Category: CC Workforce and Quality Issues

Wages, working conditions, staff shortages and the quality of CC services

Posted on

How Many Workers in Child Care Centres and How Much Education Do They Have?

Until the results of the Canadian Child Care Worker Survey are published by Statistics Canada, the Canadian Survey on the Provision of Child Care Services (CSPCCS) provides the most detailed information available about Canada’s child care workforce. 

The CSPCCS is a relatively new survey, now collected every two years. The latest results available are from 2024.  It samples child care locations – child care centres and regulated/licensed family child care homes and unlicensed family child care homes, as long as these locations have annual income of at least $2,500.  We are particularly interested in the data provided by child care centres.

I wrote a blog previously about some workforce information from the 2022 CSPCCS.

I will review some data from the 2024 CSPCCS, but first I have to raise doubts about this survey.  The information is useful, but there is reason to doubt that the sample is representative of the population.  Let me explain

The 2024 edition of this survey collected data from April to June of 2024.  The Statistics Canada report on the survey results tell us that there were 14,523 child care centres serving Canada’s children 0-12 years of age. 

However, every couple of years, the Childcare Resource and Research Unit (CRRU) collects information on child care services across the country from the provincial and territorial governments who are best placed to know details about their child care systems.  CRRU calculates (Table 26) that there were, in 2024, 18,378 child care centres across the country (over 25% more than Statistics Canada thinks there are). 

That’s not all.  The CSPCCS 2024 report says that there were 909,158 children 0-12 years of age enrolled in those centres.  But, the CRRU report tells us that in 2024 there were 709,684 centre spaces for children 0-5 and another 734,076 centre spaces for children 4-12 (Table 20).  That’s over 1.4 million centre-based child care spaces in Canada.  For the CSPCCS data to be correct, over 530,000 licensed centre spaces would have to be sitting empty.  The more reasonable explanation is that the CSPCCS has significantly undercounted the actual number of centres and centre-based enrollment in Canada. 

You can also see this in Ontario. Ontario publishes an annual report on child care every year.  Their report tells us that there were 5,836 child care centres in Ontario in 2023-24, whereas the CSPCCS only records 4,425 centres.  The names and locations of all of these centres is public knowledge and the data is not hard to acquire.  I’m not sure what the problem is.  CSPCCS says there were only 249,473 children 0-12 years of age enrolled in Ontario child care centres.  However, data provided to CRRU by the provincial Ministry of Education says that 332,379 children were enrolled in centres in Ontario in 2024.

Anyway, let’s look at some of this workforce data from CSPCCS 2024.

Here’s data on the number of employees (of all types) employed by centres in Canada’s provinces and territories. There are over 185,000 employees, with most of them working full-time.  That’s a bit lower estimate than my recent blog, but close.

Québec, Ontario, Alberta and B.C. account for the large bulk of this workforce.

The next chart shows us staff education levels.  We narrow our focus now to only “program staff”, those that are in direct contact with children on a day-by-day, hour-by-hour basis.  It does not include supervisory staff that are more occasionally  in contact with children. Nor does it include administrative and financial staff, cleaners and maintenance workers, etc.  The CSPCCS 2024 survey estimates that there are 128,839 of these program staff employees and that 64% of them have a post-secondary ECE certificate or diploma or better.  The remainder – 36% – have either no ECE training or only a small amount.

Conclusions:

There appear to be about 187,000 employees working in or for child care centres across Canada.  This does not include staff working in centres that are directly operated by school boards who are not in the sample. For instance, this excludes all employees providing child care in Québec schools for children 5-12 years of age and in Ontario excludes employees in before-and-after school programs that are directly operated by school boards.

Most of the 187,000 workers identified in the CSPCCS 2024 are employed full-time and the bulk of them are employed in Québec, Ontario, Alberta or B.C.

Nearly 130,000 of these workers are non-supervisory program staff who provide direct care and education for children.  Close to two-thirds of these program staff have ECE training in the form of a college diploma or certificate or other post-secondary qualification.

It is possible that these employment numbers are understated because of limitations of the sample used in the 2024 Canadian Survey on the Provision of Child Care Services.

Posted on

Canada’s child care workforce – what’s happening?

Early childhood educators are the key to quality in early childhood education, and they are also key to growth in the availability of child care services.  So, let’s take some time to see how things are going.

Let’s start with this chart.

I’ll describe the data source in a minute, but look at what it tells us.  The number of workers in child care has tripled over the period from 2001-2025.  Also, we see that, in 2020, the pandemic drove over 20,000 workers out of child care.  But since that time, and especially with the Canada-Wide Early Learning and Child Care Program in 2021, the number of workers in the child care industry has risen quickly – from about 128,000 at the depth of the pandemic to over 200,000 in 2025.  Many of us are used to bemoaning the crisis of staff shortages, but it is worth also seeing that the supply of workers in child care has been rising quickly.

This data comes from Statistics Canada’s Survey of Employment, Payrolls and Hours (SEPH).  This survey provides a monthly portrait of the number of jobs (i.e., occupied positions),  hours worked and average wages, by detailed industry at the national, provincial and territorial levels.  Monthly survey estimates are produced by a combination of a census of payroll deductions, provided by the Canada Revenue Agency, and the Business Payrolls Survey (BPS), which collects data from a sample of 15,000 businesses.

The relevant industry for centre-based child care is the “child day-care services industry” (Industry #624410) which includes child care centres, nursery schools and preschools and also prekindergartens if they are not part of the school system.   The industry does not include sitters providing child care in homes or nannies or staff working in school-based kindergartens.

The second chart below shows average weekly earnings in the child day-care services industry from 2001-2025.  Of course, there is a mix of employees – supervisors, educators, assistants, support staff – with different levels of qualification, that work in this industry.  Average weekly earnings is an average across all of these occupations.  We can see a clear pattern of rising average weekly earnings over the period, with a particularly rapid rate of rise since about 2019.  The chart does not adjust for inflation, but we know that the average price level has risen by about 68% since 2001.  So, we can conclude that the real value of weekly earnings in the child day-care services industry rose by about 25% over 2001-2025.

Although wage levels have been rising, the average is still relatively low.  The level in 2025 – $891.17 per week – amounts to $23.76 per hour over a 37.5 hour work week, or $22.28 per hour over a 40 hour work week.

