The Child Care Sector Is Still Struggling To Hire Workers

Amid a tight labor market that has seen companies raising their wage floors to attract workers in a range of low-wage industries, from retail to hospitality, the child care sector is not keeping up. In fact, new Center for American Progress analysis of data on wages—a key component of a good job—demonstrates that the child care sector became less competitive in 2022, exacerbating its shortage of good jobs. At the heart of the issues facing the child care sector is the reality that child care is a market failure that will require sustainable public investment.

This column builds on prior CAP analysis of the child care industry’s jobs recovery to show that the sector has yet to regain all jobs lost during the pandemic recession and continues to operate well below pre-pandemic levels.

The child care sector has not made sufficient progress

The state of child care was precarious before the pandemic: In 2018, more than half of the country was classified as a child care desert—an area with an insufficient supply of licensed child care—and real wages dropped 6.5 percent for full-time child care teachers from 2012 to 2019. Then, the child care sector suffered as the COVID-19 pandemic took hold and thrust the economy into a recession in early 2020. In fact, more than one-third of child care jobs—370,000 jobs in total—were lost from February 2020 to April 2020. (see Figure 1)

A few years later, the child care sector continues to struggle to regain all jobs lost during the pandemic-induced recession. According to the latest data, in September 2023, the child care sector was still down about 39,400 workers compared with February 2020 levels. At the rate at which jobs have been regained in 2023 so far, it would take almost 12 months—until September 2024—for the child care sector to recover pandemic-related job losses.

When looking over a longer time horizon, the impacts of the COVID-19 recession and the sector’s slow recovery are even clearer: If the sector had continued its pre-pandemic trajectory—and the pandemic recession had not occurred—there would be more than 150,000 additional jobs within the industry. (see Figure 2)

The slow recovery of the child care industry stands in stark contrast to the overall labor market, which has already regained all jobs lost and now exceeds pre-pandemic job levels. Most notably, the child care sector is recovering jobs slower than other pandemic-affected sectors, such as retail trade and leisure and hospitality. (see Figure 3) For example, while the leisure and hospitality industry lost nearly half of all its jobs by April 2020, during 2021, it began—and continues—to see a faster recovery than the child care sector. By September 2023, the leisure and hospitality industry was only 1.09 percent below its February 2020 job levels, compared with the child care sector, which remains 3.75 percent below its February 2020 job levels.

Meanwhile, demand for child care workers remains high. (see Figure 4) In January 2021, job postings on Indeed were back to pre-pandemic levels for child care roles, and they have remained above pre-pandemic levels ever since. In fact, by September 2023, child care job postings on Indeed were still more than 50 percent above their pre-pandemic levels. Notably, the number of job postings for child care roles is much higher, relative to pre-pandemic levels, than other pandemic-affected roles, such as retail and sales.

Alongside the employment data, consistently elevated job postings suggest that the sector is facing a hiring challenge—and one that is more acute than those of other pandemic-affected sectors.

Child care workers are still undervalued and now receive less competitive wages

A key component of attracting and retaining workers is offering good jobs that include competitive, living wages. Prior CAP analysis covered other factors of job quality in child care, including benefits, working conditions, and advancement opportunities. Over the past few years, a tight labor market has emerged and has continued, with low-wage workers in particular benefiting through the form of strong wage growth. A more competitive labor market, particularly for low-wage occupations, should also have led to strong wage gains for child care workers. In 2019, before the pandemic and tight labor market, child care workers received some of the lowest median wages of all occupations, at $11.65 per hour, with infant and toddler teachers earning even less, at just $11 per hour.

However, wage data from the U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics show the child care sector has become less competitive relative to other low-paying occupations—despite a competitive labor market. Put another way, the sector is less attractive to workers. For example, in 2021, there were only nine occupations with median wages lower than those of child care workers. (see Figure 5) And by 2022, there were only five. Significantly, from 2021 to 2022, child care did not become more competitive relative to any of these occupations or other essential care and education occupations that require highly skilled work but have low wages. (see Figure 6) Using median hourly wages from 2021, this analysis finds that child care workers earn 106 percent as much as waiters and 91 percent as much as short-term substitute teachers. Yet as the tight labor market lifted wages in those other sectors, it eroded the competitiveness of child care workers, who did not see the same wage increases: One year later, in 2022, child care workers were earning only 98 percent of what waiters earn and 81 percent of what short-term substitute teachers earn.

