I read one of the most fascinating comments sections in personal finance today in which Holly of Club Thrifty shared four reasons that she won't pay $15/hr for a babysitter. The article itself was decent, but that comments section is insane.
Seriously, if you think that I get worked up about Trump being the likely Republican Nominee, you should read how people feel about Holly's unwillingness to pay $15/hr for a babysitter.
In the comments section, many accused Holly of being elitist or tone deaf or undervaluing other people or failing to grasp supply and demand which seemed a little harsh since Holly's primary point of view is thrift (ie saving money). A few even said they unsubscribed from The Simple Dollar because Holly won't pay $15/hr an hour for a babysitter (or rather because she wrote about it with sincerity and conviction).
The funny thing about the whole "conversation" is that (as far as I could tell) nobody suggested that $15/hr was too little to pay for childcare in Central Indiana. Nobody suggested that childcare was worth more than $15/hr, but I think that if it came down to the safety or well-being of her children, Holly and Greg would probably pay hundreds of dollars an hour for their girls. On the other hand, many people suggested that childcare is worth less than $15/hr because they babysat for $10 or $12/hr.
So which is it? Should Holly pay $15/hr or not? Does it matter that she can find reliable alternatives for $8/hr? Does Holly pay her babysitters poorly or well? And does this matter to you?
What does it mean to pay someone well?
Wanting to pay other people "well" is a complicated value.
My dad is a business owner with around 200 employees. More than half of the employees work in a warehouse, and their work requires no specialized skills. The work is tiring (imagine stuffing envelopes for 8-9 hours per day), but neither overly rigorous nor overly intellectually stimulating.
Working in the warehouse for my dad was a staple part of my high school and college summers, and I learned a lot about my fellow employees and about running a business. Sometimes my coworkers complained about the monotany of the work, but I also learned that my dad had a reputation for being an "honorable" man who paid well. My coworkers and I earned between $12 and $20 per hour.
Is $12-$20/hr a good wage? Did my dad pay his employees well?
It's complicated. After I quit working for my dad, I quickly went on to earn $25 and eventually $60/hr equivalencies. To me, $15/hr (my terminal wage) wasn't that good of a wage, but that's because I had alternatives.
Since having a child, we've always paid babysitters rather than daycare centers. I never relished the thought of putting an infant in an institution, and by the time I thought him old enough to go to daycare, I didn't want to let go of the convenience of a babysitter. We've always paid between $10-$12/hr for childcare.
The highest any of our babysitters have requested was $9/hr. Wages are lower here in the South, and I suppose stay at home moms (our babysitters all have kids at home themselves) have a deflated sense of the value they add. At the same time, I'm earning 3-5X what my babysitters earn (some take on other kids at a similar rate), so it's not totally clear that its fair.
Paying someone else well is always contingent upon relative value. The relative value of competitors, the relative value of what they could earn, the fact that I could just do it myself... etc.
Being paid a living wage doesn't mean you're being paid well. Paying someone a wage above the price they requested doesn't mean you're paying them well. It's just complicated.
Should you aspire to pay others well?
For the majority of my professional career, I earned salaries and wages that I felt fairly compensated me for my talents. Every year of my career, I engaged a handful of outside recruiters and attempted to receive the highest possible offer from these recruiters. In six years, I have received four offers that were significantly higher than the wage I was earning at the time.
Twice, I simply passed on the offers (since the companies seemed too desperate), once I received (without asking) a raise in line with the new offer (as part of an annual wage cycle), and most recently I asked for and received a matching wage.
It seems that my employer makes an effort to pay me in line with the market, but not much higher. My dad told me that he tries to pay slightly above market rates to keep the cost of training down. I try to pay slightly higher than market rates to my babysitters because they are so dependable and flexible, and I place a premium on that.
We mostly want to pay others well because its in our best interest to do so, but does that make it any less of a good thing? I don't know.
Where I would rather show generosity
Other than a handful of times that I've hired a friend to watch Kenny particularly because she lost hours at her job, I don't try to be particularly generous in the marketplace. I go to garage sales and I get the best deals I can. I pay my babysitters the amount that makes it worthwhile for them to watch him well and give me the convenience I need.
Marketplaces are good for efficiency and bad at everything else. Marketplaces are bad at equality, stability, and predictability. I like markets because I like efficiency, but I don't pretend like they are great at everything else (you could pull out the rising tide lifts all boats quote, but the reality is that it lifts all boats that aren't capsized).
I don't prefer to put my generosity into the marketplace. I much prefer to exercise generosity through non marketplace means. Which means giving my time and money to causes that are important to me, even if the distribution of funds is not 100% efficient. Some people and organizations take pride in their ability to get marketplaces to do something other than be efficient. These groups and people are great people and they even win Nobel Prizes (Mohammed Yunus is one great example), but its not for me.
I pay people well because its in my benefit. I give because I care. I don't try to mix the two up. What are your thoughts?
PS- Expect some silence
I'm giving birth come Hell or High Water on Wednesday. Please expect a little silence, but don't worry about me. I'll eventually share posts and pictures again.
In the meantime, my baby and my blog are poised to share a birthday. Isn't that cute :)
I'm a wife, a mom, an employee, and a personal finance nerd who is devoted to spreadsheeting my way through life.