Child care costs are straining family budgets across the country. Yet child care educators continue to earn some of the lowest wages in the workforce despite their credentials.
This mismatch creates a vicious cycle: educators face financial instability and high rates of turnover because of low pay, which makes it harder for providers to recruit and retain qualified staff (PDF). Staff vacancies can cause programs to limit enrollment (PDF) and disrupt the relationships that support early childhood development. Taken together, these trends can worsen the nation’s child care affordability and supply crises.
State and local governments are looking for effective strategies to improve educator compensation and ultimately strengthen the child care ecosystem.
An ongoing compensation program in DC offers one promising solution. In 2022, DC became the first in the country to administer an early childhood educator compensation program at scale. The program increased wages for early educators working with young children in licensed child care settings by using funds from a voter-approved tax on the wealthiest households.
From 2022 to 2026, the Urban Institute conducted a mixed-methods study evaluating the program’s design, implementation, and outcomes for educators, providers, and families with young children. In this article, we summarize findings from the study and highlight lessons learned for other jurisdictions.
Direct Payments Improved Educator Retention, Albeit with Some Implementation Headaches
DC took a phased approach to increasing educator wages. It started with direct payments to qualified educators in 2022, before shifting to a voluntary revenue supplement model, which distributed funding to child care facilities that agreed to pay their educators according to a minimum salary schedule. This approach was informed by task force recommendations (PDF) and led to the participation of 82 percent of eligible child care facilities (PDF) as of June 2026.
The initial direct payment model allowed policymakers to prioritize quick distribution of available funding while giving them time to develop a longer-term strategy and implementation infrastructure. Payments were disbursed to educators as a single lump sum in 2022, and as four quarterly payments in 2023. Full-time lead teachers received $14,000, and full-time assistants and aides received $10,000, with pro-rated amounts for part-time staff. These payments were on top of child care educator’s reported median wage of $35,000 per year, or $19 per hour. By the final payment, nearly all eligible educators participated.
When the program was first announced, educators and child care providers were generally excited and believed the additional pay reflected their skills and value. Educators found the application process to be easy, although some providers faced challenges with the online system that verified educators’ credentials, which led to lower disbursement amounts for some.
The tax implications of receiving income outside of regular paychecks were the main challenge with the direct payment structure. Despite guidance that direct payments would count as taxable income, some educators were surprised when they owed more than expected during tax season. Further, some educators initially received the wrong tax form and had to refile their taxes. Other educators were concerned the extra income would push them above the threshold for public benefits receipt—a “benefit cliff.” DC established interagency agreements to minimize this risk, and few educators ultimately reported facing this issue.
Even with these challenges, educators had positive experiences with the compensation program, often using payments to pay for basic needs. Many reported improved financial well-being, a greater ability to focus on children’s needs, and a greater likelihood of remaining in their jobs. Child care directors, though not eligible for the payments under the direct payment model, also reported greater educator retention in their facilities but noted the payments did not support essential non-teaching staff, who also receive low wages.
Source: Data obtained by Urban research team from the 2023 Early Childhood Educator Survey.
Notes: Percentages indicate the weighted share of survey-eligible educators who indicated that they had enough money to pay for that expense among those for whom the expense was applicable. Unweighted N values as follows: Full sample (current and former early educators as well as home-based owners/operators) N = 1,638; No compensation program direct payments n = 83; any compensation program direct payments n = 1,486; missing n = 69.
Revenue Supplements for Providers Simplified the Process for Educators and Enabled Progress toward Other Policy Priorities
Beginning in October 2023, DC shifted to its long-term implementation strategy: providing payments to facilities that agreed to pay educators competitive wages according to a minimum salary schedule. Four key features distinguished this approach from its predecessor:
- Providers decided whether to participate. Under this system, facilities opted in, and about 80 percent have done so. Child care center directors reported that they opted in to facilitate recruitment and retention of qualified workers.
- Payments were allocated to facilities through a funding formula. The new structure introduced a funding formula that allocated payments to facilities based on their characteristics. This formula also included an “administrative enhancement,” which covered costs associated with the increase in wages and other facility operations.
- Eligible educators saw pay bump as taxed income in paychecks. Rather than sending direct payments, the new structure directed payments to facilities to increase educators’ salaries. This process addressed some of the tax burden reported under the direct payment model.
- Minimum required salaries were tied to roles and credentials. The minimum salary schedule set thresholds tailored to educators’ roles and credentials (PDF), meaning educators with higher credentials had higher wage potential.
Policy leaders reported that the funding formula created an opportunity to build the supply of child care for those most in need. Through the formula, leaders tied increased funding to take-up of policy priorities, such as subsidy acceptance, licensed slots to serve infants and toddlers, and home-based care. Early evidence shows that higher payments did lead to increased subsidy enrollment among facilities in the compensation program, but it remains to be seen whether DC can also support its infant-toddler and home-based child care supply through this program.
Child care center directors reported that the new structure eased the administrative burden on educators, simplified tax processes, and gave facilities flexibility to support other staff’s wages, as long as they met the minimums for educators.
Source: Urban Institute’s web survey of DC child development center directors from September to October 2024.
Notes: Based on 87 observations of center directors whose centers participated in the FY 2024 ECE compensation program. Survey weights were implemented to represent all DC child development centers.