The third chart – below – is a bit more perplexing.  This chart shows job vacancies for early childhood educators and assistants.  The data on job vacancies comes from a quarterly survey of businesses across the country.  Businesses report on how many additional workers they are willing and able to hire right now, and what wage level they are offering to these prospective workers.

The top section of the chart shows us job vacancies for early childhood educators and assistants from 2019 to 2026.  In 2019 and 2020 there were about 5,000-6,000 vacant positions in any quarter.  Then, vacant positions rose rapidly in 2021, peaking at nearly 13,000 in mid-2022.  Throughout 2022 until early 2024, there were always about 10,000 or more unfilled positions in child care.  From the end of 2024 till now, vacant positions have fallen somewhat down to something like 7,000-8,000 positions unfilled.

Your first instinct might be surprise.  Everyone knows there are substantial child care staff shortages – especially for early childhood educators.  For instance, the Ontario Auditor General estimates that Ontario will need about 10,000 additional staff to meet their expansion objectives.  So, why are job vacancies lower now than in 2022-23?

However, a job vacancy is not quite the same thing as a staff shortage.  For a position to be vacant in Statistics Canada’s Job Vacancy and Wage Survey, a business has to say that they need more staff but also that they are able and willing to hire them.  Centres that need more staff but don’t have a sufficient revenue stream to hire them at prevailing wages will not have a job vacancy, even though they have a staff shortage.

In any case, there continue to be significant job vacancies amongst early childhood educators and assistants, though not as high a level as in 2022-2023.

“Early childhood educators and assistants” is the name of the relevant occupation if we are concerned with workers in child care centres.  The occupation includes both educators – planning, organizing and implementing programs for children 0-12 and assistants, working with educators. These educators and assistants are employed in child-care centres, daycare centres, kindergartens, agencies for exceptional children and other settings where early childhood education services are provided. Supervisors of early childhood educators and assistants are included.

The average hourly wage offered to prospective new employees is shown along with the job vacancies.  It has been rising steadily, in line with the rising wage levels we saw earlier for the child day-care services industry.

We will soon have more precise data about workers in child care centres across Canada.  Statistics Canada has designed and implemented a Canadian Child Care Worker Survey 2026 that recently collected data (February-May 2026.  The results are not yet available, but are expected in 2027.  The questionnaire is available here: https://www23.statcan.gc.ca/imdb/p3instr.pl?Function=getInstrumentList&Item_Id=1582569&UL=1V&  This new survey focuses on centre-based child care workers particularly on factors related to the workplace, compensation and staff well-being. The survey aims to better understand how these factors influence the recruitment, retention and recognition of child care workers.

Posted on

The Triumph of Ideology Over Policy Analysis

Parisa Mahboubi and Tingting Zhang wrote a pretty good policy analysis paper for the CD Howe Institute back in March 2026 entitled “From Promise to Practice: A Critical Review of the Federal Childcare Plan”.   I didn’t agree with all of it, but much of it was a reasonably balanced assessment of some problems with the universal child care system ushered in by the Liberal government in 2021 (known as the Canada-Wide Early Learning and Child Care program, or CWELCC). 

Mahboubi and Zhang acknowledged the huge impact that the Quebec universal program had had on the labour supply of mothers 25 to 54 years of age (from 60.5% – 3.3 percentage points below the rest of Canada – to 78.9%, about 9 percentage points higher than the rest of Canada).  But, they worried about whether this sort of increase can be replicated now in the rest of Canada.  And they were anxious to make sure that costs and availability were especially improved for populations where barriers to employment are the highest.  At the same time, they recognized that there are important affordability barriers across income groups – on average 40% of a parent’s earnings are taken up by child care costs and taxes when she enters the labour force.

And, in their CD Howe paper, Mahboubi and Zhang articulate some key principles of good child care policy: “ensuring accessibility and affordability across all income levels; offering a range of options to meet diverse family needs (including various care modes, flexible scheduling, and diverse facility types); and investing in high-quality early childhood education.”

In order to achieve these goals, they come up with a number of main policy recommendations. 

  • Provincial and territorial governments need to prioritize creation of licensed child care spaces for underserved groups and areas by directing operating and capital money to incentivize these priorities. 
  • Provincial and territorial governments need to improve wages, working conditions and professional development opportunities for early childhood educators to maintain high quality services. 
  • The federal government should “ensure stable, long-term funding for the CWELCC system while promoting provincial accountability and progress towards consistent national standards.”  
  • For families not using CWELCC-funded child care, the authors called for an “income-tested, refundable tax credit similar to Quebec’s model to increase flexibility and support families using non-subsidized care”. 

I don’t agree that the best way to provide care during non-standard hours and to improve flexibility is to create a parallel funding system of tax credits.  Much better to provide funding incentives for existing providers to lengthen their hours and provide more flexible services.  But, I do agree that the priority now is the expansion of regulated spaces with stable long-term funding, planning and financial supports for new spaces,  and improved compensation for educators.

Unfortunately, a couple of weeks ago, the same authors wrote a commentary piece in the Globe and Mail.  It’s apparently based on their CD Howe study, but their balanced assessment has now become crudely ideological.  Now they say that Canada’s $10-a-day plan has made child care “less accessible”.   Gone is the recommendation to provide stable long-term funding for the Canada-Wide universal child care model.  Gone is the recommendation that improving wages and working conditions of ECEs are top priorities. Now, they want “targeting” – different child care fees for every family – instead of universal services at a known price.  They want income-related fees for all families, both for licensed child care and for families using any other type of care.  They seem to believe that charging income-related fees will deal with the accessibility problem and ensure that low and middle income families gain access.  As they put it: “Without better targeting, $10-a-day child care risks becoming a well-intentioned policy that delivers too little, to the wrong people, at too high a cost.”

Now we have simple right-wing solutions to complex child care problems – against universal services, for targeting assistance to the truly needy, don’t even mention gender-based rationales for funding child care universally.

Let me offer a few correctives.

Accessibility of child care is not worse than it was in 2019, it’s better.  Back in 2019, there were about 591,000 licensed spaces in child care centres for children younger than kindergarten age.  In 2025, there are a little over 750,000 such spaces.  On top of that there are over 100,000 family child care spaces available for children 0-5.  And, there are also quite a few before-and-after school spaces available for children who are in kindergarten (over 125,000 in Ontario, for instance). Over the period from 2019 to 2025, the population of children 0-5 years is constant at just over 2.2 million.  So, accessibility of child care has improved, not worsened. 

