Child care pay still lags despite decades of policy change

For more than three decades, expanding and strengthening the early childhood care and education workforce has been an important goal of state and federal policy. The industry’s foundational challenges are well-documented: thin profit margins, low worker pay, and high employee turnover. These conditions ripple outward, leaving families with uneven access to care, children with less stable relationships, and providers facing persistent recruitment and retention challenges.

Policy has changed in response. States poured investment into universal pre-K through public-school and mixed-delivery models, raised minimum wages, and pushed professionalization through Quality Rating and Improvement Systems and credentialing requirements. At the federal level, Head Start and the Child Care and Development Fund expanded access for low-income children, and the federal government met a struggling pandemic child care market with a $39 billion infusion through the American Rescue Plan (ARP). Although these efforts were aimed primarily at children and families, each could plausibly have reshaped the workforce as well by drawing in more credentialed workers, raising qualification requirements, or, in the case of minimum wage increases and the ARP, lifting pay directly.

To explore whether decades of policy reshaped the child care workforce, I drew on 35 years of nationally representative data from the Current Population Survey (1990-2025) in a new study.¹ Rather than treat child care as a single industry, I disaggregate it into three distinct settings: school-, center-, and home-based care. I examine the demographic composition and economic conditions within each over time and then benchmark them against the broader female and low-wage labor markets. The data tell a consistent story: Child care workers are more educated and better paid than they were in 1990, but they are still falling behind other women and low-wage workers.

On its own, an industry on the mend

Measured against itself, the child care workforce looks like it is moving up. Since the early 1990s, the share of child care workers without a high school diploma has fallen by more than half, while the share holding a bachelor’s degree or more has climbed from 20% to 32%. Pay appears to have followed, with average hourly wages rising from $14.25 to $22.15 in 2025 dollars. More schooling, higher wages: These seem like positive signals of a workforce on the rise.

Breaking the numbers out by setting shows where those changes came from. Home-based care, long the least-credentialed and lowest-paid corner of the market, moved the furthest. These workers’ hourly wages more than doubled, rising by about $9 an hour, as seen in Figure 1. (Not pictured: The share of home-based providers with a high school diploma or less fell during this period from 70% to 42%.) Center-based pay rose meaningfully as well. School-based jobs, which were already the most educated and best paid, only modestly improved. Taken in isolation, this looks unambiguously like progress. The mirage dissolves only when these gains are compared to the rest of the labor market.

Measured against the rest of the labor market, child care is standing still

Let’s compare child care workers’ earnings to the earnings of women overall. In the early 1990s, the average woman earned $20,000 a year more than the average child care worker. Today, she earns $28,000 more (Figure 2). Child care pay climbed over those decades, but other women’s pay climbed faster.

When comparing child care workers to other low-wage workers, the story is similarly bleak. Child care workers still earn about $8,000 less than other low-wage workers, per year, on average. That gap has narrowed from roughly $11,000 in the early 1990s, but closing a quarter of the gap over three-and-a-half decades is slow progress. And what’s more, this gap persists despite child care being a better-educated workforce: 66% of child care workers have at least some college, compared to 52% of low-wage workers. Child care workers are more credentialed than the low-wage workers they trail in earnings.

I should note some compositional changes in the workforce. School-based employment held steady, center-based care grew, and (lower-paid) home-based care slid from about 1 in 4 child care workers in the early 1990s to roughly 1 in 7 today. But that reshuffling is not what drives the trends in pay. If the mix of settings had stayed at its 1990 level, earnings would have followed nearly the same path. My analysis indicates that pay rose primarily because the workforce became more credentialed, not because workers moved into better-paying settings.

Wage gains from pandemic funds were short-lived

The American Rescue Plan provides a glimpse of whether a sudden infusion of flexible public funding, which providers could spend on compensation, yields higher worker earnings. Unfortunately, its effects on wages look fleeting. Hourly wages rose directly around the pandemic, in 2020-2021. However, annual earnings stayed roughly flat, since hourly gains were offset by fewer weeks worked. Furthermore, by the end of pandemic-era aid, real hourly wages had drifted back toward pre-pandemic levels.

Turnover followed the same pattern (Figure 3). Center-based turnover, which had fallen from 30% in the early 1990s to 24% by 2005-2010, reverted back to 29%, erasing 15 years of progress. School-based care followed the same V-shape. Only home-based care, which started with the highest turnover rates, maintained improvements. While this sudden infusion of relief funding provided some temporary aid to worker salaries, it did not change the conditions that drive people out of these jobs, and turnover in school- and center-based settings has returned to where it was three decades ago.

What the evidence suggests

Two cautions belong alongside these national findings. First, a nationwide analysis inevitably smooths over local variation. These aggregate trends do not mean that recent state or municipal workforce initiatives are failing. A growing number of states are experimenting with wage scales, salary supplements, and pay parity with public school employees. The District of Columbia’s Early Childhood Educator Pay Equity Fund (financed by a dedicated income tax increase) and New Mexico‘s newly funded statewide wage scale are two of the more ambitious examples.

Second, the American Rescue Plan offers an important lesson. Federal funding successfully held worker compensation steady through an unprecedented economic shock, which is crucial for a market that is especially vulnerable to economic downturns. But when relief expired, pay returned to baseline and turnover climbed, indicating that while public dollars can move wages, temporary policies don’t solve underlying workforce challenges.

The last three-and-a-half decades have seen child care workers become more educated without making child care jobs more competitive. Until that changes, the sector will keep asking more of its workforce than it offers them in return.