Compensation & Financial Relief Strategies

★ PRIORITY FOCUS AREA

Initiatives and investments to ensure compensation equal to that of a skilled professional, accounting for an educator’s qualifications, expertise, and experience

Creating good jobs for the early care and education (ECE) workforce requires multiple integrated strategies. The National ECE Workforce Center recognizes this need and organizes its work around five essential policy areas, or key topics, identified by the Center for the Study of Child Care Employment (CSCCE) Early Childhood Workforce Index as being critical for supporting the ECE workforce and higher-quality services for children and families. Each of these policy areas directly impacts the ECE workforce’s ability to thrive, which in turn improves recruitment and retention of early educators, stabilizes services for families, supports small business and the economy, aids parents’ ability to work and seek out job training and education, and leads to improved outcomes for children and families.

All early educators should earn a fair wage for the work they do, with increases for education, experience, and role responsibilities. There are two common ways for setting wage standards. Some states use living wage calculators to determine the floor of a wage scale. Others seek to provide parity with educators in K-12 settings who have similar qualifications.

Key challenges

Early educators’ wages (median of $13.07) are significantly less than the national median wage ($22.92). Low wages threaten educators’ well-being and can result in low lifetime earnings and opportunities for fiscal stability. They stifle the pipeline of qualified educators into the workforce because the career does not offer a living wage to sustain themselves or a family. Low wages also contribute to high turnover, which hinders children’s development and learning and weakens the child care system.

At the foundation of these challenges is a strained child care market in which parents struggle to afford child care and public investments are limited and targeted to specific groups of children (by income or ages).

Promising approaches

Wage scales provide wage targets for early educators that are in line with elementary school teachers who have similar years of experience and education. States are increasingly turning to this strategy as wage scales provide clarity for educators and providers on anticipated compensation for working in child care over time. Our analysis of 2025-2027 Child Care Development Fund plans showed that about one third of states aim to revise and/or implement updated wage scales during this period.

Federal relief funds, including unprecedented American Recovery Plan Act (ARPA) funds, showed us how vital compensation improvements are for making good jobs for early educators. And state programs that have continued these grants, such as Minnesota’s Great Start Compensation Support Payment program, have continued to show that bonuses and stipends lead to retention of early educators. However, this strategy is not a long-term solution in the way wage scales are.

Other compensation and financial relief strategies include implementing tax credits and supporting access to benefits, such as offsetting the cost of health insurance premiums, offering retirement plans, or making educators eligible for child care subsidies. Public funding through grants or contracts for programs could also raise early educator salaries and provide benefits like paid time off, paid sick leave, and paid family leave.

Our work

To overcome key challenges in compensation and financial relief strategies and contribute to promising approaches, our work is centered on the following aim: Early educators are paid fair, competitive compensation based on wage scales that are linked to qualifications and degrees and adjusted for changes in educational attainment and tenure in the field.

Through intensive, targeted, and universal approaches we are:

• Supporting states and communities to develop and implement comprehensive wage scales integrated with clear, accessible career pathways and to explore sustainable revenue sources to fund them.
• Supporting Head Start grantees to systemically address compensation goals for the ECE workforce.
• Highlighting the latest research evidence and state innovations in financing salary scales and expanding access to benefits.

For a deeper dive into the status of compensation and financial relief strategies, including state progress in this space, see the Early Childhood Workforce Index chapter on this topic, and for more resources to support your own efforts to strengthen compensation and financial relief strategies, see the section below.