It’s quite common for recruiters to receive calls from travel nurses looking for a new recruiter because they believe that they’re getting ripped off by their current agency. In most cases, they’ve spoken to another traveler who has indicated that she is making much more money at the same hospital. There are many legitimate reasons that this can happen though. For an in-depth description, you can review our blog post on the reasons for pay differences at the same hospital.

We hope these recommendations help you evaluate your pay packages successfully. As always, please let us know if there are any questions or experiences you’d like to share by posting in the comments section below!