How Can the Federal Government Improve Early Educator Compensation?

The COVID-19 pandemic brought attention to just how essential child care is to our economy and society. We depend on child care, and yet early childhood educators are underpaid and undervalued. The vast majority of early educators* are women and largely women of color. They earn poverty-level wages, making $12.24 per hour on average (however, there is substantial variation in wages across states, settings, and age groups served). They rarely have access to basic benefits like paid sick days or health care. Poor working conditions not only impact the quality of life of these workers, but also jeopardize their ability to provide high-quality care and early learning experiences to children.

The early educator workforce must be compensated appropriately for the challenging and important work it does. This is an essential piece of reimagining early care and education.

Our country’s child care landscape is complex, with a mixed delivery system of center-based programs, family child care (FCC) homes, and informal care arrangements. Early educators’ earnings usually come from a combination of out-of-pocket parent tuition payments and public funds. The Child Care and Development Block Grant (CCDBG) is the main source of public funding for child care. While CCDBG is a federal program, states have significant flexibility in its implementation—they set subsidy eligibility guidelines for families, determine which providers can participate, and set provider reimbursement rates.

Reimbursement rates are usually set too low to cover the true cost of providing quality care, forcing providers to operate on extremely tight margins. To complicate matters, in many states, providers serving children receiving subsidies are paid retroactively based on child attendance, rather than enrollment, hindering providers’ ability to plan for and sustain wage increases. Some states also tie public funding to licensing standards and, more recently, to state Quality Rating and Improvement Systems (QRIS) that award quality ratings to programs that meet a set of defined program standards.

The American Rescue Plan included $39 billion in child care relief funding, but supporting early educators requires more than rescuing them from hardships faced during the pandemic; they need long-term investment. The Biden administration’s American Jobs Plan elevated child care to the level of "infrastructure,” calling for $25 billion to help upgrade child care facilities and increase the supply of child care. However, the bulk of Biden’s child care plan is laid out in the American Families Plan, which calls for $225 billion in funding to make child care more affordable, improve the quality of care, and invest in the workforce. It specifically calls for a $15 minimum wage for early childhood educators and pay parity with kindergarten teachers when their qualifications are commensurate.

While increased public funding in the system is necessary, it does not necessarily translate directly to wages. Changes in federal policy are needed to ensure that wages increase.

Current efforts to improve early educator compensation are predominantly at the state level and include strategies such as collective bargaining, tax credits, one-time wage supplements, and public subsidies. The workforce needs predictable and permanent improvements in compensation, which may not be best achieved by tax credits they receive only once per year or one-time bonuses. With public attention and the federal government focused on child care, there is a window of opportunity to pursue bold reforms that permanently increase base pay.

Here are policy considerations for a federal strategy for increasing the wages of the early educator workforce:

• Explore federal levers to facilitate worker organizing and collective bargaining, such as creating incentives for states to establish themselves as the employer of record for family child care (FCC) providers. The nature of child care employment can make it difficult to achieve collective bargaining rights. FCC providers are self-employed business owners and the independent nature of their work means they are not protected under federal discrimination and worker protection laws. FCC providers also have to circumvent antitrust laws that prevent individuals from engaging in anticompetitive activities, such as negotiating wage rates. Despite these challenges, FCC providers relying on public subsidies have had some success organizing in pursuit of improved wages, benefits, training, and career advancement opportunities when the state acts as the employer of record. FCC providers have had the most success securing higher reimbursement rates, but higher rates have not always translated into better wages.
  
  Early childhood educators working in centers, which make up the majority of child care workers, reflect a more traditional workforce. Existing federal labor law proposals, such as the Protecting the Right to Organize Act (or PRO Act), would be beneficial to this population because the Act would expand employees' rights to organize and collectively bargain in the workplace.
• Encourage or require states to use a certain percentage of CCDBG funds for compensation. There are two primary ways the federal government could update existing regulations to do this:
  
  First, when CCDBG funding increases, the federal government could allocate a certain percentage of the increase towards staff compensation. A similar strategy is already happening at the state level with stabilization grants from the American Rescue Plan. The Commissioner of Connecticut’s Office of Early Childhood announced that, as part of the state’s stabilization grant, they will require that at least 25 percent of the funds be used to increase compensation. Compensation is broadly interpreted to include bonuses or other benefits as well as pay raises.
  
