Who benefits from the au pair program?

I’m writing this post from more of an economics-y perspective than usual. I used to be super suspicious of this approach because I read it as cold and selfish. I hope you’ll take me in good faith here as caring about au pairs, about people who could become au pairs if they were allowed to, about host families, and about other childcare workers. I seriously considered being an au pair, and I’ve done stints as a daycare worker and a nanny. While that’s not the same as being an au pair or a professional long-term childcare worker, I do think I have some basic understanding and compassion for everyone involved here.

We’ve hosted au pairs for the last 4.5 years, and I have mixed feelings about it. But I want to lay out some things that I think are misunderstood about the program.

The main objections I know of to the au pair program:

• The program is exploitative. Au pairs earn less than the minimum wage. It isn’t truly focused on cultural exchange, and is really a way for American families to get cheap childcare. 
• Some host families break the program rules.
• The program undermines American workers.

Background:

The basics of the US program: the government allows au pair agencies to facilitate matches between au pairs and host families, and then issues temporary work visas to au pairs.  Their legal status is some weird hybrid of an exchange student and an employee. Au pairs must be unmarried childless high school graduates between 18 and 26. Host families must house and feed the au pair and pay $500 toward some kind of education for them. Au pairs cannot work more than 10 hours a day or 45 hours a week, and cannot do any work besides childcare for the host family, and cannot do any other work. Both au pairs and host families pay the agency for things like screening, the au pair’s travel to the US, and having a local staff member who mediates problems. The arrangement lasts one year by default but can be extended as far as two years.

The au pair program in Massachusetts changed after the state court decided that a different set of laws applied, meaning that au pairs would be paid the state minimum wage rather than a stipend as in other states, and some other protections that apply to domestic workers now apply to them. So things are currently better for Massachusetts au pairs (except the ones who were laid off when the cost jumped). 

On bad host families:

• It’s absolutely true that some host families are exploitative and disrespectful to au pairs, and the au pair agencies should kick these families out. Any au pair can tell you stories of friends who are expected to work extra hours unpaid, who aren’t given proper bedrooms but expected to sleep in a laundry room, etc. The au pairs are not on an even footing — if they leave their host family, they have only two weeks to match with another family before being deported. Many stay in bad arrangements out of fear of being sent home. As far as I can tell, these families are allowed to stay with the program and continue hosting au pairs. Agencies should be more aggressive in removing such families from the program, and should better support au pairs who leave because of bad treatment, but they seem to be reluctant because most of their income comes from the host families. The federal government licenses agencies, and it should withdraw licences from agencies that aren’t doing an adequate job here.
• Not all au pairs are lovely rule-abiding people either (one stole money from us), but the families are in general less vulnerable than the au pairs. 

On motivations:

• Yes, for most families the primary draw of the program is lower-cost childcare rather than cultural exchange. This is fine — we don’t expect families to prioritize cultural exchange when choosing a daycare or school. And it’s no wonder that families want to pay less for childcare: in most states, care for an infant costs more than state college. Charts here. When Lily was a baby, an infant spot at a large daycare cost about $30,000 a year and the cheapest childcare we could find was about $19,000 a year at a poorly-run one-room operation. When we had a second child and an au pair became the cheaper option, it was a relief to switch.
• Another attraction for families is in-home care. It’s great to not have to get your children out the door to daycare, especially if you work odd hours. An au pair just has to walk downstairs and won’t get stuck in traffic or kept away by bad weather.
• For au pairs, a lot of the draw is the chance to live in the US for a while and travel in their spare time. (This pandemic year has been a tough one for au pairs because they didn’t get to see the sights as they expected.) For ones who want to improve their English, it offers a lot of language practice. And for those used to living under the watchful eyes of their parents, it can offer a lot more social freedom. And as I’ll say later, the pay is often better than what they could make at home.
  

