Chapin Hall

Child Care Workers and Wages: The Impact of COVID-19 and Minimum Wage Increases

Child care workers are one of the lowest paying professions in the U.S. economy with median national pay at $28,520 per year ($13.71 an hour) in 2022. This is less than the wage for retail workers ($14.26 an hour) and customer service workers ($18.16 an hour). Wages have remained stubbornly low even as the price of child care has risen significantly in recent years. Researchers and policymakers must understand the roots of the instability within the child care workforce, illustrated by the COVID-19 pandemic. They must also evaluate policy solutions that can improve conditions for and retention of the child care workforce.

What We Did

We analyzed quarterly wage records reported by employers to the state unemployment insurance program at the Illinois Department of Employment Security (IDES), which covers over 90% of all jobs. We focused on workers in the Child Day Care Services industry, predominantly center-based child care workers, with stable employment (three consecutive quarters of wages) between 2017 and 2022. Then we analyzed the impact of the COVID-19 pandemic and the impact of minimum wage increases on total wages for child care workers in Illinois.

What We Found

• During the most acute period of the COVID-19 pandemic, we found that the number of child care employers declined by 8% and the child care work force declined by 16%.
• The wages of Illinois child care workers in the bottom 50th percentile were most negatively impacted. Wages for the top quartile of workers were relatively stable.
• Data from the first quarter of 2022 show that while the number of child care employers had returned to prepandemic levels, the numbers of child care workers had not.
• The largest employers, with 500+ employees, experienced the most drastic decline in number of workers (-37%) and median quarter wages (-50%). They were also slower to return to prepandemic staffing levels as of the first quarter of 2022.
• Following minimum wage mandates in Chicago and Illinois, wages meaningfully increased for workers at every level of the pay scale. In Chicago, minimum wage increased to $15 per hour in 2021 (it was $10.50 per hour in 2018). In Illinois, minimum wage increased to $12 per hour in 2022 (it was $8.25 per hour prior to 2020).

What It Means

Our findings suggest that while the child care sector in Illinois appears to have recovered from its pandemic-induced low, the pandemic shock highlighted the fact that the child care industry does not operate in a unitary way. Large employers were affected by and reacted to the pandemic and relief policies in different ways than small employers did. Childcare workers at the top of the wage scale were relatively insulated from the effects the pandemic. However, workers at the bottom of the wage scale—likely predominantly part-time workers—experienced significant earnings loss. Some workers may have remediated these losses through unemployment insurance. But the uneven earnings disruption among workers highlights the importance of robust support systems, such as unemployment insurance, to mitigate the financial hardships among the childcare workforce.

So far, policy solutions like raising the minimum wage have positively impacted childcare workers at every level of the pay scale. But further analysis is needed to track child sector earnings over time in Chicago and Illinois. As minimum wages continue to increase in the city and state, do wages continue to rise for all pay levels, will they plateau, or will there be an inflection point where wage increases for the lowest earners erase premiums for the highest earners? Additional high-priority questions include understanding how minimum wage increases affect the number of childcare workers, staffing patterns, hours per worker, and worker retention at different levels of the wage scale.

Read brief on minimum wage increases
Read brief on Covid wage distribution