Is the economy affecting nannies and daycare centers?

I have to believe that, with a resounding Yes, they are. Childcare is probably one of the most expensive costs to families, and I have to think that especially for nanny care, which sometimes comes with the added expense of healthcare, mileage and gas money, and extras that are provided to nannies.

And another cost of nannies, which parents seem to slowly be catching onto? Household-employment taxes. People who pay household workers more than $1,600 a year are required to file the necessary paperwork, consisting of Medicare and Social Security taxes, unemployment insurance - federal and state - and other state and local taxes, and this is often a tedious process. But by escaping these taxes, some nannies may be losing out on services and a safety net, according to an article in the Wall Street Journal today about parents avoiding "the nanny tax." The cause of this is due, in part anyway, to huge growth of parents hiring nannies from internet sites. From the article:

In the past, parents more often hired full-time nannies through brick-and-mortar agencies, which often exerted armtwisting to persuade both parents and nannies to pay taxes...An estimated 30% to 50% of nanny hires are now done online, up from about 10% five years ago. In general, that may lead to "doing things a little more casually," says Monica Fleming, president of GoNannies.com, an employment site.


So it would seem that while using the internet to obtain a great, trusting nanny would be convienent and safe in today's world, it might actually be allowing for less tax revenue and a safety net for the nanny?

What do you think of this? How do you think nannies and/or childcare centers have been or will be affected by the economy?

-Katie Conrad