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Child Care Workforce Compensation: A Key Component for NJ Economic Recovery

August 11, 2021
By Sister Donna Minster, President, Child Care Aware of New Jersey
Meghan Tavormina, President, New Jersey Association for the Education of Young Children

It's time to talk about the workforce that supports all other workforces: the individuals working in child care (either in child care centers or in home-based child care programs). Throughout the country and also throughout New Jersey, economists are writing about a labor shortage, a tight market where employers face difficulties in hiring employees.1,2

The reasons employers face hiring challenges are complicated. However, as a result, many employers have increased their hourly wages and are offering benefits. For example, ZipRecruiter.Com reports, Walmart in Trenton is paying $15.83 per hour for sales associates.3 Starting pay for Amazon delivery associates in Jersey City begins at $18.50 per hour and includes health insurance and paid time off.4 Amazon delivery warehouse team members in Edison start at $18.75, plus receive a $1,000 signing bonus and an extra $100 on the spot for proof of COVID vaccination.5 And, Panera cashiers statewide receive food discounts, health benefits, 401(k) company match, and paid vacations.6 What's all this have to do with child care? Everything.

The most recent hourly wage data from the U.S. Bureau of Labor Statistics shows that the median wage for child care workers in New Jersey is $13.37 per hour. 7

Child care is a business. For many programs, private-pay parent fees and subsidies paid by the state for low income parents comprise the budget. The largest expense for a child care business is related to personnel costs, which comprise 70-80% of the overall cost of a child care program.8 The remainder of funds are used to pay for fixed costs such as rent or mortgage, utilities, regular maintenance, insurance, food, materials, and other operating costs. Therefore, when wages within community businesses rise, child care programs can't compete. They simply can't pay more because to do so, they would have to charge parents more. Yet, parents already struggle with affording child care. It's just one reason why public education is just that, paid for by the public.

Child Care

Local jobs paying $15-$18 per hour require employees to be courteous, efficient, and show up reliably to perform job tasks. They don't require specialized training in early childhood development. And, they don't charge these individuals with promoting the safety and healthy development of young children. Child care employers want to hire and retain a qualified workforce. But, unless they can pay more competitive wages, individuals who otherwise want to work with children are lured by jobs where they can be paid more for less responsibility, stress, or training.

Really this is a market failure. The workforce that supports all other workforces is essential to economic recovery. Unless parents have access to child care, they can't go back to work. Currently, throughout the country, there are 7.5 million individuals who responded to the most recent Census Bureau Household Pulse survey (between June 23 and July 5, 2021) that they are not working because they are caring for children not in school or child care. 9 In New Jersey, more than 225,000 individuals said they were home because they were caring for children. 10 Statewide, there are more than 161,000 individuals who have left the workforce (in addition to another 321,343 individuals who are unemployed).11

The pathway to economic recovery in New Jersey relies on child care, which relies on child care workers - individuals who are more than courteous, efficient, and who reliably show up to work. They are front-line professionals who support children, parents, and employers. Child care cannot be done remotely, it is an in-person profession. As a public good that supports economic recovery and expansion, there are solutions to enable child care programs to hire and retain the qualified workforce needed to support healthy child development (and employment of parents).

One strategy to address the child care worker shortage (as well as recruitment and retention) is called the Child Care WAGE$ program, an education-based salary supplement program that has supported early childhood teachers, directors, and family child care providers since 1998 in other states.12 WAGE$ increases the compensation of the child care workforce through salary supplements based on credentials and levels of education.13 For example, in North Carolina, fifty percent of WAGE$ participants earn less than $13 per hour (47% of teachers, 96% of family child care providers, and 35% of directors).14 More than three-quarters (77%) of WAGE$ participants earn less than $15 per hour.15 Wage supplements are made in 6-month installments and reward individuals for staying on the job.16 The turnover rate for those participating in the WAGE$ program is far lower for those participating in the program than those who are not (12% vs. 21% in 2019).17

In North Carolina in FY2021, 3,089 child care professionals in nearly 1,500 child care programs in 58 counties were participating in the Child Care WAGE$ program.18 Nearly all are women (99%) and 58% reported being a person of color and/or Latinx.19 Beyond North Carolina, Florida, Iowa, Nebraska, and Tennessee are also using the WAGE$ program.

