How D.C. tackled a child care crunch through a tax hike on the rich

WASHINGTON, D.C. — When Boniece Gillis first heard rumblings that child care workers across the city might be getting some kind of significant pay bump, she tried to keep her excitement in check.

“I was like, I’ll believe it when it comes,” says Gillis, an assistant teacher with Educare DC who was making about $18 an hour at the time, a couple dollars more than D.C.’s minimum wage.

In the fall of 2022, the raises did come. Two years on, the money has proved transformational.

Gillis is one of roughly 4,000 child care workers in the nation’s capital who have benefited from a fund established through a tax hike on city residents earning more than $250,000 a year.

The concept behind the Early Childhood Educator Pay Equity Fund is simple: to bring the wages of child care workers, who are among the lowest-paid workers in the U.S., in line with those of public school teachers.

Since the fund’s establishment, the District of Columbia’s child care workers have seen their wages rise by just over $10,000 a year, on average, setting off what researchers describe as a chain reaction: With some level of financial stability, teachers have been far less likely to quit. Reduced turnover means child care centers and home-based providers are no longer struggling to recruit and train new employees. Meanwhile, families are finding there are now more child care slots. And with more experienced teachers staying on the job, children are receiving better care.

“We know now what a big change it has brought to people’s lives,” says Erica Greenberg, a senior fellow with the Urban Institute and one of a number of researchers studying the impact of the fund. “It was long overdue.”

A 23% return on investment

The gains are not just anecdotal. Two years after the first payments went out, researchers are finding that the initiative is yielding quantifiable wins.

Owen Schochet, a researcher with Mathematica, calculated that the Pay Equity Fund boosted child care employment across Washington, D.C., by nearly 7%, or 219 additional teachers.

Working with economist Clive Belfield of Queens College, City University of New York, Schochet compared the cost of the program — an estimated $54 million in 2023 — with the value of the benefits, including lower absenteeism, lower turnover, improved access to care and better quality care. They concluded that the fund, which also includes a health care component, generated a 23% return on investment.

“The last time I went to my bank and asked for a rate of return of 23%, they showed me the door,” joked Belfield at an event unveiling the research.

The wage boost has changed lives

For some teachers, the wage increases came just in time.

Gillis had entered the field soon after becoming a mother, drawn to child care after discovering the joys of watching her own daughter learn and grow.

But as her daughter entered her preschool years, the expenses started piling up. Gillis considered returning to her old line of work as a researcher for a real estate company, which paid better but was less satisfying.

“Now, I’m able to do something I’m really good at, that I have a passion for, that I love — and I’m able to be financially compensated for that,” says Gillis, now 33. “That’s a beautiful thing.”

Across the city at Ideal Child Care Development Center, the wage supplement has brought veteran teacher Jamie Gipson a level of financial security she’d never known. With the extra cash, she and her husband decided to move out of their apartment and buy a house.

“Now I have three bedrooms, three bathrooms, three levels,” says Gipson. “My children have their own space — they’re teenagers now.”

Moreover, her wage, which has grown to $30 an hour thanks to both the Pay Equity Fund and a promotion, has made her feel like a valued educator.

“More recognized. More appreciated,” she says. Less like a babysitter.

Under D.C.’s program, Gipson will see another wage bump once she earns a bachelor’s degree, something she’s working toward now.

From a shortage of teachers to a surplus

Under the Pay Equity Fund, only teachers — not center directors or other administrators — get pay bumps, a point of friction for some.

Still, Yves-Carmel Decelian-Cadet, who founded Ideal Child Care Development Center 26 years ago, says she has been happy with the results.

“When the teachers are happy, they can pay their bills, they can perform better,” she says. “To me, that’s valuable. Very valuable.”

Decelian-Cadet is also grateful for the time saved not having to constantly find new teachers. In years past, she was so desperate for good teachers that whenever she encountered an especially kind and helpful clerk while out shopping, she’d try to recruit them. Nowadays, she has three floaters on staff and still more candidates showing up at her door.

“I have people coming here looking for jobs all the time, and I never used to see that,” she says.

The early success of the program has generated buzz, with researchers fielding calls from around the country. Already, several jurisdictions have attempted pilots on a smaller scale. A bipartisan bill in Congress, sponsored by Sen. Tim Kaine of Virginia and Sen. Katie Britt of Alabama, would, among other things, award grants to places willing to experiment with boosting child care wages to reduce turnover and increase the supply of child care.

An uncertain future

At the Urban Institute, Greenberg’s hope is that lessons learned in D.C. can inform the design of programs elsewhere. Amid the wins, there have been challenges.

Although the child care workforce has seen notable growth, the city has not seen an increase in the number of child care facilities. Rather, the expansion has come from existing centers fully staffing up, suggesting further growth may be limited.

That could be a reflection of the challenges facing administrators in the field, who are themselves ineligible for the wage bumps. An Urban Institute survey of center directors found a quarter of them reporting that most of their teachers earn more than they do as a result of the Pay Equity Fund. Close to a third said they’ve considered changing roles to be eligible for payments.

Another challenge Greenberg has identified is what she calls the public benefits cliff issue. While the Pay Equity Fund was initially disbursed through lump sum payments sent directly to child care workers, the money is now distributed through employers as part of the teachers’ paychecks. For some teachers, it’s enough of a bump to make them ineligible for public benefits — canceling out the wage gains the fund was meant to provide.

“That’s a sad statement on the state of financial well-being among early educators,” says Greenberg.

Even in Washington, D.C., the future of the Pay Equity Fund is not certain. In her proposed budget for 2025, Mayor Muriel Bowser eliminated the program altogether, citing budget shortfalls elsewhere. After fierce advocacy, the D.C. Council restored the funding, but many expect another fight in the new year.

“Let me put it this way: I’m concerned,” says Decelian-Cadet, who was among those who rallied outside the mayor’s office in the spring to save the program. “We need that money to survive.”