Inflation and Nanny Wages: Handling Annual Raises
Retention is Cheaper than Recruitment
Finding a great nanny takes months. Keeping them is an investment.
In the corporate world, employees expect an annual review and a salary adjustment. The domestic world is no different.
COLA (Cost of Living Adjustment)
This is not a "raise" for good performance; it is an adjustment to keep their purchasing power flat against inflation. If inflation is 3%, and you give a 0% raise, you have effectively cut their pay by 3%.
- Standard COLA: 3-5% annually.
Merit Increases
If the nanny has taken on more responsibility (e.g., a new baby arrived, they now manage the household vendors), a Merit Increase (5-10%+) is warranted.
The Conversation
"We value you immensely. To reflect the cost of living and your excellent work this year, we are increasing your hourly rate from $30 to $32, effective Jan 1st."
This small proactive step prevents the nanny from silently looking for higher-paying jobs.