With the supplemental federal funding received by New Jersey for child care over the past year, it could be an opportunity to review the WAGE$ program to determine whether it's a good strategy for New Jersey. For too long, individuals working in child care have been undervalued and underpaid.

It's time to pay the child care workforce for the important work that they do - which is far more than being courteous, efficient, and showing up. Child care is a public good. And, it's connected to economic recovery.

Child Care WAGE$ Program Results

The Child Care WAGE$® Program is an evidence-informed, outcome-driven initiative designed to increase the education and retention of the early care and education workforce through increased compensation. Education-based salary supplements tied to the successful completion of commitment periods in the same child care program result in a more stable, better-educated workforce.
Child Care WAGE$ Program

The Child Care WAGE$ program is an investment in economic recovery and expansion. It's a workforce investment strategy that supports the workforce supporting all other workforces. The ultimate beneficiaries are not only our children, but also parents, employers and communities. It's a common sense solution to a market failure.



1Wall Street Journal, Why It's So Hard to Fill Jobs in Certain States

2Parts of Mountain West, Plains and New England have three open positions for every unemployed person, May 29, 2021. https://www.wsj.com/articles/why-its-so-hard-to-fill-jobs-in-certain-states-11622280601 NJ 101.5, Pain, labor shortage, likely to be long term in NJ, July 29, 2021. https://nj1015.com/pain-labor-shortage-likely-to-be-long-term-in-nj/?utm_source=tsmclip&utm_medium=referral

3Walmart Sales Associate, Trenton, NJ $15.83 per hour. https://www.ziprecruiter.com/Salaries/Sales-Associate-Walmart-Salary--in-New-Jersey?utm_campaign=google_jobs_salary&utm_source=google_jobs_salary&utm_medium=organic

4Amazon Prime Delivery Associate - Jersey City, $18.50 per hour. https://www.careermatch.com/posting/bug_39047652588?context=merch

5Delivery Warehouse Team Member $1,000 Sign-on Bonus, https://www.google.com/search?q=amazon+delivery+new+jersey&sxsrf=ALeKk03y9-JOtPFl_uuUqmhr82Ff98Kjqg:1628261224342&ei=aEsNYeCqFJGHwbkPtfWoqAo&oq=ziprecruiter+cashiers+in+trenton+nj&gs_lcp=Cgdnd3Mtd2l6EAMyBQghEKsCOgcIABBHELADOgUIIRCgAUoECEEYAFDzDljqFGDuGGgBcAJ4AIABoQGIAZ4DkgEDMy4xmAEAoAEByAEEwAEB&sclient=gws-wiz&uact=5&ibp=htl;jobs&sa=X&ved=2ahUKEwjE1Yzh0ZzyAhWhRjABHfXRBcsQudcGKAJ6BAgGEC4#fpstate=tldetail&htivrt=jobs&htidocid=2I66YmkgJxWS342RAAAAAA%3D%3D

6Panera cashier, https://careers.panerabread.com/global/en/job/JR0004850/Restaurant-Team-Member-Cashier?utm_campaign=google_jobs_apply&utm_source=google_jobs_apply&utm_medium=organic

7U.S. Bureau of Labor Statistics, Occupational Employment and Wages, 39-9011 Childcare Workers. https://data.bls.gov/oes/#/occGeo/One%20occupation%20for%20multiple%20geographical%20areas

8U.S. Department of Health and Human Services, National Center on Early Childhood Quality Assurance, Guidance on Estimating and Reporting the Costs of Child Care, 2018.

9U.S. Census Bureau, Household Pulse Survey, Week 33, June 23 - July 5, 2021. Table 3. Educational Attainment for Adults Not Working at Time of Survey, by Main Reason for Not Working and Source Used to Meet Spending Needs

10Ibid.

11U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics, New Jersey. https://data.bls.gov/pdq/SurveyOutputServlet https://data.bls.gov/timeseries/LASST340000000000003?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true

12Child Care Services Association, the Child Care WAGE$ Program. https://www.childcareservices.org/programs/wages/

13Ibid.

14Child Care Services Association, Child Care WAGE$® Program, Statewide Final Report Fiscal Year 2021. https://www.childcareservices.org/wp-content/uploads/CCSA_WAGE_STATE_2021_Final_Full-Report.pdf

15Ibid.

16Ibid.

17Ibid.

18Ibid.

19 Ibid.