The child care industry is in crisis. Help doesn’t seem to be on its way

LANSING – When Janell Humphreys, a lead teacher at the Northern Explorers Child Development Center in Charlevoix, discovered that her furnace failed last winter, she expected she’d have to pay for repairs with her credit card or ask her mother for help.

By the time Humphreys received her repair bill, however, she had received an unexpected piece of financial support – a pay increase as part of a supplemental wage pilot program.

The average wage at Northern Explorers increased more than two-fold from $13.95 to $30.47 per hour.

“I was beyond relieved and felt such a sense of pride that I was able to handle that crisis on my own,” Humphreys wrote to the pilot project organizers about the experience.

The program that provided Humphreys with her pay increase, run by the Department of Lifelong Education, Advancement and Potential and several child care-focused advocacy groups, was a nine-month experiment to test the impacts of higher wages on staff retention and satisfaction.

The results? 

Teachers at Northern Explorers reported increased financial security and a better work-life balance, and two teachers used their additional earnings to pursue higher education.

Another child care business involved in the pilot project, Someplace Else Learning Factory in Detroit, saw similar improvements to staff members’ financial stability and job satisfaction.

Someplace Else was able to hire two lead teachers as a result of the pilot project, increasing its enrollment capacity.

Advocates for the child care industry and other experts say Michigan should invest in establishing a competitive compensation structure for its child care workforce – though many admit that’s a political challenge.

The industry is facing a crisis, and has been for years, said Katie Sloan, an assistant professor of human development and child studies at Oakland University.

Simultaneously providing high-quality child care at an affordable price for parents while fairly compensating child care providers, Sloan said, is a conundrum that the state hasn’t successfully tackled.

The average monthly cost for child care in Michigan was $824 – 46% of the income from a full-time minimum wage job – in 2024, according to the Annie Casey Foundation in Maryland.

That high barrier means many parents simply choose not to obtain child care, which then hurts facilities that are funded mostly through tuition fees.

In turn, the reduced revenue for the centers, which tend to operate on margins of 1% or 2%, means they can’t pay competitive wages.

The median hourly wage for childhood education employees in Michigan was $14.57 in 2023, according to Grand Rapids-based nonprofit Talent First. 

Those low wages, in turn, lead to high turnover rates.

The report stated that, combined, those factors have resulted in the state’s child care industry meeting only half of working families’ child care needs.

“It is unsustainable,” Sloan said. “We are careening toward what people are calling a complete collapse of the sector.”

There are some private remedies available, like the TEACH Early Childhood Michigan Scholarship program. It assists with tuition and fees for child care workers seeking higher education or industry-recognized credentials.

The TEACH program, said Erica Willard, the executive director of the Michigan Association for the Education of Young Children, has a 99% retention rate for participants working toward a bachelor’s degree and a 97% rate for those working for an associate’s degree.

Most advocates said they support creation of a dedicated early childhood fund in the state budget, though they admit that it will be difficult to get its expected $3.5 billion price tag into the final budget, according to the pilot project report.

There are a few potential revenue streams, said Rachel Richards, the fiscal policy director of the Michigan League for Public Policy. 

The state could raise taxes on high income earners or begin to collect sales taxes on services, which are generally exempt from sales taxes, Richards said.

The report identified increases in marijuana taxes and taxes on bottled water companies as additional potential sources of revenue.

However, it’s unlikely that the early childhood fund makes it into the final version of the state budget, given Republicans’ control of the state House, Richards said.

However, for those working in the child care industry, waiting for favorable politics hardly seems like an option.

“Do I hope the state will include us in the budget?” Rachel McDonough, the owner and director of Northern Explorers, wrote in an email. 

“Something needs to change or the industry is going to fold. I have no doubt staff hiring and retention will continue to be an issue if they don’t,” she said.