What has changed is that the latent demand for child care, which was suppressed by its high price, has now emerged.  Demand has risen; supply has not fallen.  Mahboubi and Zhang seem to believe they can deal with this excess of demand by income-related fees.  That will only happen if child care fees rise very substantially, high enough to choke off child care demand by middle and higher income families.  This would violate the principle that these same authors articulated in their CD Howe piece: “ensuring accessibility and affordability across all income levels”, and would be unacceptable socially and politically.

Although ideology appears to have driven Mahboubi and Zhang towards recommending “targeting” in their Globe and Mail comment, this is no solution to the actual problems the child care system faces.  The key problem now is insufficient supply of good quality child care services to meet the now higher demand.   The only way to deal with this problem is to create more services quickly, and that means finding sources of capital funding, mobilizing resources to ensure that land and buildings are available, that planning permissions are given quickly, that expansion is planned to take place in the areas and for the populations where need is most acute, that adequate supports are given to providers that will be managing the expansion, that access to continuing operational funding is guaranteed early in the process of expansion, that the process of obtaining a licence is smooth.  Rapid expansion also requires dealing with shortages of qualified early childhood educators, which requires ensuring that pay, benefits and working conditions are attractive enough to increase workforce supply.  “Targeting” will not provide the additional child care services needed; their CD Howe paper did not imply that it would.

I’m also frankly a bit stunned that these authors could recommend an income-tested refundable tax credit “similar to Quebec’s” as a major new form of funding child care.  These authors know that the Quebec tax credit has been a disaster for child care quality.  They refer to it in their CD Howe paper in this way:

“Between 2019 and 2022, about 30 percent of Quebec childcare installations… failed the provincial educational quality assessment. Quality outcomes were significantly weaker in for-profit daycares than in non-profit CPEs, despite refundable tax credits and other measures intended to support the expansion of commercial daycare services. For-profit centres also tend to rely more heavily on unqualified staff and are more likely to fail both the quality evaluation and qualified‑staff ratio requirements.” 

I have summarized this evidence on quality in the tax-credit-funded Quebec child care centres here, and it amounts to a damning assessment of this form of funding.

On top of all this, there is little evidence that would lead us to believe that the best way to help low-income families and vulnerable children access child care is by targeting child care assistance to them and charging high fees to others.  After all, “targeting” was the basic child care funding model that Canada had since the late 1960s – child care subsidies targeted at low-income families and vulnerable children.  These subsidies have had some positive effects, but targeting has not worked to solve workforce access problems of many low-income Canadian families.  And yet Mahboubi and Zhang think that doubling down on targeting will somehow make it work better. 

Mahboubi and Zhang should be learning a different lesson from Quebec’s experience – universal programs can provide the best conditions under which low-income families will access child care as employment and income support.  As economist Pierre Fortin has noted “In 1996, child poverty rates across Canada were at an all-time high and children in Quebec were amongst the worst off.  Today, it’s the opposite.  …Quebec’s child poverty rate is 44% lower than all other Canadian provinces.”

Economists Baker, Gruber and Milligan have recently confirmed that these effects of Quebec child care are causal.  Looking at the long-run effects of Quebec’s universal system, they have found significant positive effects on employment, mostly full-time employment, for mothers with less than high school, and those who have completed high school or college.  They found significant lifetime reductions in the likelihood that mothers affected by the child care program collected EI benefits or social assistance.  And there have been substantial reductions in family poverty, especially when mothers are in their childbearing years, but also at later ages.  We could conclude that the best way to improve CWELCC’s positive effects on low-income families and vulnerable children is to expand access and make the program work better, not to change horses in mid-stream.

I’m disappointed with the Mahboubi and Zhang piece in the Globe and Mail.  For a while, I thought that disagreements over how to solve the problems of the current CWELCC program were narrowing and becoming less ideological.  I’m sorry to have to abandon that point of view.

Posted on

Globe and Mail Fantasies

Did you see the Globe and Mail editorial last Sunday (June 28)?   The Globe has plans to fix everything that’s wrong with the Canada-Wide Early Learning and Child Care program.  A good objective, but I do wish the Globe would do some serious research before trotting out the same tired old solutions that have never worked for child care. 

Their plan would return us to market-driven child care solutions with no controls on rising fees, no financial accountability for the expenditure of public dollars, and no preference for non-profit child care.  There would be financial assistance for low-income families but not for others.  Child care is apparently not a women’s issue and a children’s issue, it’s only a poverty issue.  We’ve been there before.  It didn’t work and we don’t want to go back.

The Globe and Mail wants free market child care with the add-on of a new voucher or tax credit system – to be run by Canada Revenue.   The plan is to provide nearly free child care for low-income Canadians but little or no financial assistance to families that earn higher incomes. 

Has the Globe and Mail investigated either of the Canadian examples of a tax credit used to fund child care?  If it had, it would find the results have not been impressive.

Ontario’s CARE tax credit was implemented in 2019.  Families earning above $150,000 were not eligible.  Despite this, the Financial Accountability Office of Ontario reported that “Approximately two-thirds of the total CARE tax credit benefit will be distributed to families with incomes over the 50th income percentile…. Only three per cent of the total CARE tax credit benefit will be distributed to families with incomes below the 25th income percentile.”   And the average benefit that a family receives is only $1,300 per year.  So this tax credit is not very generous and apparently not a good way of helping low-income families that the Globe and Mail says it wants to prioritize.

The other example of a tax credit to fund child care is in Quebec.  From about 2009, this tax credit was used to encourage for-profits to enter the sector and provide more capacity. These providers could set their own fees and did not have the financial reporting requirements faced by other centres.  Money poured into this part of the sector; it provided an increase in spaces but these spaces are publicly acknowledged to be of shocking average quality.  Quebec’s Auditor General reported that nearly half (47%) of these tax credit funded child care centres did not even reach the minimum quality level.  As shown in the charts below, staffing is much worse in these for-profit child care centres – apparently not their priority – and low quality follows as night follows day.  Now that there is sufficient child care capacity in Quebec, large numbers of families are leaving these tax-credit-funded child care centres.

