How much should we raise our nanny?

[Anonymous]

Looking for guidance on how much to raise our nanny, who we have never given a formal raise to.
Here is our situation:
Nanny was hired 3 years ago to care for one DS (in DC neighborhood), then 6 months, and made $15/hour take home (net) plus health insurance, 3 weeks vacation with a guaranteed 40 hours/week but usually gets extra 5 hours. Our out of pocket is just over 45k a year after we pay taxes
Since the first year, DS has been in school 12 hours a week and so nanny only works 12-6 three days a week but gets paid for those extra hours (about 12).
We also often come home early and pay her full hours anyway. DS also naps 3 hours a day. During this time, she also has taken it on herself to do a lot of housekeeping, cleaning, laundry, etc. She is a gem.
She has received about 1000 in bonus each year plus other gifts like birthday and anniversary.
Now we are expecting DS #2 in a few months and want to raise her effective when he comes home (in other words, raise takes effect even though I will be home for a 2 month maternity leave).
What is a fair raise? We aren't super flush with cash right now but want to be fair. DS#1 will be in school 9-3 starting in september so really she will be just taking care of the baby.
Do we raise her to $16.50/hour NET? Feels like that may be market but it means closer to $19/hour to us out of pocket which is a lot and my sense is she is already on the high end in this area?
No snark, please. We just want objective opinions on what is fair.

[Anonymous]

Have you discussed it with her? She already knows what she needs to stay with you.

[Anonymous]

I think bumping her to $16 is plenty considering that is her take home. I'm assuming her gross rate would be between $18-$19/hour which is the high end of the market for 2 especially with one in school part time.

[Anonymous]

I have always gotten a $1.00 to $1.50 raise when a new baby comes along. I think $16.50 is fair.

[Anonymous]

OP, please let us know what she says to your offer.

[Anonymous]

OP back. We talked to an accountant and just realized that giving her a take-home raise of $1.50 additional an hour means an additional $6/hr out of pocket to us because it changes her tax bracket and other things. We also just realized she has a very conservative tax withholding status (we cover this) which means she gets a large refund at the end of the year, which apparently is not standard.
Anyway, we are back to the drawing board because there is no way we can afford an additional $1100/month out of our pockets which is what it would add up to.
Looks like we will have to renegotiate with her based on her gross salary, which I am guessing isn't going to go over well.
If anyone has had experiences with this, please feel free to weigh in.
Thanks for all the input.

[Anonymous]

It is ABSOLUTELY standard to negotiate gross salary rather than net, for this very reason. Good luck conveying this to your nanny!

[Anonymous]

What if you were to offer a different perk, OP? More vacation time, health insurance contribution, etc

[Anonymous]

[quote=Anonymous]What if you were to offer a different perk, OP? More vacation time, health insurance contribution, etc[/quote]

+1. Possibly offer a smaller raise that would keep the same tax bracket but offer more paid days off, whether it be vacation or just PTO. If you really love nanny and she loves you guys, I'm sure you will make it work where you are both happy. Good luck OP.

[Anonymous]

If you already cover health insurance, how about adding dental or vision? If you pay the insurance company directly or reimburse the nanny with a separate check, it will not affect your taxes or hers.

[Anonymous]

Anonymous wrote:I have always gotten a $1.00 to $1.50 raise when a new baby comes along. I think $16.50 is fair.

OP is talking net, not gross

[Anonymous]

Anonymous wrote:OP back. We talked to an accountant and just realized that giving her a take-home raise of $1.50 additional an hour means an additional $6/hr out of pocket to us because it changes her tax bracket and other things. We also just realized she has a very conservative tax withholding status (we cover this) which means she gets a large refund at the end of the year, which apparently is not standard.
Anyway, we are back to the drawing board because there is no way we can afford an additional $1100/month out of our pockets which is what it would add up to.
Looks like we will have to renegotiate with her based on her gross salary, which I am guessing isn't going to go over well.
If anyone has had experiences with this, please feel free to weigh in.
Thanks for all the input.

So she is actually getting more than $15 net.

[Anonymous]

Wow! So her "net" has always been way over $15/hr because she's banking on a huge refund. You need to include that refund as part of her actual salary if you're going to negotiate on net, because she could claim 0 exmptions and just get the absolute max out of you.

I'm not sure why you agreed to net, especially since you cover health insurance. FWIW, $17/hr gross for two kids is pretty much market, maybe $18-$20 if she's gotten yearly raises plus a new kid bump. At $20/hr gross, you've really hit the top of the market, and that's for two at home full time.

[Anonymous]

$1 more an hour PLUS more benefits.

[Anonymous]

(extra vacation or pto)