It’s quite common for agencies and recruiters to offer blended-rates when they quote travel nursing pay. Unfortunately, blended-rates are a bit confusing to new travel nurses, and even some seasoned veterans. In this article, we’ll provide a detailed breakdown of blended-rates. We’ll discuss the reasons they can be so confusing for travelers and why agencies use them so often. Finally, we’ll offer some tips for you to make use of blended-rates.

What is a travel nursing blended rate?

As you know, travel nursing pay typically breaks down into several categories. For example, the compensation package might include a taxable base rate, a housing stipend, a Meals and Incidental Expenditure (M&IE) stipend, a travel stipend, and medical benefits.

As you may know, we can break the value of each of these variables down to an hourly value. For example, a $300 weekly M&IE stipend for a contract with 36 hours per week breaks down to $8.33 per hour (300 / 36).

With that in mind, a “blended rate” is simply an hourly rate that adds the values of 2 or more compensation variables together. For example, if the compensation package has an hourly base rate of $20 per hour and the value of the M&IE stipend is $8.33 per hour, then we can “blend” these two variables to arrive at $28.33 per hour.

Now, it might be more common for recruiters to blend all the compensation variables together and call it the “total blended hourly rate.” For example, a recruiter might quote the rate as “the total blended hourly rate for this assignment is $53 per hour.”

Why are blended rates confusing?

Lack of universal composition for blended rates

As you can see, the idea of blended-rates isn’t really that complex. After all, we’re simply adding the hourly values of the compensation variables together and we can all do basic math.

However, blended rates are confusing for several reasons. First, the composition of blended rates isn’t universally accepted.

For example, recruiters at one company might quote blended rates as a combination of the hourly base rate and the M&IE stipend. Meanwhile, recruiters at another agency might quote blended rates as a combination of the hourly base rate, the M&IE stipend and the housing stipend.

In fact, you can even find recruiters at the same agency who quote blended rates in different ways. Moreover, there are probably hundreds of possible permutations and combinations for composing blended rates.

The fact that these variations exist makes it very difficult for travelers to trust pay quotes as blended rates. The concept is different everywhere they go. And trust depends on stability.

Taxable vs. Non-taxable

Another reason that blended rates tend to cause confusion is that they don’t highlight the difference between taxable and non-taxable pay. For many travelers, this distinction is very important. So important that it’s confusing when they don’t see it.

They want to know what percentage of their compensation will be taxable and non-taxable. Knowing this helps them determine how much net pay they can expect in their paychecks.

Agencies and recruiters should be sympathetic to this desire as they routinely tout how amazing the non-taxable aspect of their compensation packages is.

What am I getting paid?

Perhaps, the single biggest area of confusion surrounding blended rates is that they tend to obfuscate exactly what the traveler is going to get paid. For example, if a traveler hears that the blended rate for an assignment with 36 hours per week is $55 per hour, then they could understandably assume that they’re going to get paid $1,980 per week. However, if the blended rate quote includes the value of medical benefits, the travel stipend, and the value of company provided housing, then the traveler’s paychecks won’t be $1,980 per week.

Much of the confusion stems from the fact that when people talk about pay, they’re typically talking about their paychecks and not various reimbursements and bonuses. Therefore, it can be confusing when recruiters add these additional values to the blended rate.

This area of confusion also stems from the differences between the permanent employment market and the travel nursing employment market. Permanent employers simply don’t quote pay the same way that temporary staffing agencies do. And almost everyone is used to the way that permanent employers quote pay. So when an agency adds the value of medical benefits to a compensation quote, then this will almost certainly cause confusion.

Why do agencies and recruiters quote blended rates?

Pulling the wool?

So if blended rates are so confusing, then why do agencies and recruiters quote them? Some would argue that blended rates are a way to pull the wool over the traveler’s eyes in an effort to get them submitted for an assignment. We have to admit that there is at least an element of this going on out there. However, it is very limited.

