According to economist Brian Erard via The Wall Street Journal, only 5% of the 3.6 million American households that should be paying federal taxes related to household employees are doing so. This excludes employees from the protection of employment benefits and federally regulated workers rights. Here’s how that impacts you as a nanny!
The Economic Policy Institute says that less than 10% of two million domestic workers, and the families who employ them, pay employment taxes. This leaves the overwhelming majority, 99% women and many immigrants (according to the most recent International Nanny Association survey), out of the tax equation that provides basic benefits. Most of these talented childcare providers work ‘off the books’ so that they can receive other benefits they desperately need to supplement their unfairly low wages. Unfortunately, working under-the-table perpetuates the invisibility of these vital roles within society, and puts these valued individuals in a difficult employment cycle of low pay with minimal benefits.
As an agency comprised of lifelong nannies and childcare providers, we believe in fair and equitable treatment and pay for all domestic employees, and align ourselves with the National Domestic Workers Alliance for best practices. The National Domestic Workers Alliance (NDWA) is the nation’s leading voice for dignity and fairness for the millions of domestic workers in the United States, most of whom are women. Founded in 2007, NDWA works for the respect, recognition, and inclusion in labor protections for domestic workers. The national alliance is powered by over 60 affiliate organizations – plus robust local chapters in Atlanta, Durham, and New York—of over 20,000 nannies, housekeepers, and caregivers for the elderly in 36 cities and 17 states.
“Domestic workers have throughout history been laboring in a shadow economy, outside of the realm of workplace protections or benefits. In many ways, it’s a ‘Wild West’ environment where nothing is transparent or standardized, and the work is isolated,” said Ai-jen Poo, executive director of the National Domestic Workers Alliance and co-director of Caring Across Generations.
Take, for example, this insight from Slate: “In an industry where low, “under-the-table” pay is the norm, caregivers perceive shielding their limited income from tax is beneficial. However, the current safety nets they could access as taxpayers are meaningful (though they vary by state and city): these include protected maternity leaves, paid sick days, overtime, disability insurance, unemployment insurance and, of course, retirement income from Social Security. Inadvertently, caregivers who opt out of legal pay put their security at greater risk by losing access to these key workforce perks. This is a trade-off they shouldn’t have to make. Improving the pay and benefits they can receive, and boosting their employer-families’ abilities to afford these perks would close this gap. Tax compliance could be the way to afford all this.”
We could not agree more so we work tirelessly to take tangible steps in our placement process to ensure that all childcare professionals that we work with will be guaranteed a fair and livable wage, paid on the books in adherence to all federal and local regulations. We strongly believe that domestic workers should not have to choose between fair pay and the benefits of tax compliance. As any valued and talented professional, childcare providers should be afforded both fair pay and the benefits of maternity leave, paid sick days, disability insurance, etc.
When you apply for a role from the Adventure Nannies job board, you can rest assured that the potential new role will include fair and legal compensation. We believe that the childcare industry is in the midst of huge reform and we are passionate about pushing this industry into the spotlight where it will be recognized as the highly-valued, well-respected, diverse and rewarding professional career that it can be. The first step towards this increased visibility is standardized adherence to legal and fair pay. If you have questions about your current pay, or as a hiring parent you are interested in learning more about how to pay your employees on-the-books, take a look at Homework Solutions. This excellent payroll company offers a variety of services that will support both the employer, and employee throughout the process of legal and fair pay.
Have you worked with a family that refused to pay you on the books because they wanted to avoid paying employment taxes? Have you been offered an under-the-table role that you declined? We’d love to hear about your personal experiences around fair pay, and how you’ve navigated this situation throughout your career.
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