On pay: 

• Au pairs get housing, food, sometimes car access, and a $200/week stipend. (More in Massachusetts.) That comes out to less than $5/hour, while federal minimum wage is $7.25/hour. But consider that our last au pair came from El Salvador, where college-educated workers might expect to earn about $5,000/year as a teacher or accountant. By contrast, au pairs in the US make almost twice as much, and have basic living expenses paid. (Families pay quite a bit more than that, but the rest goes to the au pair agency.)
• My first job out of college was a similar arrangement — I was a “kitchen intern” at a religious center, working as a cook for $200/month plus room and board. In retrospect I’m sure it wasn’t legal, but it worked well for me. When I filled out the sliding-scale form to get birth control at Planned Parenthood, the receptionist was incredulous that my income was so low. But because I had basically no expenses, I paid off a bit of my student loans and had less stress about my living situation than most new graduates. I realize I still had a lot of privilege as a college-educated American. But for young women in poorer countries without a lot of good options, I think this kind of arrangement is still a good chance to save money (or spend it on travel, or whatever they choose.)
• I worry that saying “the amount au pairs are paid is too low” ignores the question of what would happen if they didn’t have the option of this program. After their time with us, most of our au pairs have gone back to living with their parents. One of them has gone back to her small town in Argentina with no good employment prospects. Another has gone back to a homophobic country after two years of being out and proud in Boston. I don’t know if their long-term trajectory was changed, but I’m glad they had a time of higher income and more freedom here. A third got another visa and hopes to stay in the US, which she feels is safer than her home country. I don’t see how taking the au pair option away from them would have been better or fairer to them.
• And what if the program required higher pay? That would be better for those who get au pair jobs, but I expect fewer of them would have jobs. Some families would be priced out, as happened when Massachusetts raised wages: many families left the program, and some agencies stopped operating in Massachusetts. At some price, it’s not worth matching with a stranger over Skype and hoping they’ll be a good fit with your family for the next year vs. getting local childcare.

On race and nationality:

• There’s a weird dynamic around white families hiring people of other races to watch their children. There’s a long history of behavior by employers that ranges from distasteful to truly awful, including deliberately limiting the options people of color had (particularly Black Americans) in order to retain them as cheap labor for childcare, agriculture, etc. 
• Our last several au pairs have been Latin American, largely because their academic calendar lines up with the time of year we were looking. In some way, it felt more comfortable to have a white American nanny or a white Australian au pair, because I didn’t worry that other people would feel we were somehow being racist. I know I treated them all with the same respect and same adherence to the rules regardless of color or nationality, but I somehow felt like a bad progressive by hiring Latinas to watch my white children. Of course, the urge to look like a good progressive by hiring someone of my same race is harmful — it discriminates based on race, and discriminates against precisely those people who would most benefit from the position. In my experience, the Latin American au pairs we’ve matched with have been better educated and more motivated than au pairs from richer countries who are more likely to be looking for something like a vacation year.

On displacing American workers:

• My basic response to the concern that au pairs is that they take childcare jobs from US residents: I don’t think it’s fair to favor some people over others because of where they happen to have been born. Overall, I favor more immigration.
• In my area, the going rate for a nanny is around $40,000 / year, more if they have experience and speak good English. That’s a bit below the Boston median individual income, but once you account for the fact that most nannies don’t pay taxes, I expect they come out better than the typical Boston resident. Even if you believe that US residents have more right to US jobs than other people, it seems like the pay is good enough that there’s room for more qualified workers here.
• Au pair visas have been frozen for the last 6 months, along with some other visa types, in an effort to protect American jobs. During the pandemic with schools and daycares closed and in-home childcare in particularly high demand, freezing au pair visas seems especially bad. 

Bottom line

• In general, when the rules are enforced, I think the au pair program is a win-win for host families and au pairs.

Indirect hat tip to Brian Caplan’s piece on tourism and social desirability bias, on why rich tourists spending their money in poorer locations is good even though it highlights inequality – not doing so doesn’t actually help inequality.

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How much do kids cost? The first 5 years

We did an estimate on how much our first year of having a baby cost. Four years and another baby later, we decided to do an update on how much the first five years have cost.

