Why are 70% of nannies in San Francisco working “under-the-table”?

Girl meets guy, (or gal), in San Francisco, they fall in love, get married, have kids, and live happily ever after — that is, after they secure childcare. San Francisco now offers the most comprehensive maternity leave in the country — offering six weeks of leave for most employed parents. Yet, when parents need to get back to work, their biggest challenge is finding high-quality, affordable and available childcare. Reputable daycares have year-long waitlists and even family daycare is hard to get into. Many parents start thinking about hiring their own nanny and they have two options: Pay a nanny under-the-table without withholding employee taxes, or become an employer.

Most parents opt to becoming employers, despite the burden of paying quarterly taxes, but quickly find out the market doesn’t support their choice.

A recent San Francisco parent’s survey showed as high as 70% of employed nannies are working “under-the-table” — and technically, not legal household employees. They work for cash. It’s usually the one thing that’s not negotiable.

San Francisco parents with the means to be legitimate household employers often have the hardest time finding their choice of a nanny, paying a 30% or more premium when they do.

Why do so many insist on working off the books? It’s estimated that only a small percent of nannies in San Francisco are actually undocumented. The real reasons are usually emotional. For some nannies, there is uncertainty about how much taxes will actually be taken out, and a threat of a lower take home pay. But, parents can easily throw in a few more dollars an hour to solve this problem.

The hidden issue is medical insurance. The flipside of having reported wages that might be slightly higher that what’s made off the books, is to not be eligible for low-cost California Care health insurance. A $3 hourly pay increase will cost significantly more if it doubles your health insurance. Even a perceived threat can drive all-cash bargaining.

Families who are doing share care, have come up with creative solutions, for example, a split payment: Minimum wage for the employee check and the rest in cash.

For many parents wanting to secure a happy and emotionally stable nanny, the real cost of being a household employer may require a generous contribution to health insurance, or even the entire premium. For a few short years, it may be well worth it.

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