Across the U . S ., the gap between the expenses providers incur and the revenues they can generate is significant – especially for infant and toddler child care . Understanding how this gap varies by child age , program type and geographic location can help better target resources to the areas of highest need . Due to the broken nature of the child care market , where the consumers — parents — cannot pay for the full cost of the service they are purchasing , using the standard market rate-setting approach that relies on the tuition these consumers can pay presents an inherently inaccurate relationship between rates and the true costs of the service that are taken on by the provider . The alternative methodology approach sets rates based on the actual costs experienced by child care providers in their delivery of services , based on the type of care , age of the child , and state licensing and quality regulations .
Below are some recent examples of cost of quality care analyses to inform alternative methodology for subsidy rates , as well as a recent policy movement on provider compensation and financing mechanisms at the state level .
California developed a cost estimation model to understand the cost of quality care and to set child care subsidy rates . P5FS found built salaries for all the child care positions in early childhood education using used data collected from California child care programs . 37 Program-level data demonstrates the difference in salary or wage points across positions in center or family child care homes . The cost estimation model includes several salary options , including :
• Bureau of Labor Statistics ( BLS ) wage data from May 2021
• 2020 Workforce Survey wage data
• MIT Living Wage Calculator Option 1 ( using workforce demographic data on family composition to establish the living wage base for the teacher assistant position , since the living wage calculation is based on family size )
• MIT Living Wage Calculator Option 2 ( calculator results for the living wage needed for a single person , no children , to establish the living wage base for teacher assistant position )
• University of Washington Self-Sufficiency Standard Calculator , which defines the minimum adequate income working families need and accounts for family composition , ages of children and geographic differences in costs
• User input , which requires completion of wages data for each position
The California Rate and Quality Workgroup recommended that child care providers earn at least a living wage , and therefore the default scenarios in the cost model use the MIT Living Wage Salary Option 1 , with regional variations included . The family size assumptions are calculated using a weighted average of the living wage across six different family size / compositions for early childhood professionals in California . These program data were used to build a salary scale reflective of the different responsibilities for each position , including director , assistant director , teacher / lead teacher , assistant teacher , and floater / substitute . 38
38 Ibid .
2022 COST OF QUALITY CHILD CARE LEGISLATIVE REPORT 31