Child care provides opportunities for children to learn and grow and allows parents to work and create economic stability for their families, but high staff turnover, low supply, and low quality make it hard for many families to access these benefits. Some state and local governments are now seeking to solve these challenges by raising wages for early education program staff members.

In our new research brief, we summarize lessons we’ve learned from partnering with state governments in the District of Columbia, Maryland, and Virginia and local governments and community organizations in King County, Washington, as they developed and implemented wage-boosting initiatives. Here, we offer three key takeaways for state and local policymakers considering how to improve stability and quality in the child care market by increasing staff pay.

1. Carefully consider which staff members are eligible for wage increases

Early childhood program staff members include early educators, directors and owners, administrative staff members, assistant teachers, instructional experts, cooks, and janitors. Though each has different involvement with children’s day-to-day experiences, they all contribute to operating safe and high-quality education programs.

Yet many wage-boosting initiativesprioritize or focus exclusively on early educators, limiting eligibility to specific role titles or to staff members who provide direct care and education to children for a certain number of hours each week. This can promote stability in children’s caregiving experiences and improve the quality of care they receive, but it can also inadvertently change an organization’s pay structure and shrink the difference in wages between early educators and their directors. And that can create challenges for management, reduce the pipeline of staff members working toward program leadership positions, and raise questions about fairness.

For example, in the first two years of DC’s implementation of a wage supplement program, directors were excluded from direct payments. One-third of directors indicated they considered changing their roles to become eligible for the initiative. Had they acted on these considerations, it might’ve introduced new stability and quality issues in DC’s child care market.

Making all early childhood care and education staffmembers eligible for a wage increase can address eligibility fairness and allow employers to avoid changing existing pay structures. But with limited funding, policymakers might have to choose between capping the number of staff members receiving a wage increase or reducing the wage increase for each participant. In King County, which implemented a pilot program in early 2025, nearly all staff members contributing to children’s well-being could be considered for a wage boost, regardless of whether they were formally in an educator role, but at current funding levels, the program can enroll only about 1,400 workers.

2. Anticipate potential drawbacks and barriers to participation

Although child care workers sorely need better wages, those who receive wage increases may face greater tax burdens or lose access to income-based benefits. In addition, the way additional wages are delivered, such as through direct stipends or revenue streams for child care programs, may determine who participates at all.

Because wage increases are a new source of income, their tax burden is not always clear. Many state and local initiatives offer payments that have not yet been deducted for tax withholdings. Recipients may be asked to set aside funds for tax season, but they may not fully understand the form and amount of taxation. For some, this means they must pay more in taxes when they file. Government agencies implementing wage-increasing initiatives could consider developing clear communication about suggested withholdings before and during tax season. Alternatively, delivering pay raises through approaches that withhold tax from the start can ensure transparency and minimize large economic shocks at tax time.

Wage boosts can also affect eligibility for public benefits, which are usually determined based on income thresholds. Recipients of wage increases can ultimately worsen their financial well-being if their income gets too high and causes them to lose benefits, which is known as a benefits cliff.

State and local jurisdictions have employed some strategies to partially mitigate these issues. In King County, additional income received would not affect workers’ eligibility for the county’s locally administered child care subsidy program. In DC, administrators established a partnership with the District’s Health Benefits Exchange to have the government pay for part of health insurance purchased by child care staff members and child care businesses. This gave educators an alternative affordable coverage option should they lose Medicaid eligibility because of increased income.

How wage increases are delivered may also affect participation. In DC, leaders in child care centers and homes showed a slight preference for having wage increases delivered to their programs and distributed through staff paychecks, rather than making separate payments directly to early educators. In contrast, educators showed a slight preference for direct payments. In either format, making participation in wage-boosting initiatives voluntary for programs and eligible staff members can empower people to decide for themselves whether additional compensation would be beneficial or harmful.

3. Mitigate negative market and staffing effects

Though wage-increasing initiatives can be beneficial for staff members who participate, they may also create unintended consequences, especially when some staff members or programs can’t participate.

Programs that don’t or can’t take part in wage-supplementing initiatives may experience “talent drain,” losing skilled staff members because they can’t offer higher wages. To avoid this, some states have tried to discourage movement across programs, tying wage increases to continued employment at the same employer. Other states have offered information and flexibility, including waivers for salary or reporting requirements, to encourage participation among programs that might not participate otherwise.

In addition, wage enhancements that standardize pay across child care programs might affect how programs offer competitive compensation packages. State and local governments can inform child care directors, owners, and operators about this dynamic so that employers might consider differentiating their benefits packages, work schedules, or other aspects of job quality to remain competitive.

Now is the time to draw on local innovations to create policies that sustainably raise wages for child care workers. Policymakers can turn to our research for evidence to inform such policies, but every community has unique circumstances. By combining the best practices above with solutions that are responsive to educators’ and programs’ specific needs, state and local policymakers have the opportunity to ensure all early childhood staff members, children, and families can thrive.