TL;DR: Over 5 years we’ve spent about $106,760 in cash, or about $150,000 including lost earnings. By far the biggest costs for us were housing, childcare, and lost wages of a stay-at-home parent.

Related posts:
Cost comparison of childcare
How much does it cost to have a baby? (at the one-year mark)
How much does it cost to raise kids? (speculation before we did it)

Total cost over 5 years:

Ok, this graph looks ridiculous because most categories are so much smaller than housing and childcare that you can’t see them, but that’s probably the point. People talk about baby gear and diapers costing money, but they just don’t hold a candle to the big two.

And that’s just counting what we paid in dollars. Here it is with my lost wages (post-tax) included:

So overall we’re about $151,690 short of what our child-free selves might have (assuming we neither donated nor invested the money). We’re also ahead by an unknown number of kisses and games of Lily-burrito.

Monthly averages:

With the exception of buying a house, most of your costs don’t come all at once. So how to the costs actually come each month?

Some costs scale with having a second child and some didn’t. The biggest differences were 1) moving towards more paid childcare 2) moving to a house where each kid had a bedroom, instead of sharing our bedroom as Lily did for the first two years. Of course some of this is more affected by the passing time than by adding additional children — if we’d had just one child, we still would have moved her out of our bedroom around that time.

Chart with numbers

What’s in the categories:

• Housing: this is kind of pretend, because we actually built two extra rooms onto our house, which had a high up-front cost but will be useful for years and will eventually make the house sell for more. I’m instead substituting the cost at which we currently rent our spare bedroom ($900/month times 2 bedrooms). Lily got her own room around age 2 and Anna got hers around age 1, but I’m prorating it equally between them. This is one where you’ll be able to work out pretty easily what an extra bedroom costs where you live. Remember that your housing size won’t scale with your family size unless you move to a larger place every time you have a baby, so you’ll likely have some crowded years or some spare space.
• Childcare: payments to daycare providers, payments to nannies, au pair costs (stipend, agency fees, room, food, utilities, phone, and transit). The cost of the au pair room is estimated in the same way as the kids’ rooms above. Duplicate childcare while traveling (when either parent takes one child with them on a work trip).
• Food: additional food while Julia was pregnant and nursing. Minimal food during child’s first year. When we split food costs with housemates, we started counting the kids at half an adult share when they turned 1. This is probably an overestimate of what they eat.
• Health insurance: increase over what we paid for 2 of us to be on health insurance from Jeff’s work.
• Gear/nursery: cribs, rocking chair, stroller, etc.
• Hygiene/medical: diapers, bottle-feeding supplies, medicine, dentistry, vitamins, copays on medical appointments.
• Other: travel, toys, books.
• Education: books and materials for doing home preschool with Lily, and a summer program.
• Clothes: mostly from thrift stores or Swap.com.
• Julia: maternity and nursing clothes. The fact that I even thought this would be a significant category when we started tracking shows how vague my idea of our future expenses was.

More on lost wages:

During 2014-2017 I worked 2434 fewer hours, or about 60 fewer full weeks, than I expect I would have. After Lily’s birth I used my 13 days of vacation and sick time I’d hoarded from my social work job, and then quit and returned 5 months later. Lily lasted 3 weeks in daycare before getting kicked out because she wouldn’t drink milk for anyone but us (who knew that was a thing? To be fair, it’s unusual and your kid will probably be fine in daycare). So Jeff moved his schedule earlier, I worked evenings and weekends, and between us we took care of Lily constantly while working the equivalent of 1.6 jobs. More on that period. When she was 18 months we switched her to 4 days a week in daycare, and I worked 4 days and 2 evenings a week.

With Anna, we had a more normal setup. I took 7 weeks unpaid maternity leave, Jeff took 10 weeks paid paternity leave, and then both children were cared for by a nanny or au pair. Cost comparison of childcare arrangements we considered.

