key takeaway
Higher wages for early care and education workers in California are essential to expanding affordable child care, supporting families’ economic security, and addressing long-standing workforce inequities rooted in racial and gender disparities.
Access to affordable, nurturing early care and education (ECE) is critical for families’ economic security and positive child development. California’s ECE system helps families with low incomes find and pay for vital programs during a child’s early years. As part of this programming, the state also pays ECE providers who participate in subsidized ECE programs. State investments in ECE are critical for ensuring that families have adequate access to affordable early care options and that ECE providers are reimbursed at a fair rate. While the state has increased funding for subsidized ECE programs since the Great Recession, this funding has not gone far enough. Namely, the demand for subsidized ECE programs far exceeds the number of spaces. As of 2023, only 14% of children eligible for subsidized ECE programs were actually enrolled.1The ECE programs referenced in this statistic include the child care and development programs administered by the California Department of Social Services.
The need to expand access to affordable early learning options also means that California requires a workforce to meet that demand. The ECE profession has experienced high turnover due to low pay, a lack of benefits, and pandemic-related risks that drove many out of the field. In order to effectively address the unmet need for affordable care, the workforce must also expand. This remains a challenge under the current subsidized system’s payment rate structure. The ECE system will remain inequitable and affordable child care will remain scarce without higher wages for the workforce.
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How are ECE providers paid and why are these professionals paid such low wages?
Currently, subsidized child care and preschool providers are paid in two ways:
- Those that accept state vouchers are paid based on the Regional Market Rate (RMR) survey; and
- ECE professionals that have a direct contract with the state are paid using the Standard Reimbursement Rate (SRR). The current rates are frozen through the 2024-25 fiscal year as the state works to create an alternative methodology reflecting the true cost of care.
However, the 2023-24 budget established “cost of care” stipends to temporarily increase reimbursement rates above the RMR and SRR through the 2024-25 fiscal year.
Early care and education professionals working in these organizations — primarily women and disproportionately women of color — deserve fair and just wages for essential work that helps children learn and grow while parents are working or going to school to support their families. However, families are often unable to afford the true cost of care, including adequate wages for these professionals. The subsidy from the state could fill this gap, but the rate-setting methodologies that have been in place in California for decades assume and perpetuate a low-paid workforce. Paying this essential workforce low wages is a direct result of racist and sexist stereotypes that devalue caregiving work and exacerbate the gender wage gap. State leaders should instead prioritize treating these jobs as high-skill, high-value jobs. The current workforce of talented and dedicated providers who help care for and develop California’s children is misaligned with the low wages they receive.
How much has the reimbursement rate increased for ECE providers?
Over the past decade, ECE providers have experienced an increase in their reimbursement rates. Yet, these increases have been insufficient to keep pace with the rising costs of goods and services and the state’s minimum wage, which has been steadily increasing since 2016. The following chart highlights key points regarding increases to ECE providers’ rates:
- Despite the cost of care supplement to the RMR, increases in rates remain far below the increase in the minimum wage. In 21 counties, home-based ECE providers participating in a voucher program had rates for infant care increase at less than half the rate of the minimum wage. In almost every county in the state, licensed family child care home providers and center-based providers struggled with low rate increases relative to the minimum wage (see table).
- Aside from the cost of care supplement, state leaders have only updated voucher-based payment rates for child care providers three times in the past nine fiscal years. Specifically, rates were increased to the 75th percentile of the updated market surveys as part of the 2016-17, 2017-18, and 2021-22 spending plans. Without the cost of care supplement, rates in 2024 would still be at the 75th percentile of the 2018 market rate survey.
- ECE payment rates have not kept pace with the increasing minimum wage. The state law requiring annual increases to the statewide minimum wage went into effect in 2016-17, raising the wage by 65% from 2016-17 to 2024-25. Because ECE professionals are paid very low wages, increases in the minimum wage increase costs for providers. State leaders have failed to increase payment rates to keep pace with the state minimum wage (see chart). This cuts into providers’ bottom line making it even harder to provide care to children and families.
Policymakers have not consistently updated the Standard Reimbursement Rate (SRR), either. From 2016-17 to 2024-25 the SRR increased by just 37%, falling far short of the 65% increase in the state minimum wage.