The Globe and Mail gets so many other things wrong, they are hard to count.  They want to get rid of universal Canada-Wide child care because according to them:

  • there are staff shortages that are not improving,
  • the compensation of educators is not rising,
  • the Canada-Wide child care program is failing to have any perceptible effect on mothers ability to access employment
  • one-third of all Canadians with preschool children are on waiting lists and unable to access child care
  • there is a narrow focus on non-profit child care, with punishing restrictions required by Ottawa on subsidies to for-profit child-care centres

On every one of these indicators, the Globe is wrong or misleading.

After reading the Globe editorial, you would probably be surprised to learn that the number of employees in the day care industry in Canada outside Quebec rose by 44.1% between January 2019 and January 2026 (Statistics Canada Table 14100220).  Over that same period, across all industries the growth in employment was 8.5%. 

You might also be surprised to hear that average weekly earnings in the day care industry rose by 43.5% from April 2019 to April 2025.  Over the same period, average weekly earnings across all industries rose by 27.4%.  Compensation for child care educators is still low relative to other industries – average weekly earnings across all industries was $1,302.86 in 2025 – but it is improving.

Again, you might be surprised to hear that, contrary to what the Globe and Mail would have you believe, there is good evidence of rising labour force participation of mothers most affected by the child care reforms.  Labour force participation rose by 3.7 percentage points from 2019 to 2025 for mothers with a youngest child 0-5, meaning about 65,000 mothers joined the labour force.  For an appropriate comparison, look at mothers with children not affected by the Canada-Wide program.  Mothers with a youngest child 6-12 increased their labour force participation over this same period by only 0.7 percentage points.  And mums with a youngest child 13-17 increased labour force participation by only 1 percentage point.

It’s true that there are a lot of children on waiting lists.  Of course there are, because child care fees have fallen by 50% and more.  But if you dig into the big parent survey that Statistics Canada conducted in 2023, you find that only about 16% of families are both on a waiting list and not already in licensed child care.  You see, parents can be already using licensed child care and at the same time on a waiting list for a preferred licensed arrangement.  Removing these still leaves a lot of children who need either new child care spaces or need existing spaces closed due to staff shortages to become operational – about 350,000 compared to the 927,000 children already in licensed care.  We would need to increase enrollment by about 38% to eliminate these waiting lists and this, in my opinion, is where policy attention should be focused. 

The Globe would have you believe that the “narrow focus on non-profit child care” is a big problem.  Statistics Canada finds that about half of all child care centres serving children 0-5 years are for-profit businesses.  Because non-profit child care is typically of better quality than commercial child care, the agreements signed between Canada and the provinces and territories call for new child care growth to be predominantly in non-profit, public and family child care facilities.  Contrary to the Globe’s beliefs, this policy has not been a major barrier to  for-profit child care expansion.  Only 27% of new spaces since 2022 have been in non-profit facilities and another 16% in home-based child care.  The rest of the expansion (57%) has been in for-profit facilities.

As you can see, most of the Globe’s analysis of the situation in Canadian child care is based on incorrect information.  The Canada-Wide program is beginning to work – increased affordability, increases in child care capacity, increases in employment of child care staff, increases in the pay of child care workers, increases in the labour force participation of mothers with young children.  It’s not fast enough and governments fight over who should pay the bills, but there is measurable progress.

The Globe has a point when it says: “Still, money is the main obstacle: There simply isn’t enough of it to keep fees this low and also create enough spaces to meet demand.”  

There is good recent evidence that governments would find spending on child care to be a wise investment.  The Globe editorial refers to this: “Recent research based on data from Quebec, finds that when child-care subsidies help mothers join or stay in the labour force, the benefits last for the long term, with women working and earning more throughout their careers. This boosts tax revenue and reduces reliance on social assistance for decades after families stop needing child care.”  But the Globe apparently thinks that this research only applies to mothers with low incomes.  In fact, that research shows that universal child care, available to all mothers in Quebec, generates enough fiscal return to pay for itself.  Quebec’s program encouraged many lower-income mothers into employment, but the fiscal payback comes disproportionately from the increased taxes on mothers who earn above the median.  Universal child care may pay for itself.  Heavily targeted financial assistance for child care will not.

Even if governments are currently cash-strapped, throwing away universal child care in favour of a narrowly targeted voucher would not make sense.  The maximum child care fee in Ontario is currently $22 per day, rather than $10.  Staying at $22 makes a lot of sense if money is too tight, as long as governments also have equitable and accessible child care subsidies for low-income families.  Reaching $10 a day can wait for another day. The immediate priority is expansion.

Despite cherry-picking evidence from the C.D. Howe paper, they ignore one of its two key recommendations:   “Ensure stable, long-term funding for the CWELCC system while promoting provincial accountability and progress toward consistent national standards.” Instead, the Globe and Mail plans to solve the money problem by cutting off financial assistance to many families.  And they have the gall to claim in their editorial’s last line that their voucher/tax-credit plan will “provide a child-care spot for every kid who needs one.” 

Posted on

ACE National’s New Proposal to Reduce Affordability, Access and Accountability in Ontario Child Care

ACE National is an organization that groups together child care operators, most of them for-profits, to lobby for reforms that serve their interests.  Their chair and most prominent spokesperson is Krystal Churcher, who owns a child care centre in Fort McMurray, Alberta, and also heads up the Churcher Group which is a consultancy firm supporting child care operators.

ACE National recently published a report recommending 10 major reforms to CWELCC in Ontario. These reforms would apparently create “A Structurally Sustainable Framework for CWELCC” for the years 2027–2031.

Unfortunately, their report is actually a slide deck – with 10 very briefly described reforms and no research or evidence evaluating their likely impacts.  So, this is more like a press release than it is a report.  Nonetheless, it is worth looking at to see what ACE National has to offer.

According to the report, their recommendations are aimed at helping Ontario continue its participation in CWELCC.  They say that their proposals would avoid the need for substantial new funding, would preserve affordability for families and would control costs structurally.   It sounds like a dream.

