3 Pitfalls When Discussing Travel Nursing Pay and How to Avoid Them
Travel nursing pay packages are comprised of many different variables which can make accurate quantification quite difficult. Different recruiters have different ways of explaining travel nursing pay which further complicates the issue. Moreover, the lack of generally agreed upon vocabulary to describe pay packages adds yet more confusion. We’ve previously discussed how to break down pay packages for the purpose of comparing them. Here we’ll discuss some of the communication pitfalls to watch out for when obtaining information.
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A quick review of chats regarding pay on social media and message boards will quickly turn up statements like this:
“I had that happen to me in LOS Angeles last summer was quoted a take home pay that was about 300 a week more than what we brought home and a few other underhanded bs.. so now I ask for everything and figure it out.”
Essentially, the travel nurse was expecting to take home $300 more per week based on the quote received from the recruiter. There are several communication pitfalls that can cause such confusion.
Unclear Blended Travel Nursing Pay Rates
“Blending” is one of the more common practices recruiters use when quoting pay rates. Blending refers to combining the value of several different compensation variables into one lump sum expressed by a common denominator. Hours are the most common denominator used to blend rates. For example, you may receive a quote for $25 per hour as the taxable base rate, plus $250 per week for an M&IE stipend, plus $450 per week for a lodging stipend. If the contract was for 36 hours per week, then the hourly values of the M&IE stipend and lodging stipend would be $6.94 per hour and $12.50 per hour respectively. Add it all up for $44.44 per hour “blended.”
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There are a couple of potential pitfalls to be on the lookout for. First, the traveler could misunderstand the quote and assume that it’s for $44.44 PLUS the stipends. Second, the recruiter might add things to the blended rate which aren’t going to be paid weekly, like the travel stipend, cost of medical benefits or other variables. They do this in order to provide a “fully blended hourly rate”. This is a good figure to have for comparing the value of two competing compensation quotes. However, it can also confuse the traveler into believing they are going to get more than they actually stand to get.
Incorrect Travel Nursing Net Pay Estimates
Quoting or estimating net pay for assignments is a common practice. It’s also a potential communication pitfall. Focusing on net pay is unique to travel nursing due to the fact that so much tax free money is involved. Agencies also use it as a key selling point for assignments. Meanwhile, many travelers request to have the net pay quoted to them prior to accepting a assignment.
To calculate the net pay, taxes must somehow be estimated for the taxable portion pay package and then subtracted from the anticipated gross pay per week. For example, if you received a quote for $25 per hour as the taxable base rate, plus $250 per week for an M&IE stipend, plus $450 per week for a lodging stipend, then you would calculate the estimated taxes on $900 ($25 * 36 hours). You would then subtract the estimated tax from $1,600 ($900+$250+$450) to arrive at the net pay. The best way to do this is to use a paycheck calculator like the one provided by paycheckCITY.
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One common problem with estimating net pay occurs when recruiters estimate the net pay without inquiring about the federal allowances that the travel nurse intends to declare on their W9 or whether or not the travel nurse has any additional withholdings to declare or any garnishments. Instead, recruiters may just cavalierly decide to calculate the net pay using 2 or 3 federal allowances in order to paint a more rosy picture. This means the travel nurse will receive a quote for net pay that is higher than what they actually end up receiving.
Another common problem occurs when travel nurses or recruiters don’t use a paycheck calculator and instead base their calculations on some arbitrary tax percentage. For example, I regularly see travel nurses use 20% as the total tax rate they anticipate paying no matter where they are traveling. However, certain states have much higher payroll tax rates than others. For example, the total combined rate for an individual with no allowances in California is 29% if the hourly rate is $25 per hour. The 9% difference equates to roughly $100 per week.
Travel Nursing Pay – The “Effective Rate” or “Taxable Equivalent”
It’s almost always a disaster when recruiters quote an “effective rate” or a “taxable equivalent”. Essentially, the recruiter is trying to convey what the blended pay rate would be equivalent to if it were to be taxed entirely. For example, if you received quote for $25 per hour as the taxable base rate, plus $250 per week ($6.94/hour) for an M&IE stipend, plus $450 per week ($12.50/hour) for a lodging stipend, then the blended rate for these specific variables would be $44.44. The non-taxable variables add up to $19.44 per hour. So the recruiter might add %20 (or some other arbitrary tax percentage estimate) to $19.44 to express how much you’d have to make if your pay were all taxable. In this case, the recruiter would add $3.88 to $19.44, then add the $25 taxable rate and say, “This is an effective rate of $48.32.”
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Of course, this will confuse the travel nurse in almost every case. They’ll end up thinking that they’re going to make more than they actually are. To compound the confusion, some recruiters will use the term “effective rate” to refer to a blended rate as described above. Therefore, travel nurses who identify the effective rate with the taxable equivalent might actually think that they stand to earn less than they’re being quoted.
The answer to avoiding all of these pitfalls is to demand specifics. You should always receive rate quotes in their entirety and broken down to their base levels. You can then add them up yourself. You’ll then be able to utilize the paycheck calculator on your own in order estimate your net pay. However, remember that those estimates are only estimates. In any case, you’ll ensure that you’re well informed about your pay rate as a travel nurse if you always get the specifics.
