Because if I had to go by Mijka Samora's blog post, "The Nanny Arbitrage," I'd have to say no.
Samora makes the argument--what used to be called "self-serving rationalization"--that paying a nanny off the books is not only awesome, the very existence of New York City depends on it:
But if a parent ignores the laws on employment and immigration, the nanny arbitrage becomes significantly more profitable. If social security taxes are not paid for the nanny (if the nanny is paid 'off the books' in usual parlance), and if the nanny is an illegal immigrant, the arbitrage becomes compelling to many people who would otherwise never dream of breaking the law. There are sufficient dollars at stake for many to make the jump. And there is solace and comfort in the widespread, if misguided, notion that 'everyone else does it', and in the conflicted satisfaction of helping an illegal make a living.Yes, please let me feel satisfaction for "helping an illegal make a living" AND for totally ratcheting down her rate by exploiting her status.
More than that, the New York economy would get into serious trouble if everyone started to respect the letter of the law. Consider the following. A nanny expects to take home between $12 and $15 per hour. If a nanny is illegal, she will be more compelled to accept the lower end of this range.
By Samora's calculations, an off-the-books nanny will run you $31,200 [$12 x 50hrs x 52 wks], or $48,000 before taxes. A legal nanny "will want to take home $15 per hour," unfortunately: [$15 x 50 x 52wks = 39,000 x 1.2], $72,000 before taxes:
1- Hiring an illegal nanny off the books puts a cool $16,000 in after-tax dollars in your pocket every year. This can accumulate quickly if you keep a nanny for a decade, resulting in $160,000 in savings (or more if you invest it well), a sufficient amount to pay for a college education, an SUV, a lavish vacation etc.As it happens, there's a special 33-mo. lease offer on a Mercedes GL450 right now: just $699/month. Figure $600/mo parking [$500+ the 20% SUV surcharge], and that illegal nanny could put you behind the wheel of a new Mercedes for just the cost of insurance, a couple of hundred bucks a month. Less than your cell phone bill.
3- The New York economy is dependent on the perpetuation of the nanny arbitrage. If every parent decided to respect the law and to only hire a legal nanny on the books, all earners with an income between $48,000 and $72,000 would forgo the hiring of a nanny as it would be more financially advantageous to stay home with the children instead. Because this income range ($48,000 to $72,000) probably includes a very large number of parents, the stay-home decision could lead to a shortage of workers in New York City.I'll let someone else tackle the assumptions that the only factor to go to work is to pay for child care, or that the only consideration to stay home is financial [Comment lines are open, operators are standing by].
The idea that New York will experience a shortage of professional workers is ludicrous. Especially if those positions are currently being subsidized, in effect, by the hiring of illegal nannies or the out-of-pocket childcare expenses of employees. If parents suddenly disappeared from NYC's $48-72k job tier, some would get replaced by child-free workers. But it's also likely that wages and benefits would rise to keep parents happy. Employers would provide more flex accounts for child care and more flex time, etc.
But that's not going to happen because that's not really the issue Samora's addressing. The "hedge fund manager, every director of an investment bank, every private equity whiz, and more than a few lawyers, ad executives and other partners in lucrative businesses" Samora ID's as nanny arbitrageurs all make at least mid-six figures, with plenty of seven-figure bonuses. None of them is realistically trading off an illegal alien nanny and a G-Class; they can have both.
In this situation, paying a nanny off the books is purely about cutting a deal, offloading an expense you don't want to pay, and exploiting someone less powerful than you. Notice that neither health care nor vacation time is even mentioned in Samora's nanny calculation. Since I've never met anyone who with a non-agency nurse or nanny who provides either benefit, I can't say I know how much it improves the quality of your kid's child care, or how it affects the nanny-family dynamic.
But I do know the New York City economy is already taking an inefficient hit for the cost of that nanny and her uninsured dependents' medical needs. If Samora were serious about improving the strength of the city's economy, he'd factor that in. What he's actually doing, though, is using the challenges faced by families with two mid-range incomes to prop up a system that exploits them so that a bunch of self-justifying, lawbreaking bankers can upgrade their week in St. Barth's.