Reply #4: Every salary economic transaction has a big

[exboyfil]

tax drag. For examples S.S./Medicare is taxing at approximately 30% (15% for the parent which is either a direct payment or reflected in reduced compensation for the parent and 15% for the day care worker which gets paid by the parent). Throw on top of it state and federal income taxes (even with some child care credits).

Add to this meeting state standards for child care (in an institutional setting) and liability insurance (we checked on this when my wife was thinking on doing daycare in the home and it was high).

Consider aspects which depress wages (availability of undocumented workers willing to work for less because it is better than the alternative), and the fact that this is income which can be gained in a somewhat more flexible manner (you can watch your kids the same time you watch others for dollars).

A ratio greater than 3 to 1 for infants is not recommended making them especially expensive. In many settings you have to pay for two more hours than you work (transport time from the sitter to your employer and back). Add in additional cost for transportation (taking the kid to the sitter as well as your own commute). Needing a more reliable car when you are employed. Add also the additional clothes and food expense related to working outside the home.

I would guess that, unless you need the health care from an employer, anything less than $15/hr. would be a losing proposition under these conditions. We did the math when my wife had our first child and came to this conclusion. I am still trying to convince my wife to go back to work now that our youngest is in 6th grade.

Your pay $15/hr ($120/day) Taxes - $5/hr ($40/day) Childcare ($4/hr for 10 hrs) ($40/day)
Transportation (40 miles at $.40/mi) ($16/day) Clothes and Food ($5/day)

Net income $19/day

Sitter of an infant $4/hr*3 infants=$12/hr of that 15% will have to come out for S.S. and TBD for State/Federal taxes

From the parents perspective $200/wk seems like a lot for childcare, but the childcare provider really is not making very much either. The numbers get better when the kids get older, but still we are talking about pretty thin margins.