Challenges for Childcare Workers Result in Added Struggles for ALICE Families

Childcare workers play a largely unrecognized but pivotal role in the labor market: they provide essential services to working parents, which are particularly vital in low-income and single-parent households. In essence, these individuals are the workforce behind our workforce. Yet despite their critical role, childcare professionals often find themselves living paycheck to paycheck, which makes them part of a large population of Americans who are Asset Limited, Income Constrained, Employed (ALICE). 

Here’s why childcare workers are struggling financially and the ripple effects these challenges have on other ALICE families. 

Why Childcare Workers are ALICE

The following factors contribute to financial instability for childcare workers:

• Low wages and insufficient benefits. As of 2022, the childcare worker salary saw a national median hourly wage of just $13.71 per hour, far below the median for other occupations. Low pay is compounded by a lack of essential benefits such as insurance, sick leave, and pensions, with few workers receiving compensation packages that include these. As a result, childcare professionals often struggle to find affordable childcare for their own children, or healthcare for their families.
• A workforce facing the greatest levels of inequality. The childcare workforce predominantly consists of women, particularly women of color. This demographic faces higher rates of poverty, with nearly 15% living below the poverty line. This is due in part to factors like generational poverty, fewer academic and employment opportunities, and the double inequality of experiencing both gender and racial pay gaps.
• High turnover rates. Low wages directly contribute to high turnover rates in childcare centers. Research indicates that centers paying below $10 per hour experience a 23.1% annual staff turnover. Until wages and benefits become equitable, the childcare industry forecast isn’t likely to change.

How Childcare Worker Shortages Exacerbate Challenges for Other ALICE Groups

Here’s how low wages and inadequate benefits for childcare workers spill over into hardships for the working parents they serve:

• Childcare shortages. Because childcare organizations (unsurprisingly) struggle to hire and retain workers, families often struggle to secure services. This takes up valuable time and causes stress of the kind low-income parents can least afford: ALICE parents already experience greater mental and physical health disorders due to stress than their wealthier counterparts — and have greater barriers to accessing the mental and medical healthcare they need.
• Threatened financial stability for families. The shortage of affordable and accessible childcare places immense financial strain on families, especially those in the ALICE category. In 2020-21, 13% of children under five lived in families where someone had to quit, change, or refuse a job due to childcare issues. The cost of childcare, averaging $10,600 annually for one child, disproportionately affects women, single parents, and families of color​.
• Reduced care quality and suboptimal child development. The high turnover rate among childcare workers often leaves those who stay with excessively large class sizes and less time to spend one-on-one with each child. This instability in care affects the most critical developmental years for children. It leads to reduced gains in child development areas like vocabulary and literacy and increases the likelihood of behavioral issues.

The Burden of Childcare Shortages on the National Economy

The childcare market's failures, including worker shortages and high childcare costs — which are only partly offset by federal subsidy programs — have extensive economic repercussions at the national level. It's estimated that these issues cost the American economy around $122 billion a year in lost earnings, productivity, and tax revenue.

Addressing these issues requires comprehensive policy solutions to enhance the pay and benefits of childcare workers, and to make childcare more accessible and affordable for all families. In the meantime, ALICE childcare workers and the parents who need their services should seek out assistance from equity-driven community and regional nonprofits like United Way.

ALICE Childcare Workers and Families Can Get Support with United Way of York County

United Way of York County in Pennsylvania assists working households in our community to achieve financial stability by collaboratively and equitably reducing barriers to prosperity. We offer access to free health and human services like child care, affordable prescription medications, assistance with tax preparation, transportation support, and more to fight for the education, health, and economic mobility of all members of our community.

One of the ways we do this is through PA211, a free confidential health and human services information and referral hotline. Learn about how to use PA 211 to access resources like high-quality child care, and contact us to get the services you need for a financially successful future. Alternatively, consider supporting us by making a donation today!