Unfortunately their 10-point plan would reduce services offered to children and families, increase costs to parents, and totally eliminate eligibility for some children and families. On top of this they want to reduce measures of financial accountability for the public money that providers receive, and they want to shovel public money towards the 8% of providers in Ontario that have refused to enter the CWELCC program (almost all of them for-profit operators charging high fees without any financial accountability).  None of this passes my sniff test as a useful, well thought out set of policy reforms to make CWELCC sustainable.

Let me give you a few details about their 10-point plan: 

  • ACE would adopt a “Tiered Affordability Model”.  Apparently this means parent fees that vary with income.  There would still be a fee maximum, but we don’t know how high, or how much families would pay at different income levels.  And we don’t know how it would be administered.  Would operators have to income-test parents to determine how much they would pay?  Parents wouldn’t like that.  According to ACE, a few $10 a day spaces would be available but only  to a “limited budget-controlled subset” of families.  ACE suggests that this tiered affordability system would save $300 million – $600 million per year, which is less than would be saved by simply keeping the maximum fee at its current $22 a day level while increasing subsidy funding for low-income families.  Not a very sensible suggestion in my opinion. 
  • ACE would make the standard child care day only 8 or 9 hours per day, rather than the current 10 or 11 hours.  Any family who needed to use extra hours would have to pay extra.  Of course, this means that most parents working an 8 hour shift would face extra-billing. 
  • ACE would cancel eligibility for child care for ALL children in Junior or Senior Kindergarten.  There are currently about 128,000 before-and-after-school spaces for these children in Ontario.  All these children would lose CWELCC child care assistance.  That’s close to 40% of the children currently benefiting from CWELCC in Ontario.
  • ACE wants to get rid of cost-based funding of child care in Ontario (i.e., the funding formula).  Instead, child care providers would get “standardized per space operating grants”.  And, there would not have to be detailed financial accountability for public money received.  Instead only risky operators would have to undergo audits.  Apparently, there would also be no more limits on the percent of public revenues each year that can be taken as profit, unlike with the current funding formula.
  • ACE wants the province to define clearly which services are part of CWELCC and which are not.  Services that are not included would be additional costs to parents above the daily fee.
  • ACE wants the government to provide money to operators who have refused to join the program so they can provide low-fee child care for families. Currently, government subsidies and revenues are only available to operators who are part of the CWELCC system.  But ACE wants to reverse that and subsidize the profits of these operators outside CWELCC.
  • ACE wants to eliminate local planning restrictions on expansion of child care services.  Instead of planned expansion with a priority on underserved communities, expansion would be allowed wherever shortages exist (i.e., everywhere) and whenever projects were ready to go.  Sounds like a free-for-all for the for-profit sector which would receive guaranteed future operating funding for new spaces they are willing to provide. 
  • Even when it comes to a recommendation about staff wages, ACE can’t get it right. There is currently a wage floor of $25.86 per hour for Registered Early Childhood Educators, rising over time. ACE wants to establish a wage floor for non-RECEs – program staff that are not required to have any child-related qualifications.  However, ACE proposes that unqualified program staff – Early Childhood Assistants – should have a guaranteed wage that is no less than $2.00 per hour below the RECE wage!   I wonder how many RECEs will want to spend two or more years getting qualifications and paying annual registration fees to the College of Early Childhood Educators when they could earn nearly as much with no training.

Overall, this is an incoherent mishmash of ideas designed to reduce services to families, charge extra to families for the “voluntary” services that they need, eliminate child care services for children who are in kindergarten, and reduce or eliminate financial accountability and restrictions on the amount of profit.   All of this in a proposal which is free of any evidence that supports its claims.

On top of this, government revenues would now be funneled towards the 8% of (for-profit) operators that refused to join the program initially.  And any operator who wanted to open and had the money to open a new child care centre could do so with few restrictions and then would receive government operating funding as a right.  

ACE National calls this “A 10-Point Plan to strengthen affordability, access, and accountability in Ontario childcare.” However, as we’ve seen, their plan would reduce affordability, access and accountability. Sounds like a dream scenario for some entrepreneurs and a nightmare for parents and the Ontario government.  This is policy advice the Ontario and federal governments should reject.

Posted on

My Submission to the Standing Committee on Finance, 2026

The House of Commons Standing Committee on Finance has been taking pre-budget submissions from whoever wants to contribute. I chose, unsurprisingly, to focus on funding child care, especially child care in Ontario. Here’s what I wrote:

RECOMMENDATIONS

  1. Expansion is the key priority for this next 5 year period. Provinces who are not yet at $10 a day should be allowed to get to $10 a day more slowly than originally planned to focus scarce funds on expansion. 
  2. The federal government should increase its annual amount of CWELCC funding sufficiently to allow child care capacity to continue to grow in all provinces and territories. Equally important, the federal government needs to credibly commit to maintaining and expanding the child care program.   Across Canada, an extra $4 billion to $6 billion annually would allow for maintaining the program and increasing capacity.  A clear commitment to maintaining and expanding the program can substantially reduce expansion risks for non-profit child care providers.
  3. In Budget 2024, the $1 billion Child Care Expansion Loan Program for non-profit child care was announced.  This program should now be implemented in its original or amended form. Non-profit child care operators have little access to capital funding to expand.  This would be of great assistance, especially to multi-site non-profit operators.
  4. The Child Care Infrastructure Fund of $625 million to support expansion is being sunsetted.  This has been a good model, with money distributed through provincial/territorial authorities.  It should be repeated and expanded, perhaps with some tweaks to funding rules.

TOPICS

  • The benefits of universal child care
  • How much more child care does Ontario need?
  • How is Ontario doing on expansion?
  • Why is child care expensive to provide?
  • What is the average operational cost of a child care space?
  • What could Ontario do with additional federal funding?
  • Should Ontario lower its fee to $10 a day?
  • Would income-testing help?

The benefits of universal child care

Much has been written about the benefits of universal child care.  Two recent papers are especially important.  

The first is by economists Michael Baker, Johnathan Gruber and Kevin Milligan.[1] They analyze universal child care in Quebec to show that:

  • Mothers’ employment in Québec rose by a lot and stayed permanently higher through those mothers’ lives (+12 percentage points by age 50).
  • Mothers’ incomes grew very substantially over their lifetimes as a result of maintaining attachment to the labour force and not losing skills when their children were young (+27% by age 50).
  • There was a substantial drop in the level of family poverty, particularly during childbearing years. The program was particularly important for those without a university education – the policy had a consistently strong effect on mothers with levels of education below university
  • Based on analysis of Canadian tax records over a long period, Quebec’s $5 a day child care reforms generated enough government tax revenues and reduced social benefit payments to pay for the costs of the program.  

