Nanny Share: Managing Childcare Costs in a Troubled Economy
|Child care is very expensive – ask any working parent. Childcare cost management is often the second largest monthly expense, after mortgage/rent payments, which a family with young children deals with. According to the National Association of Child Care Resource and Referral Agencies (NACCRRA), full time infant care in a child care center in the District of Columbia averages $24,081 (2019) per year. In New York State (state wide – not just NYC), this figure is $15,028 – more than $1000 per month! Some of the more popular for-profit centers, such as Crème de la Crème, will command $2,500 a month or more for infant care. Center based infant child care is in great demand – many of the accredited centers have waiting lists that are many months long.Many new parents will consider hiring a nanny to care for their infant – that is until they price the local nanny markets. Nationally a full time nanny earns $600 – $1,000 per week, and in major urban centers it can be difficult to find an experienced, legal nanny with references for under $800 per week. In markets like New York City or Washington DC this weekly rate is more often in the $800- 1,200 range. So how are families to manage these infant care expenses? Sharing a nanny is a childcare cost management solution for a growing number of families.
Increasingly, families look for nanny share arrangements to help manage their infant care expenses.
So what is a nanny share? In a nanny share, two families (typically) will share the services of a single nanny. Costs are split in any number of creative ways, most commonly evenly split between the families. In a nanny share arrangement, the nanny often earns a premium over her counterparts employed by a single family – from 10 – 20% more. Split down the middle, however, this creates a win-win situation for the families and the caregiver.
A nanny can be more flexible with hours than a center, and a nanny will provide sick child care that centers cannot. In a nanny share, the infants are typically only exposed to each other, reducing the spread of childhood illnesses. Typically one family ‘hosts’ the share. That is to say, the care occurs at the ‘host’ family’s home. The other family in the share drops off and picks up their child daily.
Nanny shares, while a great cost cutting vehicle with respect to childcare cost management, have their own set of issues to be addressed by the families and the nanny. These include:
- Coordination of Schedules: The two families should have very similar needs for care. The closer the family schedules are to each other, the happier everyone will be.
- Child rearing philosophies: The nanny caring for two infants needs to treat them similarly. If one family believes in ‘cry it out’ and the other in ‘attachment parenting’ this is a recipe for a failed nanny share. Consider discipline (hard to imagine with a 6 week old, but definitely an issue coming in the future), diet, TV watching, outdoor activities, nap schedules and the myriad things that can create conflict between the parents in the share, or between parent and nanny.
- Ages of the children and the number of children: The best situations are where two children of similar ages are being cared for together. It is the exceptional nanny who can handle more than two infants and more than 4 total children all day. An infant who naps twice daily will limit the outdoor activities of older children in the home, an important consideration for many parents. Remember, in a child care center the caregivers are given breaks, and there is floating staff available in emergency or stressful situations (tummy flu anyone?). The nanny typically works for 8 – 9 hours at a stretch without a meaningful break.
- The anticipated length of the share arrangement: Some families enter into a nanny share as a stop gap while they await an opening in a day care center. Others are looking for home based, non-institutional, care for their child through age 2 or the start of pre-school. It is important that the families have a frank discussion of their plans and expectations. No one wants to come home on a Friday only to discover that their share partner got the coveted slot in the downtown daycare center and they will not be sharing the nanny going forward. Nanny also needs to be apprised of expectations, and given both notice and a reference when the share comes to an end.
- Sick Care Policies: Most families will agree that fever, vomiting, or diarrhea are all illnesses that should cancel the share for the day. But what about the nanny? Will she care for the sick child? The healthy child? What if the healthy child doesn’t live in the home where the care is provided? Families need to be very frank with each other, BEFORE the situation arises, as to how this will be handled.
- Nanny share payroll taxes: Both families are the nanny’s employers, and each is responsible to report and pay their family’s share of the payroll taxes. Payroll inequities such as one family handling the taxes correctly and the other family paying under the table lead to tension in the share. The nanny who receives $370 after taxes from one family and $400 cash from the other is put in an uncomfortable situation.
- Compensation and Benefits: What about vacation and sick time? Will the families coordinate their vacation times with each other? If not, when does the nanny get vacation? What happens if the nanny is sick – will the two families alternate providing back up care, or each fend for themselves? Many shares dissolve when these logistical issues create tension between the parents or between parents and nanny.
- What about licensing and insurance? In some states such as Maryland and Washington, when two or more families hire a nanny to care for non-related children at the same time, a state family child care license is required. You will want to check you state’s requirements, and the host family definitely needs to have a frank conversation with their insurance agent about liability (worker’s compensation, claims by the non-host family, transportation liability).
Video: Payroll Taxes in a Nanny Share
So what are some best practices in a nanny share?
- Both families should interview potential nannies together if possible. If Family A already has a nanny and family and nanny mutually decide a share is in their best interests, Family B should have an opportunity to independently interview both Family A and the nanny.<
- » Write down the details. This should be a three way document between both families and the nanny and it should detail the possible issues above – hours, wages, benefits, taxes, sick care policies, vacation and nanny sick days.
- Have periodic meetings. Issues large and small that you never anticipated will come up and having a regularly scheduled meeting time (once monthly is usually sufficient) gives you the opportunity to bring up any concerns.
- Deal fairly with expenses. Each family needs to supply it’s own diapers, wipes, and baby food. When the children graduate to table food, the non-host family should make a meaningful contribution to the hosting family’s pantry. Consider extra car seats, pack and play for napping, or tandem strollers.
Nanny sharing is a wonderful way to provide your child with very personalized, home-base child care and share the costs of this care with another family. Many families find that the nanny share is the answer to childcare cost management.
Other helpful information:
» Tip Sheet: Setting Up a Nanny Share
» Nanny Share Payroll Taxes
» Workers’ Compensation Insurance