In the worst case scenario, which is very rare, recruiters will quote the “taxable equivalent blended rate.” Essentially, they calculate how much the traveler will be saving by not paying taxes on the non-taxable portion of their compensation. Then, they add that amount to the blended hourly rate and quote the total as the “taxable equivalent blended rate”. Recruiters that do this assert that they’re providing an idea of what a permanent job would have to pay to match the net pay that you will get on the assignment in question.

That’s all well and good and it may even be useful to know, but it definitely adds confusion to an already confusing topic. By adding in a number that will not be seen or realized in any tangible way, the recruiter opens the door for misinterpretation. The traveler may end up thinking that their pay will based on the quoted figure.

On a less egregious level, some agencies and recruiters like to quote the highest blended hourly rate possible because big numbers are much more attractive than small numbers. “This assignment has a blended rate of $55 per hour…” sounds much better than, “This assignment pays $26 per hour plus a $350 weekly stipend and company provided housing.” This is essentially an honest sales technique, but it causes confusion nonetheless.

Blended rates are simpler to quote

Another reason that recruiters quote blended rates is that they’re simpler to convey. It’s much easier to provide one round number than it is to provide the same number broken down into 5 or 6 different categories. Many recruiters also feel that the blended rate is simpler for travelers to understand. The problem is that many travelers acknowledge that they understand, but they actually have an incorrect understanding.

Race to the bottom

Many recruiters and agencies feel forced to quote blended rates because their competition is doing it. If your competition is quoting a nice, big, round number, and you’re quoting a series of numbers by category, then you’re fighting an uphill battle to explain how the two are really the same. And often times, that’s enough to lose the sale.

A reaction to the perception

Many recruiters quote blended rates as a reaction to the negative feedback they get when they quote rates with a detailed breakdown. For example, here is a sample detailed breakdown of a pay package:

One of the most common reactions to this quote is, “Are you crazy? There is no way I’m working for $24 per hour.” Many travelers have a tendency to focus only on the taxable rate.

This is understandable given that this is what we would focus on for a permanent job. But permanent jobs don’t pay stipends and those are an important part of the travel compensation package. As a result, many recruiters are compelled to quote blended rates in an attempt to circumvent this issue.

Blended Rates Can Provide the Full Picture

Finally, many recruiters quote blended rates because they are the best way to make an apples-apples comparison. For example, let’s say that Company A is not offering common benefits like travel reimbursement, medical benefits and license reimbursement. Meanwhile, Company B is offering these benefits.

Most likely, Company A’s pay will be higher all else being equal. In this case, it’s useful for the recruiter from Company B to quote the entire blended rate, including the value of all the benefits, to demonstrate that their pay package is equal to or higher when you consider all the compensation variables.

What does all this mean for travel nurses and recruiters?

Many travel nurses hate blended rates with a passion. That’s understandable given the confusion they generate and lack of uniformity that exists. Ultimately, blended rates should be just one part of a comprehensive compensation quote. Travelers should always receive a detailed breakdown of the package. However, blended rates can still be very useful for travelers.

For example, we highly recommend comparing blended rates when comparing competing compensation packages. This is because competing packages will almost never split the compensation evenly among the various compensation variables.

For example, two competing packages may have different base rates, housing stipends and M&IE stipends. Comparing them by their blended rates is the easiest way to determine which is offering a better deal.

Also, travelers can use blended rates as a shortcut to determining interest in an assignment. For example, you may know from experience that when it comes to California, you’re only interested in jobs that have blended rates higher than $55 per hour. So when a recruiter calls with an opportunity in California, you can quickly determine your level of interest. You can also contact recruiters and ask them what jobs they have in California that have blended rates higher than $48.

Meanwhile, recruiters who use blended rates as a sales technique to pique a traveler’s interest in an assignment should always have a detailed breakdown ready go for candidates that express interest.  Perhaps more importantly, recruiters should be mindful that different agencies quote blended rates in different ways. Therefore, it’s important to be clear about what your blended rate quote includes in order to avoid confusion.

Source: bluepipes.com