The second paper, again analyzing universal child care in Quebec, is by economists Montpetit, Carrer and Beauregard.[2]  They uncover two important results:

  • In addition to the important gains in employment and earnings for mothers, they measure substantial additional benefits that we might describe as work-family balance.  Universal child care makes all the tasks associated with caring for children less stressful and onerous for the family.
  • This point is obvious but generally overlooked.  All of the benefits of universal child care – employment, earnings, work-family balance, etc – depend on increasing the supply (availability) of child care even more than on improvements in affordability.  The benefits depend on making more spaces available to families.

Our takeaways from these studies: Not only does early learning and child care deliver very substantial economic benefits to mothers and families, it also delivers very substantial fiscal benefits to governments.  These benefits depend on continuing to grow the child care system, making it available to all families.

How much more child care does Ontario need?

The federal government has set 59% of children 0-5 years of age as a target.  This is a reasonable definition of “universality” given that Ontario already has full-day early learning for children 4 and 5 and maternity/parental benefits and leave for children up to 12 or 18 months of age.  To reach 59%, Ontario would need to have 515,430 child care spaces for children 0-5.[3]  As of the end of December 2026, Ontario plans to have 375,111 spaces.[4] 

After December 2026, Ontario would reach the federal target if it had 140,319 additional spaces inside CWELCC and all of them were operational. 

How is Ontario doing on expansion?

In Québec’s successful child care rollout, growth happened quickly – was planned and organized.  Québec started with 18% coverage of 0-4 year old children in 1997.  By 3 years later, it had added another 11 percentage points of coverage.  By 8 years after the program started, it had added another 23 percentage points of coverage and provided enough child care for 52% of all children 0-4 by 2005.  This strong commitment to expansion of the program greatly aided its acceptance and ultimate success.

In the first 3 years, from 2022 to 2025,  Ontario’s centres grew from about 34% coverage of children 0-5 to about 39%, an increased coverage of only about 5 percentage points.  Ontario’s child care system is growing much more slowly than Québec’s did.   Without this growth, families and governments will not reap the benefits of a universal affordable child care program.

Why is child care expensive to provide?

It’s not a surprise that child care is expensive; it requires a lot of skilled labour.    Registered Early Childhood Educators (RECEs) in Ontario now earn about $27 an hour on average and Educator Assistants earn about $22 an hour. 

As an example, how much in staff salaries does it cost to provide care for toddlers in Ontario?  According to regulations, one RECE and two Assistants can look after 15 toddlers and the child care centre is open for perhaps 10 or 11 hours per day.  If these ratios need to be maintained all day, you can calculate these salary costs on a 10 hour day and add 20% for benefits (not generous).  Then the staffing costs per toddler amount to nearly $57 per day per child.

That’s without adding in the cost of food and food preparation, supplies, the costs of leasing the centre and playground, the cost of replacement staff for holidays and a share of the costs of the supervisory and administrative staff.   Or the cost of providing an allowance for profit.  So, the provision of child care can be expensive, even on the relatively low salaries and benefits that are currently paid. 

What is the average operational cost of a child care space?

Ontario has a funding formula that they developed based on evidence that the Ministry of Education collected about the cost of providing child care.  We can reverse engineer this funding formula to give us estimates of the typical operational costs of providing child care – program staff, supervisory staff, operations and accommodation.

In Ontario, this estimate based on the 2026 funding formula is $130 per day for infants, $85 per day for toddlers, $65 per day for preschoolers and $35 a day for kindergarten children.   A single cost estimate per space, irrespective of child age, is meaningless; costs vary depending on the ages of children using child care.  Note that costs in Ontario are higher than in many other provinces, for good reasons.  Typically, the quality-related regulations are stronger and better enforced in Ontario.  That’s good for children.

What could Ontario do with additional federal funding?

Many of Ontario’s child care spaces – about 80,500 – are licensed but non-operational.  The Auditor General of Ontario advises that “many of these centres operate below their capacity because of staffing shortages, including RECEs” (Auditor General of Ontario, 2025, p. 42). 

To solve staffing shortages, compensation of early childhood educators will have to rise.  Currently the average educator wage for program staff appears to be about $27 per hour and for staff without these qualifications about $22 per hour.  A rise of about 25% in compensation (wage and benefit improvements) has been called for to aid recruitment and retention of staff.[5]  

If Ontario had an extra $1 billion of operating funding, I estimate it could fund nearly 70,000 of these already licensed but non-operational spaces at rates allowing for a 25% compensation increase for educators.

Alternatively, $1 billion of new operational funding could support services in about 57,000 NEW spaces with a 25% compensation increase for educators. New spaces receive a growth supplement to operational funding in Ontario and therefore cost more. 

Ontario needs at least $2 billion additional funding in order to stay on track for building an affordable universal child care system.  Since, Ontario is about 38% of Canada’s population, an extra $2 billion annual funding for Ontario would imply about $5.3 billion annual funding for all provinces and territories combined. 

More one-time-only funding is also needed for capital grants to support expansion.  Overall, the federal commitment needs to rise by between $4 billion and $6 billion annually.  That would allow building of adequately staffed and stable child care services serving over 100,000 more children in Ontario than was true in 2025.

Should Ontario lower its fee to $10 a day?

No.  Not right now.  The parent fee of a maximum $22/day (actual average $19/day) brings in significant revenue which is needed given Canada’s current economic situation.  Ontario has had a good child care subsidy system targeted at lower income families and vulnerable children.  It subsidizes many families that cannot afford $22/day and should subsidize more.  This subsidy system should be made more accessible; it is important to retain and improve access to child care subsidies.

Would income-testing make child care more affordable for governments?

The existing child care subsidy system is a form of income-testing, helping those who cannot afford $22 a day ($5,742 per child for a full year).  Maintaining this subsidy system or improving it is very important.  However, this is not what most people mean when they advocate income-testing.