Policymakers’ failure to consistently update the payment rates for subsidized child care and preschool providers undermines their ability to offer care to children and families while covering the rising cost of business in California.
How Do ECE Professionals’ Wages Compare with the Broader Workforce?
The relatively small percent increase in ECE professionals’ wages is further compounded by the low wages they face, as compared with other professions. This is particularly the case when compared to elementary and middle school teachers, an occupation with similar work and professional qualifications. The chart below compares median wages for ECE professionals, all workers, and K-8 teachers.2The methodology to define “Early Care and Education professionals” is based on the Center for the Study of Child Care Employment’s Early Childhood Workforce. These professionals include: 1) child care workers in the child day care services, private households, religious organizations, or elementary and secondary school industries; 2) education and child care administrators in the child day care services industry; 3) preschool and kindergarten teachers in the child day care services industry; and 4) other teachers and teaching assistants in the child day care services industry.
Overall, this chart shows that median ECE professionals’ wages fall behind the median for all workers and even further as compared with K-8 teachers. Other key points from this chart include the following:
- Between 2008 and 2023, ECE professionals’ wages increased by only a few dollars. After adjusting for inflation, ECE professionals’ wages increased by $2.81 between 2008 and 2023. This small increase has meant that ECE professionals’ wages have remained alarmingly low over time, exacerbating issues such as high turnover and fewer workers willing to enter and stay in the field.
- If trends continue, it will take nearly 60 years for ECE professionals’ wages to catch up to the median wage of all workers. Specifically, using the 10-year average rate of change for ECE professionals and all workers’ wages, ECE professionals will finally surpass the median wage of all workers in the year 2083.3The rate used to project median wages is the 10-year annual average of the change in median hourly earnings from 2012-2023. Therefore, the number of years before the wage gap closes reflects an estimate based on projected median hourly earnings. The data include the employed population age 16 and over working more than 10 hours a week and 27 weeks per year. Data for 2020 was unreliable and therefore omitted from the analysis. Source: Budget Center analysis of US Census Bureau, American Community Survey data.
- ECE professionals make only 39% of the K-8 median hourly wage. ECE professionals’ hourly wage is less than half the median hourly wage of a middle school or elementary school teacher. ECE professionals often have the same qualifications and work with the same age groups as elementary and middle school teachers; yet, median wages are far from parity.
In addition to K-8 teachers, comparing ECE professionals’ hourly wages with other professions underscores that ECE professionals work in one of the lowest paid occupations despite the critical value of their work. The table below outlines ECE professionals’ median hourly earnings in the context of other low wage occupations. Thus, ECE professionals’ wages have not only grown at a slow rate, but they also started near the floor. ECE professionals have been stuck in low wage work, despite increases in state funding for ECE.
What is the consequence of low wages for ECE professionals?
Poverty is on the rise for children and families across California. Thus, many of the families ECE professionals serve are struggling more now than in prior years to make ends meet; however, many professionals themselves are also in poverty. Specifically, compared with all workers and elementary and middle school teachers, a disproportionate percentage of ECE professionals are also in poverty. The chart below shows that while poverty rates have decreased for ECE professionals over time, they are still over twice that of all workers and nearly four times that of elementary and middle school teachers. These relatively high poverty rates are a consequence of ECE professionals’ historically low wages.
How can state leaders support ECE professionals?
Overall, California has undoubtedly seen an increased investment in its ECE system. However, the system is still falling short in several ways. While the number of slots has increased, thousands of families still do not have access to affordable ECE options. Increasing access to ECE programs also requires supporting ECE professionals, and wages are still too low to ensure ECE professionals have the resources they need to expand and thrive.
Inequities in the ECE system reflect centuries of historical racism and sexism. The ECE system and its workforce deserve better, and state leaders have the tools to ensure that ECE professionals are paid a living and just wage. Specifically, state leaders can advance the alternative methodology to develop payment rates and implement an improved rate structure. For far too long, ECE professionals have worked low wages and endured a system that undervalues their integral role in California. California has been a leader in many other policy areas, and is well-poised to continue leading by paying ECE professionals the true cost of care.
Kristin Schumacher, a former analyst at the California Budget & Policy Center, now contributes to the organization as a consultant on various research projects.
