Nannies and the shadow economy behind New York's working class

http://www.guardian.co.uk/money/2012/oct/27/nannies-new-york-economy-women

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When two young children were killed, allegedly by their nanny, on the Upper West Side of Manhattan, much of the coverage of the crime prominently mentioned the family's class: their "luxury apartment" – complete with comparable rents – and affluence seemed to be a strangely consistent part of the coverage.

But in New York, a city of working families and significant ambition, you don't need to be rich, necessarily, to hire a nanny. There are two-income families in more bohemian precincts, like those of Park Slope in Brooklyn, where nannies are a crucial part of allowing women to work, or to take care of their other children.

Nannies are a crucial part of the economic equation for the professional classes – which, in New York, counts as part of the solid middle class. That includes doctors, lawyers, advertising and businesspeople. Having a nanny will allow many mothers to go to work when otherwise they might be at home.

In short, nannies are part of the shadow economy of New York City – the quiet economy that keeps the bigger one running. This is not just true for women who stay at home and whose husbands are high earners. Women make up more than half the population of New York City, and women-owned businesses make up a third of all the businesses in New York, according to the Census Bureau. Nationally, 23% of women out-earn their husbands, as a remarkable BusinessWeek story pointed out. The Census Bureau indicates that – again, speaking nationally – more than half of all managerial positions are filled by women.

At the same time, women's wages have not kept pace with their accomplishments in the workplace.

The Government Accounting office found that working women pay a financial "penalty" for having kids – a 2.5% pay cut compared to women without children. This is on top of the fact that women with professional degrees are paid 67 cents to the dollar of men with the same education, and in the financial industry – a major center of revenues for New York – women are paid 71 cents to a man's dollar.

Can you see that happening without nannies or childcare? Increasingly, paying high costs for childcare is the price many families pay for advancing in their careers and achieving the new version of the American dream. Particularly in the context of New York's cost of living, dual-income families are common by necessity, and as a result, so are nannies.

Clifford Greenhouse, president of the Pavillion Agency and the Nanny Authority, helps affluent families find nannies in New York. In much of the country, his clients would be described by income as rich. In New York, they are of the professional class. "A large percentage of our clientele are working families … investment bankers, professionals, physicians, attorneys, in the arts, real estate. They are dual-income families but very high earners."

These families, with the resources of high-powered careers, are able to foot the very high cost of having a nanny provided by an agency. Pavillion's nannies get paid $52,000 a year and up, and the agency itself gets 15% of that salary in fees – so $7,500 and up. Many of its nannies make six-figure salaries. Parents also have to pay health insurance, social security benefits, disability benefits, and, if the nanny lives with them, she requires a separate room and bath. Pavillion employs 20 people, check references, perform background checks, interview nannies, and match them with families. He described the process to me. It is an enormous amount of work.

But a lot of the professional, dual-income families who have nannies don't necessarily use services like Pavillion. They can find nannies on Craigslist, where prices are negotiated. Then parents have to do all that work – the background checks, the references, the interviews – on their own time. Missing days of work is inevitable, for one or both parents.

Greenhouse suggests that working parents either find a nanny by word of mouth, or else pay for very good daycare. By word of mouth, he has a very specific definition: "The mom knows another mom – a dear friend, a colleague, a business associate – who are relocating. The mom has most likely interacted with their nanny over the past few years, and is confident she's been happy with this nanny." He advises against the kind of word-of-mouth by which parents may ask a nanny to suggest a friend they've never met.

His advice: "If at the end of the day, you pay 50% more than you should have for a nanny, and you can go to work with peace of mind, then it's worth it. You can't put a price on it."

Neither can the country. Having more women in the workforce, and more women in managerial positions, will bring more talk and stories of nannies to the forefront. And soon, having a nanny or reliable daycare may not just be seen as the luxury of the rich, or even the affluent. It will be seen, rightly, as the price of having a balanced US economy.