Things that may change your costs:

• Paid parental leave: Both times Jeff got 12 weeks paid leave and I got none. This is better than what most Americans get, but not so good by world standards.
• Opportunity cost: If a parent earning a lot takes unpaid leave or reduced hours, it’s a bigger difference from your previous income. If the parent wasn’t earning that much, it’s a smaller difference. If you’re in a field where taking extended leave will hurt your chance of promotion, etc, that’s an additional loss.
• Cost of childcare in your area: Boston has one of the highest childcare costs in the country, which is why an au pair (with nationally standardized costs) was the cheapest option once we had two kids. I don’t really understand why it varies so much by region. Also, different types of childcare vary in cost, quality, and convenience.
• Cost of living in your area: There are many places (including cheaper areas of our city) where a spare room costs less than $900/month, and some where it costs more.
• Sharing rooms: We could have moved to a three-bedroom place before having kids, which would have increased our costs. Or we could have stayed in a smaller space for longer — children having their own bedrooms has been unusual historically. But extended room-sharing means extended night feedings and (at least in our experience) more disrupted sleep for everyone. That’s one thing if you don’t need to do a lot of mental work during the day, but chronic sleep deprivation is no joke if your job requires you to think clearly. There are also other ways around this (baby in the bedroom and parents sleeping in the living room seems to happen a lot in San Francisco). Having children share with each other is another common option.
• Buying more or less stuff: We’ve kept costs pretty minimal here by buying used toys and clothes. Swap.com and similar sites are excellent for this.
• Preschool: we opted for minimal paid preschool because we were already paying for full-time childcare. We could either have put the kids in a daycare (the more expensive of which include preschool programming) or paid for Lily to go to morning preschool on top of the childcare we already had. The difference is whether someone is basically watching the kids play, vs. leading more organized group activities and having them learn letters, basic math, prewriting skills, etc.
• Vehicle: We have never owned a car, so kids really haven’t changed our transportation expenses. This is a cost to consider.
• Travel: The trips we take are now more expensive, but we take fewer of them, so I think this about evens out.
• Health insurance: Costs would be lower in a country with free health care, or higher if you don’t have an employer that covers as much of insurance costs as Jeff’s does.
• Health needs: children with special needs (medical, emotional, behavioral) need more of your time and more money for medical copays, services that aren’t covered by insurance, childcare that can handle their needs, etc.

How I want you to use this information:
To think about how much it may cost you or others to raise children. I particularly advise saving money before you have kids.

How I do not want you to use this information:
To criticize my family for our lifestyle or financial choices.

Hardly anyone publishes their budget. Please don’t disincentivize that.

Cost comparison of childcare

Now that we have two children, the cheapest form of childcare has changed. Double daycare didn’t sound appealing, so we did the math and decided that an au pair was cheapest (see tables below). Jeff’s family used au pairs and were happy with the arrangement. So we’re planning to go ahead with that this coming year.

Au pairs have a connotation of being something only posh people have, perhaps because having live-in help seems like having servants. But the state department is very clear about them not working extra hours or taking on housework beyond what’s child-related, and they’re supposed to be like a family member (“au pair” literally meaning “on par” or “on equal terms” with the family). Jeff’s sister was an au pair and it was something I considered after college, so it’s not as if it’s a one-way stream either.

Pros:

Cultural exchange. The whole reason au pairs don’t make minimum wage is that they are technically having a cultural experience rather than being employees. If you’d like to expose your children to another language and hang out with someone from another country, this might be a nice way to do it. Caveats: the kids I see with Spanish-speaking au pairs or nannies seem to understand Spanish but don’t speak it themselves (they respond in English). Jeff’s father said they preferred au pairs who spoke English as a first language because it made communication easier. I also think childrearing methods vary quite a bit by culture, and there are some cultures that seem pretty low-interaction, which is not what I would want.

Flexibility: An au pair works up to 45 hours a week, and you can schedule the hours anytime during the week (with a max of 10 hours/day and with at least one weekend a month fully off). Because we both travel for work, the ability to have someone watch our children at odd hours as we’re coming and going from the airport sounds good.

