ECE Workforce Compensation Initiatives to Enhance Wages, Improve Retention, and Stabilize Businesses

Session Submission Type: Panel

Abstract

The childcare industry is characterized by low-wages, high turnover, and businesses that struggle with unstable revenue streams (CSCCE 2025; Bassok, et al., 2021). Even financially stable childcare programs operate on small profit margins and experience staffing challenges given poor compensation, working conditions, and competition from other industries (Grunewald, et al., 2020). Although the market price of childcare is too high for many families to afford, it is too low for providers to comfortably cover labor and operating costs. The true cost of operating childcare programs that pay decent wages and invest in high quality programming is well above the price that the market will bear, creating a compelling case for public investment (Davis & Sojourner, 2021).   

The United States primarily invests in demand side public programs—most notably vouchers to low-income families—rather than directly supporting the childcare workforce or childcare businesses (Henly & Adams, 2018). By providing vouchers (subsidies) to eligible parents, the expectation is that we make private market care more affordable for families, while contributing to provider revenue indirectly through parent subsidies. Yet, the value of the subsidy (what states pay providers to serve subsidized children plus family copayments) is well below the market rate for childcare (Schulman 2019), which itself is significantly below the cost of delivering quality care and paying decent wages. Moreover, subsidy density varies tremendously across providers and subsidy revenue is unstable due to frequent caseload churning (Pilarz, et al., 2016). Thus, despite many strengths, demand-side vouchers are only a partial solution to the childcare dilemma given there is no guarantee that subsidy payments will translate into more highly compensated, stable, or better trained staff.  

Increasingly, states have been experimenting with supply-side initiatives to directly augment salaries with the goal of attracting a qualified, stable, childcare workforce and stabilize the childcare industry. There are several such programs across the country and an emerging body of research evaluating them (Doromal & Greenberg, 2025). This panel highlights four wage enhancement initiatives in Washington DC, King County, Washington, Illinois, and Maine. The four cases have distinct designs – for example, one funds eligible staff directly while others fund eligible programs, requiring that grant funds raise wages. They also vary in other ways: which programs and staff can participate, training requirements, and the wage supplement size. The studies presented use diverse data sources and methods, and they examine several workforce indicators such as retention and credentialing changes, and program indicators such as financial health, tuition changes, and program stability.   

Wage enhancement programs are still only a fraction of public investments in childcare. Investments at a larger scale would be needed to have serious market impact. Still, there is considerable excitement among local policy stakeholders about the potential of supply side interventions to address longstanding workforce underinvestment problems. Thus, now is a good time to carefully consider how design choices in select programs influence policy goals and the broader system, program and staff responses to these efforts. Panel discussants will address these questions, drawing insights from the four papers.

Policy Area

• Family and Child Policy

Chair

• Julia Henly, The University of Chicago

Discussants

• Anna Powell, University of California, Berkeley

• Pia Caronongan, Boston University

Organizer

• Julia Henly, The University of Chicago

Individual Presentations

• Stabilizing Child Care Businesses: Provider Perspectives on DC’s Early Educator Compensation Program - Presenting Author: Elli Nikolopoulos, Urban Institute; Non-Presenting Co-Author: Justin Brian Doromal, Urban Institute; Non-Presenting Co-Author: Heather Sandstrom, Urban Institute; Non-Presenting Co-Author: Erica Greenberg, Urban Institute

• Examining Child Care Employee Retention in a Wage Enhancement Pilot Initiative in King County, Washington - Presenting Author: Justin Brian Doromal, Urban Institute

• Increasing Child Care Wages Through Illinois’ Smart Start Workforce Grants - Presenting Author: Aida Pacheco-Applegate, The University of Chicago

• Toward a More Stable Early Childhood Workforce: Evaluating Maine’s ECE Workforce Salary Supplement System - Presenting Author: Theresa A Hawley, Northern Illinois University