There are two other types of proposals for income-testing.  One would mimic the funding system used in Québec for several years (2015-2019) under Premier Philippe Couillard.  In Québec, everyone using a fixed-fee provider paid the provider $7.30 per day.  Then, at tax time, the family would be assessed for how much child care they had used and would pay an income-tested extra amount to the Québec government.

The scheme became unpopular very quickly.  Families were “surprised” when they had to pay a few thousand extra dollars at tax time.  And, it didn’t raise that much additional revenue for governments.  So, the incoming CAQ government cancelled income-tested fees and returned to a fixed fee, rising over time with inflation.

The other kind of income-testing is like that used by the Australian Government.[6] The trouble with this kind of scheme is that it is entirely market-based.  There are no controls on provider fees and fees tend to rise constantly.  The average total fee charged by providers in Australia, irrespective of child age, is over $130 per day. And there is no financial accountability by providers for the subsidy money they received on behalf of parents.  This results in an unaffordable and unaccountable set of funding arrangements.

Both of these income-testing alternatives take a considerable amount of administration.  Unless governments are willing to have some parents pay much higher fees, they don’t raise that much revenue from parents.  On the other hand, a fixed fee model provides certainty to parents and, arguably, is a large part of the reason why the labour force impacts of Québec’s child care program have been so large over time.

Staying at $22/day with a well-functioning subsidy system is a better alternative than dropping the fixed-fee to $10 a day and layering income-testing on top of it.

[1] Baker, M., Gruber, J. & Milligan, K. (2026) Investing in Mothers? The Long-Run Impact of a Universal Child Care Program on Maternal Work and Income.  Working Paper.  https://drive.google.com/file/d/1PqKGMyrqKMMvUEXiahcx5jbQ4JhbLsYo/view

[2] Montpetit, S., Carrer, L., & Beauregard, P-L (2026) A Welfare Analysis of Universal Childcare Lessons from a Canadian Reform.  Working Paper. https://sebastienmontpetit.github.io/WebsiteSM/MCB_QCchildcare.pdf

[3] Ontario has 873,610 children 0-5 years of age as of July 1st, 2025 (Statistics Canada table 17100005).  

[4] Auditor General of Ontario (2025) Performance Audit: Canada-Wide Early Learning and Child Care Program.  Special Report 2025.  Office of the Auditor General of Ontario, p. 15.  But also see Moran, H. (2025) Updates to 2025 Ontario Child Care and Early Years Funding Guidelines. Memo to SSMs. https://efis.fma.csc.gov.on.ca/faab/Memos/CC2025/EYCC01_EN.pdf. This memo suggests capacity at end December 2026 will be 400,881 licensed spaces.  This may include spaces outside CWELCC.

[5] A. Shariati (2024) Addressing the Early Childhood Educators Labour Shortage in Canada: Challenges, Solutions and Impacts.  Centre for the Study of Living Standards Report prepared for YMCA Canada.

[6] Cleveland (March 2025) Does Tax Credit Funding Work for Child Care: Lessons from Australia.  https://childcarepolicy.net/does-tax-credit-funding-work-for-child-care-lessons-from-australia/

Posted on

How is CWELCC Doing? A Response to Peter Jon Mitchell

This week in the Hill Times, Peter Jon Mitchell says he wants to get rid of the $10 a day federal child care program.  But too many families now love it and depend on the increased child care affordability that has made their lives better.  So instead Peter Jon argues that the Canada Child Benefit or the Child Care Expense Deduction should be amended to provide child care assistance to those who can’t find child care.  But neither solution would be much help.  The Canada Child Benefit goes to nearly every family independent of whether they want to use any form of child care so this would be a very expensive way to deliver assistance.  And the type of tax credit that Peter Jon would use to replace the Expense Deduction has been an unmitigated disaster for child care quality in Quebec, as the charts below show.

Peter Jon hopes to convince us that the federal child care funding program is a complete failure and shambles, so he throws as much mud as possible at the wall to see if any of it will stick.  He has these complaints about the program:

  1. Space creation is difficult because the child care agreements favour expansion predominantly in the not-for-profit/public/family child care sector
  2. Many existing licensed spaces are empty or not operating
  3. Most children under six years of age don’t benefit from the program
  4. Only 71% of centres are in CWELCC – the federally funded program
  5. The program breeds inequality. Child care enrolment by low-income families is declining – by 31% in Ontario.
  1. Not-for-profit

The not-for-profit issue has been tested in practice.  As Peter Jon reminds us  “Quebec’s daycare program, upon which the CWELCC is modelled, has long depended on private, for-profit childcare businesses.”  It’s true that since about 2010, Quebec has relied on a tax-credit-funded expansion of for-profit child care operators.  There are three types of centres in Quebec. There are the CPEs which are not-for-profit community-based centres that charge a flat fee less than $10 a day.  There are the funded for-profit child care centres (shown as GS on the charts) that also charge the low flat fee. There are the tax-credit-funded child care centres that grew since about 2010, shown as GNS on the charts.

It might surprise Mr. Mitchell to hear that Quebec Families Minister Mathieu Lacombe told the Globe and Mail in 2022 that “allowing for the expansion of private daycares was the biggest mistake that the Quebec government committed in the last 25 years.”   And the Quebec Auditor General has shown us why in her 2023-24 report, reflected in the charts below. 

The first chart shows us the results for on-site quality evaluations by the Ministry.  The other shows us the percent of centres that fail to meet the current requirements for fully-qualified staff (which is one out of every two staff).  Together they indicate that for-profit child care, which seems to be Peter Jon’s preference for the rest of Canada, is much lower in quality and cuts costs by avoiding hiring the required numbers of qualified staff, compared to the not-for-profit CPEs. 

So, yes, there are good reasons to want space creation to take place predominantly in the not-for-profit and public sectors.  Relying on for-profit expansion may seem faster and cheaper in the short run, but at what cost for our children’s future?

  1. Enrolment

It’s true that there are too many existing licensed spaces that are empty or not operating.  The Auditor General of Ontario found this was true of 27% of the funded spaces in Ontario, but it is also true elsewhere.  The substantial majority of this is due to staffing shortages.  Early Childhood Educators in most of Canada require a college education to be a fully-qualified educator, but they earn wages that are surprisingly low.  As a result about half of all new hires in child care do not stick around for very long.  Recruitment and retention of staff both fall well behind what is needed. 