You can also have your au pair travel with you (so if I were at a conference for a week, I could potentially bring the kids and the au pair, which would certainly be nicer than being away from my baby for that long. But the cost of extra airfare and lodging means we’ll probably use this very sparingly).

You also don’t have to cram your child into a daycare’s timeframes: no need to drag them out of bed in time for you to leave for work, or to keep them awake or make them lie down because that’s the group schedule. There’s no panic if they’re not potty trained and won’t be allowed into the three-year-old classroom.

Sick days: An au pair doesn’t work when they’re sick, but they can work when the kids are sick. (With a daycare, the kid can’t be there when they’re sick or for 24 hours afterward.) Since little kids get sick more often than adults, we expect this will mean we miss less work caring for a sick child. Also, snow days, which we have a reasonable number of in Boston.

No commute: having care in our own home is huge for us. When we took Lily to daycare every day, it added about 90 minutes to our days (because you have to manage a child’s commute in addition to your own).

Less stress for children: At home, young children’s level of cortisol (a stress hormone) peaks in the morning and falls throughout the day. At daycare, many children’s levels rise again during the middle of the day. (Caveat: I couldn’t find out whether in-home care with a non-family caregiver matches the home pattern or the daycare pattern, but I’m assuming it’s closer to being home with your family on a weekend.) It’s not clear that this has any long-term effects, but it seems plausible to me that it does.

Cons:

Socialization: It takes extra effort to get socialization for the children because they’re not already in a group setting. For a baby or young toddler, I don’t think this is a problem, but for older kids you could potentially be looking at the cost of preschool on top of an au pair. But I think it’s possible to supplement with visits to library story hours, play groups, etc. Certainly most children throughout humanity have been reared primarily in their own (extended) families rather than in a classroom-type setting.

Privacy: An extra person in your household brings more possibility of conflict and awkwardness.

Inexperience: I know 19-year-olds can be clueless, because I cringe at some of the mistakes I made at that age working in daycares or as a babysitter.

Year-long schedule: If you end up with someone who’s a bad fit for your family, you’re kind of stuck unless you want to pay the fee to re-match. Also if you no longer need childcare (say one parent is unemployed for a few months) you’re still paying for it. But this is true in the better daycares, too.

Unpredictability: The au pair can decide to buy a flight home any time (edit January 2017: ours did this with less than a week’s notice). Young adults who have never lived away from home before are not known for their consistency. There are also factors beyond their control: their visa application could be delayed. They could have a family emergency and need to return home. Trump has mentioned getting rid of the J-1 visa that au pairs use, so who knows whether he’ll follow through on that.
A daycare could also close or lose its license, particularly if it’s a home daycare that relies on a single person, but I’m guessing it’s less likely.

Housing: You need an extra bedroom. If you have the flexibility to rent a larger space this may be fine, but for people who own condos or houses it may not work. In our case, it was possible to build an extra bedroom, which we’re happy to do because we’d like to have a spare room after we’re done having au pairs.

Transportation: If the au pair will need to drive, adding them to your car insurance (and getting another car, as some families do) would add extra cost. In our case, we’re near the subway and don’t own a car, so the transportation cost is just a public transit pass.

Monthly costs in Boston area using public transit:

Au pair

Au pair stipend and agency fees:	$1620
Rent:	$770 (based on renting a four-bedroom vs. a three-bedroom apartment in my neighborhood)
Utilities (including cell phone):	$65
Food:	$200
Worker’s comp:	$30
Misc spending (museum admissions, public transit pass, etc.):	$100
Total	$2785

Daycare (this varies a lot but is based on the daycare Lily went to)

Infant in daycare with sibling discount	$1794
Toddler in daycare	$1885
Total	$3679

Nanny 

$20/hour (more if withholding tax and social security), 45 hours/week	$3900
Worker’s comp:	$30
Food, museum passes, etc.	$100
Total	$4030