Examining Wage Growth in ECE Programs: Evidence from Massachusetts

• In Event: State and Local Strategies for Supporting the Financial Well-Being of the Early Care and Education Workforce

Abstract

Early care and education (ECE) is essential for children and families yet access to high-quality ECE continues to be a pervasive challenge. Although public investment in ECE has been growing, ECE programs still rely heavily on private pay (NSECE project team, 2022). ECE programs operate with low profit margins because many families struggle to pay fees out of pocket and programs are often unable to charge for the true cost of providing services. Because of the constrained business model with which most ECE programs operate, ECE workers are among the lowest paid workers in the United States (Workman, 2021; Mclean et al., 2024).

The COVID-19 pandemic exacerbated challenges in the ECE sector, leading to widespread closures (Lee & Parolin, 2021). However, pandemic relief funds allowed states to address longstanding challenges in the ECE sector in new ways (Schulman, 2022). The provision of stabilization funds during the COVID-19 pandemic illustrated the utility of a recurring funding source to help promote stability of ECE program operations, providing a foundation upon which to make subsequent expansions in access and improvements in quality.

In Massachusetts, the Commonwealth Cares for Children (C3) program was originally established with federal child care stabilization funds to address challenges faced by programs during the pandemic. C3 is now fully state funded and has been codified as part of the annual state budget. C3 grants are non-competitive and available for eligible, licensed child care programs open and serving families in Massachusetts. C3 funds can be used for operational expenses, quality improvement supports, and workforce investments.

In this paper, we use longitudinal data on ECE programs participating in C3 to examine: 1) How did wages change among participants of the C3 grant program?; and 2) What factors explain variation in wage growth?

Using data provided by programs through their monthly grant applications, we fit multilevel models to examine within-program changes in wages over time for ECE teachers and directors. We examine wage growth both in terms of nominal wages as well as real wages to see if consumption power has changed over time or if wages have just kept up with inflation. We find that wages for both teachers and directors have increased throughout their participation in the C3 program but that changes are smaller when adjusted for inflation.  We explore the extent to which variation in wage growth is related to program characteristics such as age groups served, program size, for-profit status, and whether a program is part of a multi-site organization. Additional analysis will explore other indicators of staff well-being such as provision of staff benefits and staff turnover.

Studying C3 provides an opportunity to understand how supply-side financing can help support the ECE sector. Understanding the contribution of programs like C3 vis a vis other policy interventions such as targeted wage supplements programs and child care subsidy expansion can help inform decisions about longer-term investments and complementary policy solutions to expand ECE access and build the ECE workforce.

Author

• Pia Caronongan, Boston University
  Presenting Author