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Data Hit

California’s Subsidized Child Care Providers Urgently Need a Pay Raise

February 2023 | By Erik Saucedo

Teachers with children playing and learning at preschool

California’s subsidized child care providers deserve fair and just wages for their essential work that helps children learn and grow. These early educators  — who are primarily women and disproportionately women of color — offer affordable early care and learning options for working families struggling to make ends meet.

“Payment rates for voucher-based providers have not kept pace with the rising minimum wage.”

State leaders have not consistently and adequately increased provider payment rates. For example, since 2016-17 payment rates for voucher-based providers have not kept pace with the rising minimum wage, one of the major costs of providing care. Since 2016-17, the state’s minimum wage has increased by more than 50%.

A bar chart showing the percent change from 2016-17 to 2022-23 in regional market rate ceilings for selected counties where payment rate increases for voucher-based child care providers have fallen short of increases to the minimum wage.

Recent budget actions initiated a process for long-term rate reform. However, providers and the families they serve cannot wait for fair compensation. Policymakers should significantly increase rates in 2023-24 to ensure child care providers can keep up with costs, keep their doors open, and continue to offer invaluable care to children and families.

Child Care & Preschool

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Corporations are contributing roughly half as much of their California profits in state taxes than four decades ago. In the early 1980s, corporations paid more than 9.5% of their profits in state corporation taxes. In contrast, corporations paid just 4.9% of their California profits in corporation taxes in 2020.

Corporations pay less of their income in taxes today than the 1980s in part due to tax rate reductions by state policymakers. Policymakers have also enacted several tax breaks that reduce the share of corporate income paid in California corporation taxes, such as the research and development tax credit.

“Did you know? California’s budget would have recevied $14.5 billion more in revenue in 2020 had corporations paid their fair share of income taxes. ”
A line chart showing corporate taxes as a percentage of income for corporations reporting net income in California where the share of corporate income paid in state taxes declined by roughly half between the early 1908s and 2020.

California’s budget would have received $14.5 billion more revenue in 2020 had corporations paid the same share of their income in taxes that year as they did in 1981 – more than the state spends on the University of California, the California State University, and student aid combined. 

Taxes & Revenue

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For many years, high costs of living have made it difficult for many Californians to keep themselves and their families safely housed, healthy, and nourished. Recent high inflation has made it even harder for Californians to make ends meet.

When basic costs go up, Californians with the lowest incomes are hit the hardest. About 2 in 3 California households with incomes under $35,000 had trouble affording basic expenses in fall 2022. Moreover, about 9 in 10 California adults with household incomes below $35,000 who faced rising prices reported feeling moderately or very stressed about price increases.

A bar chart showing the percentage of households reporting difficulty paying for basic expenses by household income where Californians with low incomes were most likely to struggle to pay for basic expenses in September and October of 2022.

Policymakers should make sure Californians with low incomes have the support they need to cope with rising prices and high costs of living. Strategies include:

  • boosting safety net supports
  • ensuring low wages keep pace with inflation
  • prioritizing investments that help people meet basic needs like affordable housing, health care, and child care.
Poverty & Inequality

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Having a safe, stable place to live is crucial for student development and educational success. But more than 220,000 of California’s public K-12 students experienced homelessness in 2020-21. This includes children temporarily staying with other families due to economic hardship, and children living in motels, shelters, vehicles, public spaces, or substandard housing.

“More support is needed for California’s Latinx, Black, Indigenous, and Pacific Islander K-12 students who disproportionately experience homelessness.”

Latinx, Black, American Indian, Alaska Native, and Pacific Islander students were disproportionately likely to experience homelessness. These students also experience high rates of chronic absenteeism causing them to lose critical access to curriculum and social structures that schools, educators, and peers offer.

A bar chart showing the percentage of public K-12 students considered homeless during the 2020-21 school year where California's Latinx, Black, Indigenous, and Pacific Islander students disproportionately experience homelessness.

Students’ housing situations shouldn’t block them from learning opportunities. Policymakers should boost investments in safe, affordable housing and target additional funding and resources for students who experience homelessness to ensure every California K-12 student can thrive in school and life.

Education
Housing & Homelessness

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Everyone wants to live in safe communities, and data show California continues to experience crime rates well below historical peaks. The property crime rate — the number of property crimes per 100,000 residents — was 2,178 per 100,000 in 2021, far below the peak of 6,881 in 1980. The violent crime rate was 466 per 100,000 in 2021, less than half the 1992 peak of 1,104.

“Despite a rise in property and violent crime rates in 2021, data show California continues to experience crime rates well below historical peaks.”
Line Chart: Property and Violent Crime Rates in California Remain Well Below the Peaks of the Past Five Decades

Crime rates recently increased across the nation as the COVID-19 pandemic took its toll. In California, between 2020 and 2021 the property crime rate rose by 3% and the violent crime rate went up by over 6%.

Any rise in crime is concerning, even as crime rates remain at historic lows. Policymakers should avoid resurrecting the failed, incarceration-focused policies of the past. Instead, state leaders must advance strategies to reduce youth violence, strengthen families and communities, and target the longstanding structural barriers to opportunity — such as poverty and housing instability — that disproportionately impact Black, Latinx, and other Californians of color.

Justice System

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California is home to the California State University (CSU) and the University of California (UC), which educate thousands of students every year and help them build strong futures for themselves and their communities. CSU and UC require that high school students complete certain courses, known as A-G courses, to be eligible for admission.

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Policymakers can improve CSU and UC access by reforming course requirements so that all students have an equitable chance to pursue higher education.
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However, California high school students do not have an equal opportunity to successfully fulfill this requirement on their pathways to higher education. In 2020-21, many student groups graduated high school without completing the A-G pathway at rates that were higher than the state average of 48%. These groups include students with disabilities, English language learners, students experiencing homelessness, and students of color.

Policymakers can improve CSU and UC access by reforming course requirements so that all students have an equitable chance to pursue higher education, irrespective of their socioeconomic backgrounds.

Education

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For many years, high costs of living have made it difficult for many Californians to keep themselves and their families safely housed, healthy, and nourished. Recent high inflation has made it even harder for people to thrive in California communities.

When basic costs go up, Californians with the lowest incomes are particularly likely to struggle to make ends meet. Around 3 in 5 California households with incomes below $50,000 had trouble affording basic expenses in June. And due to past and continued discrimination, about one-half of Black, Latinx, and other Californians of color reported struggling with basic expenses in recent months, compared to about 30% of white Californians.

Policymakers should ensure policies to address recent price increases prioritize the needs of people with low incomes, who were already left out of sharing the state’s pre-pandemic prosperity and who have been disproportionately impacted by the pandemic and inflation.

Poverty & Inequality

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California workers deserve to be safe, healthy, and thrive. State leaders created COVID-19 supplemental paid sick leave to ensure workers were able to take time off to care for themselves and loved ones while following public health guidelines. This temporary policy lapses once again on September 30, 2022. Without it, many workers may have just three paid sick days a year.

During the early 2022 surge in cases, the number of Californians who reported that they were not working because they had coronavirus symptoms or were caring for someone who did increased by 320% — soaring to nearly 1 million adults statewide.

Without COVID-19 supplemental paid sick leave, workers may have to choose between working while sick and losing pay or even their job. Extending supplemental paid sick leave is critical so workers can care for themselves or family. The state should also require employers to provide 10 paid sick days a year to support workers’ health and safety beyond the pandemic.

Note: This post was updated in July 2022 to reflect changes in state policy proposals.

Covid-19
Poverty & Inequality

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