Also saw this article where Yale University is now giving its child care workers free housing, since you can’t live anywhere within commuting distance on the low wages being paid.
intercst
2 Likes
Here’s the WSJ story with out the paywall.
http://archive.today/2023.12.07-122405/https://www.wsj.com/politics/policy/cost-of-hiring-au-pairs-could-double-under-biden-administration-proposal-23afe8b7
The NYT story seems to omit one thing that might be a fly in the ointment - taxes. Would the value of the housing be taxable as ordinary income?
2 Likes
When I was an Au Pair in France, I wasn’t a “Nanny,” but on a cultural exchange of equals. It required that I go to school, participate in family life that an older sister might do including light chores, given I was living in the home, and about 4 hours of childcare a weekday during which I was to keep their English language skills current. Pocket money was abysmal, about 25 FF a week, which at the time was about $6! Health insurance and room and board, schooling, was included and mandatory. They also paid for my plane ticket, which was quite expensive back then.
Nannies are a different job, longer hours, much better pay, higher responsibility. Employee vs cultural exchange. If host families have a hard time understanding that, the au pair should go to their agency to have them step in. I don’t recommend doing something like an au pair exchange without an agency. https://www.aupairworld.com/en/wiki/difference-nanny-au-pair#:~:text=Nannies%20and%20au%20pairs%20both,money%20instead%20of%20a%20salary.
IP
1 Like
Probably not. If the housing you are occupying is for the convenience of your employer (i.e., they want to nanny/au-pair to be close to the kids, not residing in the next town) then it wouldn’t be taxable.
intercst
Would it work that way for the pre-school teacher in the NYT story?
I would think they would indeed be taxed on the housing as ordinary income. That’s how it works for a nanny I know, who was given an off premise condo to use while employed with that family, as well as a car which she also used for personal use. She had to declare all of that on her taxes.
IP
2 Likes
Even if that’s true, what tax bracket is a childcare worker going to be in? Surely a lower bracket. The average childcare worker makes about $30,000/yr. Even if the apartment is $5000/month ($60,000/yr), they’d still be getting half their income below the 22% bracket. So they’d be getting the “free” housing for about $1,000/month in taxes. Still a good deal.
When I was working, if you got housing as part of an assignment, the tax people grossed up your salary to cover the income taxes (same thing if the company was paying for an employee’s kid in private school.)
It was comical when I was working in Norway in the 1980’s. The Norwegians by law posted the top ten income earners in town, along with taxes paid at city hall. About half of them were Exxon employees. I doubt anyone had a salary above $200,000/yr at the time, let alone the $2 MM/year posted at city hall. Almost all of it was the value of the housing and private school benefit plus the enormous tax-gross up to pay for it.
intercst
1 Like