However, the policy also created new administrative responsibilities for providers to manage funds and raise salaries. These demands were particularly challenging for smaller child care centers and family child care homes, which often had limited staff and administrative capacity.
Additionally, center directors reported confusion over eligibility and payment amounts, difficulties with the online system used to verify educators’ credentials, and a misalignment between payment amounts and the cost of implementing higher wages. As the program continued, experiences with its design and implementation improved, though some challenges remained.
Minimum Salaries for Educators Improved Child Care Quality and Affordability for Families
Although the structure of the compensation program changed, its benefits to educators largely remained the same. Educators in facilities participating in the compensation program continued to report less financial strain and improved mental well-being, earning about $5 to $6 more per hour on average, according to analyses of our 2024 survey of early childhood educators. They also felt better able to provide high-quality interactions with children, pursue professional development opportunities, and were less inclined to search for a new job.
As a result, centers in the compensation program had lower educator turnover than those not in the program, and most directors continued to report improved experiences with hiring and retaining qualified staff.
Source: Urban Institute analysis of Division of Early Learning Licensing Tool (DELLT) data and publicly available information on facility participation in the DC early educator compensation program.
Notes: The 2024 sample included 292 centers, and the 2025 sample included 300 centers. Educator roles captured in our analysis include assistant teachers, Montessori assistant teachers; teachers, and Montessori teachers. Educator records were merged with facility participation data from quarter two of the corresponding fiscal year.
Families also saw positive outcomes, reporting that their children received higher-quality care in the classroom when educators had fewer financial concerns. Because the compensation program provided child care businesses with another revenue source to fund educators’ salaries, most refrained from tuition increases and some even lowered tuition for families. As such, the compensation program not only increased educator salaries, but also improved families’ access to high-quality, affordable child care.
The Future of DC’s Compensation Program Remains Uncertain
Despite its benefits, the future of the compensation program is not guaranteed. Proposed cuts to the program in past annual appropriations have led to substantial uncertainty around whether providers can rely on program funding and whether educators can expect to maintain their current wages.
The Council continued funding for the compensation program into fiscal year 2027, but the program’s budget has not met existing demand, with a waitlist policy in place since April 2025 for facilities wanting to join the program. Without the program, providers worry they will have to raise tuition and reduce educator salaries, which they believe will lead to a workforce exodus and subsequently reduce the number of children they can serve. Though not tested, the lack of stable funding may threaten early educators’ feelings of job security and their desire to stay.
Already, DC remains well above the national average in child care tuition costs, with the average cost for care for two young children at $47,200 in 2024, compared with $29,100 nationwide. In interviews, DC families at all income levels reported that the substantial expense of child care required them to make many difficult financial trade-offs. These high costs persist despite DC’s robust child care subsidy and universal preschool programs. Additional support may be needed to improve families’ ability to afford high-quality child care.
Lessons Learned
DC’s model yields policy design and implementation lessons for other jurisdictions looking to address low educator wages and high turnover:
- Align design with intended outcomes. The direct payment model localized funding for educators, with providers and families benefiting indirectly from workforce stability. When payments were made through facilities, educators continued to see improvements to their financial and emotional well-being, and providers leveraged funds to pass on cost-savings to families. By designing the program with their intended outcomes in mind, DC policymakers successfully reduced turnover and made high-quality care more affordable for families.
- Determine the proper funding amount. There is no “right” level of compensation for early educators. To determine the proper funding amount for their workforce, policymakers must understand how much educators are currently earning alongside other employee benefits they receive and how much funding is needed to achieve policy goals. This process requires time, resources, and consideration of different contexts.
- Reduce administrative burden. Program design influences who bears the administrative burden. The direct payment model’s tax implications placed a higher burden on educators, whereas funneling payments through facilities increased burden on providers and administrative staff. Policymakers should consider what administrative challenges the structure of their program may pose and, if possible, provide support to alleviate this burden.
- Protect program longevity. An educator compensation program can only exist so long as it has adequate funding. The uncertainty over the future of DC’s compensation program has raised concerns for providers, educators, and the future of DC child care. Moreover, this uncertainty can erode buy-in and feelings of job security, limiting the reach of the program and making it less effective.
As states and localities across the country search for effective strategies to increase child care affordability and support children’s early development, DC’s compensation program shows that improving educator compensation can provide the foundation for a thriving child care ecosystem from which everyone can benefit.
This research was funded by the Administration for Children and Families (ACF) of the US Department of Health and Human Services (HHS) (Grant No. 90YE0284) for the District of Columbia Child Care Policy Research Partnership Study totaling $1.6 million, with 100 percent funded by ACF/HHS. The contents and views expressed are those of the authors and do not necessarily represent the official views of, nor an endorsement by, ACF/HHS or the US government. The views should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at urban.org/fundingprinciples.
We thank the District of Columbia Office of the State Superintendent of Education (OSSE), Division of Early Learning (DEL), for engaging in the DC Child Care Policy Research Partnership. We are especially grateful to Kathryn Kigera, director of quality initiatives at DEL; Sara Mead, former deputy superintendent of early learning at OSSE; Hannah Matthews, interim deputy superintendent of early learning at OSSE; and Charmaine Llagas-Mulhern, education research analyst at DEL, for their ongoing support and feedback on study products. Lastly, we thank the government officials, child care providers, early educators, and families who participated in our study for sharing their thoughts and experiences with us.
