Wealthsimple makes powerful financial tools to help you grow and manage your money. This is the latest installment of our “Dear Ms. Etiquette” series, where our columnist untangles the issues that happen when people and money get together.
Dear Miss Etiquette,
My wife and I have used the same housekeeper to clean our place once a week for about ten years. But, at the start of the pandemic, we paused her services — limiting contact with other people was, and is, the order of the day. But we kept paying her since she depends on the income, and we figured the situation would be pretty short-term. Two months and what feels like ten million articles about preliminary vaccine trials later, it doesn’t seem so short-term anymore. Should we keep paying her? For how long? What’s the right thing to do, morally and financially, given that I still have my job but no one knows what the future holds?
I Actually Don’t Mind Cleaning the Toilet
Dear Don’t Mind Cleaning the Toilet,
Welcome to the Pandemic Anxiety Club, a special community that uses its copious free time to scrutinize life choices, financial and otherwise, in microscopic detail. Membership dues come in the form of debilitating panic attacks as you lie in bed each night.
Your question is a good one, and one I’ve been hearing a lot. In one hand you hold the economic fate of a worker; in the other you hold your own financial security — plus a toilet brush. You’re starting to get annoyed by paying someone to do work you’re doing yourself, while you also realize you play a part in an interconnected service economy — whether that’s by employing a gardener, nanny, dog walker, or housekeeper.
At least I hope that’s how you’re thinking about it. We all need to realize that, in our increasingly gig-ified world, many of us are part-time bosses to folks who don’t have “employers” in the corporate sense of the word. And with that role comes a certain obligation to do right by them.
Of course, what that means amid a global catastrophe is unique to each person’s circumstances. So my answer is going to depend on a few questions you need to answer yourself. Think of this as my guide to accepting the fact that you’re a boss, and then becoming one.
First: Has your financial situation changed?
If you’ve lost your job, if your spouse or partner has lost a job, if your income has been impacted in a major way – well that’s some information that’s going to change the math here. Literally. If you’re not able to pay your own rent, for instance, you’ll likely have no choice but to stop paying other people. Though you can always pay your housekeeper a portion of her fee if that’s possible — we can get into that later.
This is also a good time to remind you that it’s important to have an emergency fund — in case you lose income in an occasion like the very one we’re living through.
Remember to account for the fact that you are someone’s boss.
Now you can confront your dilemma on a more ethical front. And my opinion here is clear: now is not the time to rewrite the ethics of choices you made during the “good times.”
First, these services are not the same as an unused Spotify account. There’s an awfully good chance that, whatever financial anxieties keep you up at night, those of your nanny, gardener, dog walker, or housekeeper are even more urgent. And cutting those folks off could have disastrous consequences in their lives.
Second, service workers are often paid under the table in cash, functioning inside an off-the-books economy. Perhaps you yourself, as a boss, have reaped the tax benefits of this system. I’m not here to shame you for it. But I am here to remind you that, by doing so, you’ve been complicit in a self-perpetuating system wherein cash workers make more being off the books, which means they also have no official income that would qualify them for unemployment when the market for their services very suddenly disappears. Which is all the more reason for you to feel a real responsibility to do right by them in times of crises. At the risk of sounding like a coronavirus Chevy commercial: now, more than ever, it's our duty to practice financial kindness.
I should add that this is something to consider from the macro-level, too. The service industry is the largest sector in all of Northern America. In both the United States and Canada, service workers make up around 79% of the workforce. According to Jonathan Wight, a professor of economics at the University of Richmond who specializes in the ethics of capitalism and globalization, there are currently somewhere around two million domestic workers in the United States alone. If this pandemic has taught us anything, it’s that a society has a real self-interest in ensuring the physical and financial health of its most vulnerable members (which are statistically very much linked).
And doing harm to the gig sector will bite all of us. Wight says the effect would ripple across other sectors. “All these people, if they’re laid off, presumably have rent to pay, they need to buy groceries, they have health care expenditure. So to the extent they’re not working, that produces what economists call a multiplier effect through the economy. And that would be devastating then for landlords and for grocery stores and for health care facilities. It really would be pretty catastrophic.”
If nothing’s changed for you, consider paying your gig workers until they can start doing work for you again.
My feeling is that, as long as your financial situation hasn’t changed, you should continue paying service workers indefinitely, even if they’re not actually performing the service at the moment.
“Loyalty is a two-way street,” Wight says. “You want your service worker to be loyal to you, but you have to be loyal to them, too. And this is a great time to step up and continue to pay the people that have been serving you if you can.”
If your financial situation has changed.
There’s also a more difficult scenario. There may come a time (and for a lot of us that time has already come) when your income could be suddenly and seriously affected. What is your obligation to the housecleaner who’s been doing your laundry for ten years and brought over a spare key the time you locked yourself out? You have options. One is to cut expenses further. But if you’re already operating under this new “bare bones” regimen, ask yourself: can you cover your essential expenses this month? What about the next? If the answer is, scarily, no? Then it’s time to consider whom you employ and who you should stop paying first.
If you have more than one worker who depends on you and you can’t pay all of them, make some tough choices.
Let’s say your hypothetical housecleaner is sixty-two and been with you ten years. She has two grown kids and she cleans houses because when her husband died a decade ago they had no savings and her government check just doesn’t quite cover the bills. And you’re also paying a nanny who is twenty-two, lives with his parents, and has only worked for you for six months.
Who do you stop paying?
Again, it’s a decision you’re going to have to make, but it seems that both the relationship with the housecleaner and her situation require more support.
Consider reducing pay rather than eliminating it.
But before you make the decision to stop paying for services altogether, Zoe Wolpert, Portfolio Manager at Wealthsimple, suggests that, if it’s possible (based on your budget’s bottom line) you simply reduce payment. “Ask yourself what you can afford on a regular basis,” she says.“Try and work out what might be a suitable way to help until things turn around.”
Tough conversations are better than no conversations.
No matter what arrangement you decide upon, you need be able to have an honest conversation. “Talking openly is the best thing that we can all do,” says Wolpert. “You know, finding out: do they have other sources of income right now? Are they familiar with any benefits they could be receiving? Could you help them navigate that, if you can’t keep them on the payroll?”
And then let them know what you’re able to pay, and for how long. Don’t sugar coat it, and be clear. And if possible, let them know that you’d like them to come back and work for you again when your income is replaced.
Remember, the less sudden, the better. It’s standard to give two weeks’ notice to your employer before you leave a job, and that’s a good rule of thumb. If you can provide other severance pay, that will help a lot, too.
Be kind, be empathetic. That’s not just good advice when it comes to dealing with people who work for you. But, especially right now, it’s good advice period.
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