Supporting Child Care Workers as Parents: How the Kentucky Subsidy Income Exclusion for Child Care Employees Helps Increase Access to Child Care

Download Brief

Throughout the country, more than 14.6 million children under age six live in families with working parents (about 69.3%). When parents of young children have access to child care, they are better able to obtain and retain employment.

Employers depend upon working parents, which makes addressing the supply, affordability, and the quality and safety of child care important.

When the COVID pandemic swept the nation in 2020, stay-at-home orders and anxiety about COVID spread resulted in millions of children being pulled out of child care. In turn, this threatened the financial viability of programs that were crucial for ensuring essential personnel—such as first responders and grocery store workers—had access to child care while working onsite.

Congress passed three COVID relief bills between March of 2020 and March of 2021 that included specific increases in funding for child care to ensure that the child care market didn’t collapse—that is, programs could continue operating with a significant reduction in the number of enrolled children. This was critical to ensure that onsite working parents could utilize the child care they depended on to work.

While the nation witnessed a swift recovery after the initial months of the pandemic, the child care industry still floundered. In part, this was a result of the inability of programs to hire and retain staff in a job market where workers, who typically earn low wages in child care, could be employed nearly anywhere else and earn more money. The workforce recruitment and retention challenge for child care businesses impacted the ability of parents to obtain child care. For example, while programs across the country reported waitlists for children, some classrooms remained empty because child care small businesses were not able to hire and retain the staff needed to operate at full capacity.

Many states utilized the supplemental federal COVID child care funding to pay workforce bonuses to child care workers. Every state provided stabilization grants to child care businesses, and some of those states provided enhanced grants based on wage boosts for child care workers.

While the median wage for child care workers increased from $11.65 per hour in 2019 to $14.60 per hour in 2023, the 25.3% increase was a reflection of how low wages were in 2019, rather than a boost to make child care jobs more competitive within local markets.

Even with the significant increase in wages, child care jobs still pay considerably less than other jobs throughout service and retail industries, such as at McDonald’s, Walmart, Target, or Staples. Those jobs typically involve less stress and require little to no training compared to licensed child care programs that have annual training requirements and the responsibility for meeting the needs of every child in a group setting.

Download Brief