No greater investment

While the emotional cost of entrusting your newborn or toddler to an outsider is incalculable, the financial costs of child care can be measured. To help you weigh the pros and cons of three child care options — daycare centres, live-out and live-in nannies — let’s take a look at how the numbers stack up.

By Sherry Noik-Bent
Globe Investor Magazine, Feb. 21, 2008
Illustration by Christopher Hutsul

1. Daycare centre

In an urban centre such as Toronto, daycare centres charge up to $70 a day ($1,540 a month) for infants and $50 a day ($1,100 a month) for preschoolers, says Kathy Graham, who is CEO of the Association of Day Care Operators of Ontario (ADCO).

For parents, one important asset of this option is the comfort of knowing that daycare centres are licensed and governed by provincial regulations. The Day Nurseries Act that Ontario introduced in 1990 sets out health and safety standards, staff-to-child ratios and educational requirements for caregivers.

2. Live-out nanny

The cost of a live-out nanny is harder to nail down, because wages and benefits are negotiable. In Ontario, for example, the minimum wage for workers is $8 an hour, but supply-and-demand factors can push the rate for nannies closer to $10 to $15 an hour. On a monthly basis, that’s between $2,000 and $3,000.

When you discuss wages with a prospective nanny, you need to be certain that your interpretation of take-home pay is the same as hers. After all, the last thing you want is to be quarrelling about money with the person who’s minding your toddler. “When nannies say they want $12 an hour, they want $12 in their pocket,” says Shawnda Walker, who employs a nanny to care for her two children. “I’m paying all the deductions on top of that.” With employer contributions, she estimates the hourly rate for her nanny is closer to $12.75. Of course, as the nanny works more hours or the hourly rate goes up, the gap widens—with benefits, for example, a $16-per-hour nanny costs the employer more like $17 per hour. (While many parents are tempted to go “off the books” to avoid dealing with the taxman, the write-offs at year-end are worth the pain, not to mention the peace of mind.)

If a nanny lives outside your home, don’t be surprised if you have to cover her transportation costs—bus passes or perhaps even the fuel and maintenance expenses for her car. And she’ll need to eat, so don’t forget to budget for extra food in the refrigerator.

3. Live-in Nanny

As you’d expect, live-in nannies usually receive a lower hourly wage than live-out nannies. In Ontario, the government has fixed wages for live-in caregivers at $9.25 per hour—almost identical to what a family in Edmonton will pay, says Jennifer Wolff of Nannies from Heaven. But, on top of the hourly fee, Wolff’s agency charges clients a $995 fee for trips to interview prospective nannies in their countries of origin, video resumés and detailed instructions on how to deal with the taxman.

4. What else?

As of July, 2006, all parents are entitled to the federal Universal Child Care Benefit of $100 per month per child up to the age of 6, although this income is taxable. On the plus side, the money can be used to offset the cost of whichever child-care option parents select: a daycare centre, a nanny or even your mom. In Toronto, eligible parents can qualify for up to 100% of the cost of a daycare centre, says Kathy Graham, but to claim the subsidy, the child must be enrolled in one of the facilities that have partnered with the city.

The bottom line

However the numbers add up, most parents ultimately make their decision for either a daycare centre or a nanny based on the kind of care they think best suits their child: the tranquillity of one-on-one attention versus the noisy goings-on in a roomful of kids. For work-at-home mom Cindy Dallal, “socialization was key.” “I don’t plan on having a second child, so it was really important to me that the kids my daughter meets at daycare almost serve as surrogate siblings, and I did not think she was going to get that from a nanny.”

Finding space for your child in a daycare centre, however, is something of a national pastime. In Toronto, for example, there were some 354,000 children under the age of 12 in 2006, but only about 54,800 child care spaces (excluding the private, qualified operators that are not part of the city’s subsidy arrangement). “We’ve heard that you could be on a waiting list for up to a year or two years,” admits ADCO’s Kathy Graham.

Fourteen months, in Dallal’s case. “I got myself on the waiting list when I was three months pregnant. Daycare managers knew I was pregnant before my parents did,” she quips. When her daughter turned seven months old and Dallal was still waiting for a space to open up, she realized the time had come to surrender and move on. After purchasing a membership on a nanny-search website, it took her only three weeks to hire a nanny who was just the right fit.