I think my first step is to see if the center hole is effecting how quickly it dries out. I'm considering taping some saran wrap over the controls to see if that holds humidity better. If it does, I'll look into sealing it from below the lid.
Closing any air holes on the outside of the incubator will increase the humidity but the chicks need fresh air too so some holes are needed. How much space is there between the top of the water and the plastic grid floor? It looked like maybe an 1" to me. That would be enough space to cut some sponges and lay them in each trough so that they went all the way up to the floor.
I agree I would check with another humidity gauge to make sure it is accurate. I have an Accurite from Walmart and the temp is 2 degrees off and the humidity is between 5-10% off. You can tell in this pic....
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