Au pairs, typically young European women who work as nannies in American households, are among the lowest-paid workers in the United States. They earn around $1,800 a month for 45 hours of work per week, which amounts to less than $1 an hour. Despite their low wages, they also receive room and board, an opportunity to experience American culture, and a chance to improve their English language skills.
These au pairs provide a cost-effective solution to the high expenses of childcare for host families. Additionally, they could potentially address the steep costs of long-term care for seniors if regulations permit them to do so. However, some states, like Massachusetts, have implemented regulations requiring au pairs to be paid minimum wage rates, leading to a decline in au pair participation in that state.
The Biden administration is considering following Massachusetts’ example, which could impose additional financial burdens on families relying on au pairs for childcare or elder care. This goes against the principles of free market economics, where wages are determined by the value of the worker’s production and supply and demand dynamics.
Nobel Prize-winning economist Paul Krugman, known for his columns in the New York Times, often advocates for government intervention to address income inequality. However, careful studies show that income distribution has not widened over the past 60 years, contrary to Krugman’s claims. Despite Krugman’s arguments, government intervention in labor markets like setting artificial wages can have negative consequences, as seen in the case of au pairs in Massachusetts.
Ultimately, following Krugman’s advice could lead to fewer opportunities for au pairs to work in the U.S. and impose greater challenges on families in need of childcare or elder care. It is essential to consider the implications of government intervention in labor markets and understand the economic principles at play.