Given the competition for workers in the ongoing tight labor market, child care workers are seeing little benefit to staying in their own profession. As wages increase across other occupations, child care has not been able to compete, and the relative attractiveness of other jobs will continue to make it difficult to hire and retain people in child care work. (see Figure 5 and Figure 6)

Expiring funding could exacerbate existing problems

While the child care workforce has struggled over the past several years when it comes to wages, hiring, and retention, it has been buoyed by pandemic-recovery investments. However, the American Rescue Plan’s child care stabilization grants—by which the federal government provided $24 billion in flexible funding for states to allocate to child care providers—expired on September 30, 2023. These funds were critical to ensuring the sector and its workers—97 percent of whom are women, and disproportionately women of color—could endure the impacts of the COVID-19 pandemic and its associated recession. As of December 31, 2022, these stabilization grants reached more than 80 percent of all licensed child care centers and more than 120,000 family child care centers.

Most states have delivered grants to providers across 98 percent of their counties, including 97 percent of rural counties and 98 percent of persistent poverty counties. The most common use of funds by child care centers is covering personnel costs to keep programs staffed. Specifically, many states and child care sites chose to provide grants, stipends, or bonuses that offered additional compensation in a time-limited way.

Without continuing investments, however, many state and local policymakers, child care providers, and parents are feeling the toll. A survey of providers conducted by the National Association for the Education of Young Children (NAEYC) found that nearly 30 percent of infant and toddler providers said they will have to reduce wages for staff. In Pennsylvania, for example, more than one-third of child care providers indicated that they were considering leaving their job or closing their business entirely, with competitive wages being the No. 1 change needed for them to stay in child care.

As teachers leave the child care sector, there are few options moving forward. Caring for young children is skilled work that requires training and experience. Staff turnover decreases the quality of care provided and negatively affects child development outcomes. Prior to the pandemic, about three-fourths of child care teachers had attended at least some college, and about half held an early childhood-specific credential such as a child development associate (CDA) certificate or a state-issued license. With the current hiring struggles, finding qualified staff can be difficult or impossible. One provider reported that after losing seven child care workers in just a few months, it hired three teenagers to care for children but subsequently let them go, as they could not perform the required responsibilities.

The safety and care needs of young children make it critically important that child care providers are trusted, qualified caregivers; however, the current child care wages will not attract or retain these workers.

Some states are stepping up to fund child care workforce needs

While it’s important that Congress works to make substantial investments that help improve job quality within the sector, states can also take steps to make investments in the early childhood workforce.

As stabilization funds expire, some states are trying to fill in the gaps:

• Minnesota’s Legislature passed a new grant program to assist with child care wages, providing $316 million over two years, which is nearly equal to the state’s estimated share of the stabilization funds.
• Maine is providing monthly stipends of $200 to child care workers employed by licensed providers.
• New York state’s 2024 budget created a $500 million grant program that will provide awardees with additional funding for staff retention bonuses, staff recruitment expenses, and providers’ payroll taxes.
• Washington, D.C., began providing free health insurance to child care workers and their families at the beginning of 2023.

Investments such as these are critical to reduce the loss of essential child care workers.

Conclusion

It is critical that job quality improves for the child care workforce; otherwise, the sector—and the families it serves—will continue to struggle. For decades, child care has been scarce and unaffordable while still leaving workers with extremely low pay. The end of federal COVID-19 relief funding will likely exacerbate existing hiring challenges facing the industry, which has struggled, even with the time-limited investments made over the past few years.

In the absence of sustained, long-term federal investments in child care, states can help bolster the early education workforce, resulting in better access for families and higher-quality care. But until those investments are made, the sector will continue to struggle to hire workers, leaving families with few options that work for them and placing a greater burden on the underpaid—overwhelmingly women—workers who remain in the sector.