Would Economy Crumble With No Nannies?

June 3, 2008— -- Imagine a world without nannies.

Now think about the thousands of highly paid women — and, yes, they would still mostly be women — who would abandon their jobs to be with their kids.

The U.S. economy might not quite fall apart under such a scenario, but several experts said it could have far-reaching effects.

While it might be a farfetched idea here, look no further than Italy to see what could happen.

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The government of Prime Minister Silvio Berlusconi had taken a hard-line approach to immigration, cracking down on those in Italy illegally. And now the Italians have begun to see the results and are pleading for the government to exempt foreign cleaners and nannies from the crackdown.

In the United States, there is no nanny shortage now —and. of course, not all nannies are immigrants — but a major change in immigration laws, or an increased crackdown on those in this country illegally, could severely limit the pool of available nannies.

"I think that the evidence here is clear … if you take child care away, we'd have many fewer women in the work force," said Jonathan Gruber, an economics professor at MIT who studied child care issues in Canada. "Child care availability is the key determinant of female labor force participation."

As more women entered the working world in the past few decades, Gruber said, "It's not like the dads are filling in. It's just increasingly that children are being cared for in child care settings."

Let's say -- hypothetically -- that 10 percent of the 65.7 million women in the work force today decided to stay home. That would mean a sudden shortage of about 6.6 million workers. Productivity would plummet and millions of dollars would stop flowing through the economy.

The average American makes $31,333 a year. That means that if just 10 percent of the women working in the United States today decided to stay home, about $206 billion in wages would be lost. There would also be a dramatic impact on federal and state income taxes if such a mass of women fled the work force.

Liz Ryan, a workplace expect and author, said such a nanny shortage such as the one feared in Italy would be "catastrophic" here.

"Many of these women, if they had to pay a legal nanny, they couldn't work," Ryan said.

Many women have become disenchanted with corporate America and are starting their own businesses, said Ryan.

"We already have a big problem with women bolting the workplace," Ryan said. "To add on top of that a child care crisis would set women back professionally 20 years, at least."

There are 23 million children under the age of 6 — the typical age when kids enter school — living in the United States, according to the U.S. Census Bureau. Of those, 14.3 million, or about 62 percent, live in households where all the adults work, either a two-parent house with two working parents or a single parent who works.

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Women make up 46.3 percent of the labor force but hold 50.6 percent of the positions in management and professional occupations, according to Catalyst, an organization that promotes women in the workplace.

Changes in American culture and increased availability of day care have led more women to shift from the role of homemaker to full-time employment in the workplace.

Since 1970, the percent of women with children working has jumped considerably while the percent of men with kids working has dropped slightly, according to the Department of Labor.

The numbers are most dramatic for women with children under the age of 6.

Back in 1975, just 39 percent of women with young children also held jobs, according to the Department of Labor. By 2005, that figure had jumped to 62.6 percent.

Changes to our immigration policy, Gruber said, "would lead to a huge reduction in female labor force participation."

Just a slight change in home life -- such as a lack of nannies -- could have dramatic repercussions for the working world.

"Clearly women are in the work force at all levels, in great numbers and over many decades," said Laura Sabattini, director of research for Catalyst. "With so many dual career households, it's critical for business and its employees that women and men are able to manage their work and life responsibilities effectively -- which includes, but is not limited to, family responsibilities and child care."

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Connie Glaser, a speaker and author on gender communications at work, said a nanny shortage would be particularly devastating to women at the higher end of the pay scale.

"The nanny alternative to child care is a very high-end one," Glaser said. "It would have a very profound effect. If women cannot go to work and feel confident that there is somebody competent and capable and professional taking care of her children. Then, in many instances, the women opt out."

"It's taken women a very long time to come into their own in the workplace, especially at the high end," she said. "You're going to lose a lot of those women."

Many people who now are paid to look after children who would be out of a job.

There are more than 575,000 people working in the child care industry in the United States, according to the U.S. Department of Labor. While child care workers can earn more than $15 an hour in cities like Santa Fe, N.M., on average such jobs pay less than $9.50.

But most of these workers are not nannies; instead, they work in traditional day care centers.

Airane Hegewisch, a scholar in residence with the Institution for Women's Policy Research, said that less than 4 percent of families in the United States have a nanny.

"It is a low percentage," she said. "It's not incredibly high proportionately."

And because many nannies are paid under the table, the experts say there is very little reliable data available to determine where nannies come from, how much they are paid and their actual prevalence.

The families that do have nannies tend to have higher-income women. There is an argument to be made that if nannies aren't available some parents might go with traditional day care instead, but many mothers might instead forgo their careers, opting instead for more one-on-one time with their kids instead.

Bryan Caplan, an associate professor of economics at George Mason University and an adjunct scholar of the Cato Institute, said families hire nannies because the cost of the nanny is far less than the income that can be earned by leaving the kids with a nanny.

"Without the nanny, you may have a highly educated woman who could do any number of things but is stuck in the home taking care of the kids when there is someone else in another country who has a high school education or less and is perfectly able to take care of kids but can't do the job a highly educated woman would do," Caplan said.

If women are forced to choose between either career or family, he said, "they are more likely to do only career."

Hegewisch, from the Women's Policy Research, doesn't think women will stay home with their kids.

She said such a nanny shortage would likely lead to a smaller population as more women for go having children to advance their careers.

She points to Japan and some Western European countries such as Germany as examples.

"People don't have kids anymore, so you have a much more aging workplace," she said.

And that would lead to a whole different set of economic problems.

"People are much more likely to choose between working and having kids so fewer women do have kids," she said, "and those who do, stay at home."

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Patrice Buzzanell, a professor of communication at Purdue University who studies gender issues in the workplace, said that quality child care is key to keeping women, especially those with high-profile jobs, in the workplace.

That said, Buzzanell said many women are opting out of working for a host of other reasons.

"We're kind of in this era of neoliberalism where everything is orientated toward the corporation and one needs to put one's whole heart and soul into it," Buzzanell said. "You look at it and think at any point you could be laid off."

Some people balance that with their families and decide to stay at home.

"So much of identities are hooked into who we are at work and what we do," she said. "Where does it end? Where does work not encroach on family life?"