What do I do here?
Long backstory:
We moved here in July 2015. We had 3 nannies who didn't work out, then finally hired our current nanny in March 2016. She was initially responsible for full time care of my DD, and my son went to preschool 3 days a week from 8-3:30. My husband has every other Monday off, but we pay her 40 hours those weeks anyway, and overtime at 1.5x when she's over 40 hours in a week. She started at $15/hr, which was more than she was making at the daycare she had worked at before. In September 2016, we started sending my DD to preschool 2 days a week and my son to preschool 4 days a week. So she didn't really have any responsibilities for 2-3 days a week, other than pick up the kids at 3:30 and keep them for an hour or 2 until we got home. But we kept paying her 40 hours/week to retain her, since my brother/SIL were expecting in January 2017.
So in April 2017 she started caring for my niece as well. We raised her pay to $17/hr. She still gets every other Monday off. My brother pays me 1/3 of her salary. Now my son goes to K full day, and my daughter is in 3 days a week preschool. I like this arrangement for a couple reasons - we have easily available back up care, the nanny does a reasonable job keeping stuff picked up, and I like feeling that the cousins will be close growing up.
Nanny's social situation is a little complicated...her mother passed away when she was young, and she has been living with her aunt since then, in some sort of rent controlled apartment. Her aunt got cancer and passed away recently. Nanny took a bunch of days off to care for her aunt around that time, and a full week off for the funeral, which my mom came up and watched the kids. We still paid her for that time, and we were sympathetic that losing this person who was a big part of her life was quite difficult, but most jobs would not have supported that amount of PTO.
Yesterday, nanny told me that she needs a raise. Because she was living with her aunt, she was only paying $300/month in rent, and now the house is being sold and she needs a new place. She says she needs $20/hr to be able to afford this. She says she would be willing to take on extra chores (grocery shopping, more cleaning, etc.) to justify this. Otherwise she will find a new job. I think she's probably correct that especially moving a little further in towards Boston, an experienced nanny could easily find a $20/hr job.
DH is upset. He says it is all my brother's/SIL's faults, because they ask nanny to do too much for their daughter. I think that even if my niece was in daycare, we would still be in the same position, because nanny just seems to really want a certain $$ per month to pay her bills, not to work less. Only then we would be paying 100% of the bill.
I haven't talked to my brother yet, but I am worried that he can't afford much more than he is paying now, and is approaching the rate that he would be paying for daycare. We can afford to pay her the extra, but my husband doesn't want to. I really don't want to look for a new nanny, since we had such trouble finding a good one to start with. I'm not even sure what I should tell my brother. I think my husband wants to do full time daycare for my daughter and before care/after care for my son, and obviously that would be cheaper, but it would be a really hard lifestyle adjustment for me.
I guess this is really half a vent, but any advice is welcome.