Originally Posted by
Johnson85
Well, most of the hospitals doing that are non-profit and often government owned.
But regardless, I wasn't casting chicken bones, I was explaining exactly why it happens based on supply and demand. Can't really put graphs on here but in simple terms, let's say the market clearing price for 100 nurses in an area is $100k annually. Lots of those nurses in fact are willing to work for $85k or even less, but there are 10 spots they won't be able to fill for less than $100k. It's not that those hypotehtical ten nurses are worth more or better skilled; they're just not willing to work for $85k, either because they can stay at home or live somewhere else. Trying to pay 10 nurses $100k and the other 90 nurses $85k is hard to manage, particularly when it's not skills or experience based.
Hell, it's even legally risky if the nurses that hold out for $100k are white affluent housewives. So the hospital will end up paying closer to $100k for all nurses if they try that, which will cost them roughly an extra $1.3M annually. Or, they can hire travel nurses, put enough restrictions on them that it's not viable for existing nurses to just quit and sign up with a travel nurse group (e.g., month to month contracts, no extensions past 6 months, prohibition against hiring anybody that has worked with the system in the past 12 or 24 months and a preference against anybody living within an hour, etc), and they pay ten travel nurses the equivalent of $125k per year (after equalizing for employer side of FICA, benefits, etc.). It may cost the hospital $400k "extra" compared to hiring ten more nurses at $85k, but it saves them $950k compared to the scenario where all of their nurses end up making $15k more to fill out there nursing staff. They essentially create a second nursing position that is less desirable on every metric except money, and use that to tap into those nurses that won't work for $85k but are willing to put up with a lot for what is the equivalent of $125k.
It's just a specialized form of price discrimination. Being willing to put up with the uncertainty and inconvenience of being a travel nurse is essentially a supercharged version of coupon clipping, but in reverse since it's the seller going through the hassle instead of the buyer.
ETA: We have employees that are constantly looking for jobs that will jump for $0.25 an hour increase. We have employees that would stay for $2 an hour less than what they make now. Those two sets of employees aren't generally better or worse employees than the other (ignoring that longer tenure is better). We're not overpaying the ones that would stay for $2 an hour less or underpaying the ones that want $0.25 more an hour. There's a range of reasonableness for jobs. Some people are willing to do more (e.g., move cities/states, job hop, ask for raises, change industries, etc) to push their wage to the higher end of the spectrum (which often works out and sometimes fails spectacularly) and others are less willing to do those things (which risks letting their wages lag significantly). Maybe people should be more comfortable with uncertainty or structure their lives so they can take more risk, but it's hard to blame people for the choices they make on those issues or tell them they're underpaid and should go elsewhere like there are no risks/challenges associated with that.