Nanny Contracts Part 2 : Setting Wages

Here with another segment of Nanny Contracts 101. Today I want to talk a bit about setting wages.

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For the most part, when families are looking to work with an in-home caretaker for their kiddos, they are hoping to form a long-term connection with this person. It’s likely everyone has gone through a long vetting process, boundaries have been discussed, philosophies on care clearly stated (hopefully), and so on. There’s a good deal of understandable nervousness and tension around bringing an outside person into a family or becoming that person with so much responsibility. It’s a big deal and it should be! This is why I stress so much (as do the folks responsible for the Domestic Worker’s Bill of Rights in NYC and beyond) that in home care workers have contracts. Setting these terms out clearly can go a long way in building solid, honest, caring, and long-term care situations. 

It is also important for everyone to be on the same page about a nanny’s role as an employee. The cost of childcare in the U.S. is incredibly high, as is the cost of living in many areas. Having said this, if a family wants a committed care provider who is able to devote the necessary compassion, energy, and attention the want for their children, they have to look at the needs of the person they are charging with that role as someone who needs to ALSO keep up with the rising cost of living in their community. 

The first step in doing that is setting a reasonable salary to begin with. One tool you can use (both nanny and family) is the HUD Median Family Income and HOME Income charts, as well as this breakdown of the poverty level as defined federally and statewide. Keep in mind that Domestic Workers are taxed at around 40% and have few tax deductible items through the year. Using that data, what is the salary you are comfortable having/providing? 

For example, in San Francisco, the median household income for 2019 is estimated to be $136,788. If a nanny without their own children works 40 hours a week at $20 hour 50 weeks out of the year, at a salary of about $41,000 before taxes they are making just above 30% of the median income in that city, which is often the limit for receiving federal or state assistance. Keep in mind also that 93% of units for rent in San Francisco go for over $2,000 a month, the bulk of which are over $3,000 per month. 

Shockingly, the average hourly rate for nannies in San Francisco, according to many online salary snapshots is around $17 an hour, netting the nanny $2,720 (about $1,000 of that going to taxes) a month for full time care work, which is about 40% of the median income for a household of 1 and barely over the average cost of apartment rental in the same city, even pre taxes. 

There are other parts of the country where the cost of living is significantly lower and rent takes up a somewhat smaller portion of expenses. This is why it’s a good idea to look at the data for your specific community when factoring how much to charge / pay for nanny services. 

As a nanny, you’ll need to factor in a number of things around how much you are needing to charge :

  • Is this going to be your primary source of income?

  • Do you have another working person in your household who helps support you / your family?

  • Where does your rent fall in the average for your area?

  • Will you be working full or part time?

  • Is this going to be a long or short term contract?

  • What advanced skills do you have to offer?

For families, in addition to the basic considerations like how many children and how old they are, you’ll also need to consider some of the following when offering rates :

  • What requirements are you looking for in a nanny -- Advanced degrees or training? Added certifications? Not working other jobs? X years of experience? 

  • What sorts of tasks/etc. are you requiring of your nanny -- Additional housework? Having their own car? Setting a family’s schedule? Cooking? Taking the child(ren) to specific activities? Pet care?

  • Will you offer additional perks like health insurance, covering their taxes, paid sick leave, paid vacation, bringing their own children, options for bonuses and raises, etc.? 

  • Will you offer them room and board (au pair or live-in nanny situation)?

  • Does your employer offer to cover some or all of your childcare expenses? 

Rates may or may not be negotiable on either end. It can be a good idea to interview a bit outside of your range requirements to see if there is a good fit in terms of connection and see if there can be some negotiation in either direction for finding a solid fit, but keep in mind, “good vibes” can’t pay the rent, not even in the city of groovy. 

It’s important to look at the process of setting responsible and appropriate salary rates not as something scary, intimidating, or confrontational, but as a means for showing respect for both parties, and offering an avenue to grow together in this important work. Be open and honest about your needs -- both nanny and parents -- to ensure the likelihood that this relationship is set on solid ground. 

Once terms of payment are set, make sure to include them in a contract. Beyond the rates, you’ll need to work in the way in which payments will be made as well as how often, and whether taxes will be taken out now or later. Any incentives -- financial or material -- should be in writing as well. 

Any job with a longer contract should have an open possibility for income adjustment, based on performance and/or inflation, and nanny care is no exception. The Social Security Administration releases a Cost of Living Adjustment report annually, with projections for the following year that can help you set the terms of raises and salary adjustments. There are several different ways to work this into a nanny contract, based on any number of personal factors related to your individual relationship between nanny and family. As long as it’s in writing and offers clear, but flexible language, the possibilities can remain broad and respectful. 

No matter how you set your terms, the process of coming up with these boundaries can be empowering for all involved if done thoughtfully. 

If you are looking for help writing a nanny contract for yourself or your family, I offer a wide range of services to aid in the process. You can learn more about those packages by visiting my Nanny Contract page here, or arrange for a 20 minute nanny contract consult by emailing me at I look forward to working with you!