What is the total yearly cost of employing a nanny?

[Anonymous]

I have seen a couple trends in my little microcosm that I think may eventually compensate to try and even out rates, or at least signal a decrease in job security for nannies (when demand for nannies was very high.)

1. Expectations that nanny will replace the parent in the home (do some amount of cooking and kitchen cleanup, family management) not just do a very short list of things strictly related to childcare. More parents are looking for this, and the higher pay will go to nannies willing to step out of the "strictly childcare" approach many nannies take. Nannies will need to adapt to be competitive.

2. Less longevity. As a poster above notes, it gets more and more expensive to keep nannies over time. I have seen parents pay more than they can afford for a nanny simply because they'll only need to do it for 1 or 2 years then switch to cheaper childcare--so it keeps their career going, even if they are negative for a year or two.

On the flip side of that, I also think there's a lean out movement brewing, particularly among older mothers, that mean as their kids age out of the "nanny vs. daycare" age and into the elementary where everyone still thinks they need a nanny, many moms will chose to downshift and make up that extra time themselves. These are folks that are either established enough in their careers to have the flexibility to dictate their job terms or that have grown their savings enough they can ramp down.

That said, I just think the nanny model is in a tough place. I DO think nannies should be paid on the higher end of the wages quoted here--it's their job, inflation has made everything expensive, and the work they are doing is pretty damn important to me. But, I have also seen fewer and fewer families be able to afford it. That doesn't bode well for career nannies.

[Anonymous]

Anonymous wrote:There are a dozens of threads on the going hourly rate for a nanny, but I’m interested in the total all-in cost for your family every year — base rate, overtime, employer taxes, workers comp coverage, payroll service fee, mileage reimbursement, health insurance stipend, etc. (What other common expenses am I missing?)

How much does it really cost for you to employ a full-time, year-round nanny who makes $25-$35/hour (or less or more)?

The $25/hour for 40 hours a week nanny is $52,000 a year. The $35/hour for 50 hours a week nanny is $100,100 a year.

Payroll plus employer’s share of taxes adds about 10% to the gross wages. Add an unknown amount for workers comp and added homeowners insurance, since most numbers differ drastically.

The QSEHRA reimbursement can add up to $5,850 to your cost this year IF you add it to the wages instead of taking it out before taxes.

Mileage reimbursement is 65.5 cents per mile. Again, no way of giving you a solid number because YMMV, but 100 miles a week is $65.50, which is around $3,200/year.

Add in 1-2 weeks pay as a yearly bonus.

Best guess for the $25/40 nanny is $62,000 to $72,000+ depending on the variable that I can’t calculate. (All the insurance costs plus mileage.)

Best guess for the $35/50 nanny is $115,000 to $130,000+ depending again on those variables.

In a share, you’ll be looking at 70% of the estimates per family plus those variables. So anywhere from $42,000+ to $91,000+.

Most people can’t afford nanny care. If you aren’t sure whether you can afford a nanny, the easiest way to estimate is to look at 1B/1B apartment rents near you, multiply that by 12, then divide by 3 and multiply by 10. That gives you the gross wage which will allow a nanny to spend 30% of her earnings on rent.

$52,000 a year gross gets nanny an apartment that rents for around $1300/month. If you wouldn’t live in your local $1,300/month apartment, you can’t afford a nanny.