  Alternatively, the federal government could create a supplemental payment through CCDBG for providers that is reserved for wage increases. Creating a separate pool of money for wage increases helps avoid supplanting current CCDBG funds. This is a direct method to ensure funds go towards compensation.
  
• Require states to pay providers accepting CCDBG subsidies based on enrollment instead of attendance. Because reimbursing providers based on child attendance leads to monthly variation in payments, it can be difficult to make informed decisions around budgeting, staffing, and enrollment. Federal guidance for CCDBG encourages states to reimburse providers based on child enrollment instead of attendance, yet limited resources often prevent states from adopting this higher cost strategy. Shifting to paying by enrollment will not solve underfunding, but it can make funding more predictable, stable, and adequate, making it easier for providers to appropriately compensate staff for their work.
  
• Provide federal guidance on leveraging state QRIS. For providers that participate in QRIS, states can require or encourage rate enhancements received as a result of QRIS participation to go directly to staff wages. Alternatively, states can make a base wage part of the criteria for achieving certain QRIS tiers. Illinois currently has a pilot program where child care programs in high-need areas that hit a certain quality rating level receive a rate enhancement at the beginning of the month (rather than the end) that must go directly to wages. QRISs are far from perfect, but they are the policy reality across states and embedded into systems. Work can be done to improve QRIS so that they more accurately reflect quality and more equitably support program improvement.
  
• Support wage ladders, such as those outlined in the Child Care for Working Families Act, which requires states to develop a plan describing how they will set rates that provide at least a living wage for all staff of child care providers. The Act would also require states to provide a description of their wage ladder for child care providers, encouraging them to implement wage ladders. States can look to Washington State as an example. Its Early Childhood Education Career and Wage Ladder used state funds to pay incremental wage increases for early educators based on educational advancement, experience, and job responsibility. A base wage was set to the state’s inflation-indexed minimum wage and the model tied pay to credits beginning with a high school degree and moving up to include an AA, BA, and MA. The total cost of the Wage Ladder for the state was estimated to be about $450 per child per year. An evaluation of the Washington program found statistically significant improvement in several areas, including the quality of care and teaching, wages and benefits, and employee self-esteem.
  
  Alternatively, states could tie compensation to uniform professional designations that were recently developed. The Power to the Profession Task Force recommended three distinct designations of early educators based on degrees and credits earned and responsibilities for practice: ECE I, ECE II, and ECE III. Establishing a clearer career ladder for the workforce that leads to higher pay over time through distinct designations in title could encourage employee recruitment and retention.

This is not an exhaustive list. The early childhood policy field has been grappling with this complicated issue for many years. Improving compensation can and should be intertwined with policies to strengthen early educator training and development. For additional ideas on how states and the federal government can support compensation, we recommend the following resources:

• UC Berkeley Center for the Study of Child Care Employment: Early Childhood Educator Workforce Policies - Compensation & Financial Relief
• Alliance for Early Success: Build Stronger: A Child Care Policy Roadmap for Transforming Our Nation’s Child Care System
• Bank Street College of Education: Investing in the Birth-to-Three Workforce: A New Vision to Strengthen the Foundation for All Learning
• National Academies of Science, Engineering, and Medicine: Transforming the Financing of Early Care and Education

*A note on terminology: New America typically uses the term early childhood educator to refer to those directly responsible for young children’s early care and education, regardless of the program setting or age of child served. We define early childhood education as birth up through third grade, but in this post we are focusing on child care and those working in child care programs (both providers and other staff). The recommendations in this post are specific to child care staff and are not meant to include school-based pre-K and elementary school teachers.

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