However, empty spaces suggest a solution different from Peter Jon’s – raise educator wages and benefits closer to the average wage in the province or territory.  I’m sure that many trained educators currently working in retail and elsewhere will come flooding back to allow the spaces to open.  Families would be happy, educators would be happy and the child care system would be more stable.  The number of parents having difficulty finding child care would drop fast.

  • How many children benefit?

Peter Jon says that most children in Canada don’t benefit from CWELCC.  CWELCC is intended to be a universal program, but that doesn’t mean that everyone will want to use child care from their child’s birth through until school.  Many families take a year or more off after a child’s birth using maternity and parental leave to spend time with their infant.  Many families live in jurisdictions with full-day kindergarten, sometimes for both four and five year olds and don’t need additional child care beyond that.  Some parents want to stay home with their young child and do not need child care. 

If we looked only at families where the main caregiving parent was employed, was not on maternity/parental leave, and whose child was not in kindergarten, then already in 2023, 62% of Canadian children were enrolled in and attending some form of licensed child care across Canada, most of it receiving federal funding.  We still have a way to go to serve all children who need or want good quality affordable child care, but we’re much farther forward than Peter Jon says we are.

  • Is it true that nearly 30% of centres are not in CWELCC?

In fact, there are very few eligible centres not enrolled in the CWELCC program.  Mr. Mitchell should be more careful with his “facts”. 

The source he cites looks at centres serving children 0-12. This data source says that only 71% of centres said they were enrolled in CWELCC.  But many of these centres serve only school-age children and these centres are not eligible to get federal funding, which is only for children 0-5. 

Ontario is the province (outside Quebec) with the largest number of centres that are not part of CWELCC and as of March 31, 2025, 91.8% of all centres serving children 0-5 in Ontario were enrolled in the CWELCC program.

  • Child care enrolment by low-income families

This is a serious issue, but Peter Jon misunderstands it.  It is true that the Auditor General of Ontario recently found that the number of children receiving child care subsidies in that province has declined by 31%.  But that is compared to 2019 before CWELCC started, and the decline in subsidies before Ontario signed onto CWELCC was more rapid than since that time.  

 There is a legitimate worry that not enough low-income families will be able to access newly available spaces.  The Auditor General cited favourably a program in one region where a percent of spaces in each centre are reserved for children receiving child care subsidies.  This might be a useful reform that I hope Peter Jon would support.  Already, there has been a strong prioritization for child care expansion in Ontario to favour underserved areas with more vulnerable populations.

However, rather than look only at subsidies, there is more comprehensive data on child care use by family income that comes from a 2023 parent survey done by Statistics Canada.  Here’s what it shows:

The data suggests, yes, that access to licensed child care by lower income families is not as high as for the more affluent.  But the differences are probably smaller than you thought they were.  I don’t mean to minimize the issue.  Most studies show that children from lower-income or vulnerable families are especially likely to benefit from quality child care.  So working on this issue is a high priority.  However, the sky is not falling.  It is just a persistent problem that provincial and territorial  child care systems need to address.  In fact, it is a persistent problem in child care systems, no matter how they are funded, often less so the more universal the service is.

Instead of trashing the $10 a day child care program, maybe Peter Jon Mitchell should spend his time lobbying the Alberta Government to re-instate the child care subsidy system that they completely eliminated  this year!  This will definitely hurt lower and middle income families in Alberta.  The Alberta Minister complained at the time that federal funding regulations did not allow him to fund a targeted program like child care subsidy.  However, he had a subsidy system receiving federal funding ever since signing the CWELCC agreement with Ottawa, and nearly all other provinces have child care subsidy systems, so that excuse is untrue.  Alberta should re-instate its subsidy system as part of its CWELCC funding. 

What is to be done?

The $10 a day child care program is only partly developed and is far from perfect.   Much more affordable licensed child care is now wanted by many more parents.  Of course.  And expansion of services is too slow. There is little capital funding and too little planning for expansion of not-for-profit child care.  Also, crucially, child care wages in most provinces are too low to attract qualified educators. 

Making child care more accessible is central to the health of the program.  I hope Mark Carney recognizes that in the upcoming budget.  After all, isn’t a universal child care system a pillar of the new economy that families with children need – the kind of nation-building project that will make Canada stronger, fairer, and more affordable?

Posted on

A NEW STATISTICS CANADA REPORT ON CANADA’S CHILD CARE WORKFORCE

One of the main barriers to expansion of child care supply is a widespread shortage of qualified educators.  This is mostly due to wages and benefits that are insufficiently high to attract and retain staff.  As a result, there are long waiting lists to get into licensed child care (115,000 children with mothers whose main activity is paid work). 

We do not have much good current data on our child care workforce, but Statistics Canada is attempting to begin to fill that hole.   Towards the end of December last year, Leanne Findlay and Thomas Charters from Statistics Canada published a report on child care workers who care for children 0-5 years of age.  The data is from 2021-22 and its source is the 2022 Canadian Survey on the Provision of Child Care Services (CSPCCS).

The authors restrict the sample to look only at centres who provide child care to children 0-5 years of age, and they address several issues:

  • Centre employees –  hours, training and roles
  • Typical rates of pay
  • Numbers hired, departed and staff vacancies
  • How all of the above vary by auspice and organizational structure

There are some important findings and observations in this study.   The study reports on weighted results for nearly 12,000 centres serving children 0-5.  Nearly half (48.6%) of child care centres serving children 0-5 are for-profit.  Centres employ nearly 137,000 staff, including full-time and part-time, program staff, supervisors, and support staff.  Nearly 90,000 of these employees are in Ontario and Quebec, and close to 15,000 each in Alberta and B.C. About 38% of these staff are hired in multi-site centres and about 62% in single-site centres.

A typical centre has about 56 children and close to 12 staff.  About 8 of these are front-line program staff.  There are either 1 or 2 supervisors and between 1 and 2 support staff.

Staff Qualifications

Most centres (83%) have a supervisor with an ECE certificate, diploma or degree.  For-profit single-site centres are below this average at 77%.

50% of centres have at least one staff member with no ECE training, and in those centres on average there are 3.7 staff members with no training.  47% of centres have at least one staff member with training of less than one year and on average in those centres there are 3.1 staff members with this modest level of training.  88% of centres have at least one staff member with a one-, two-, or three-year ECE certificate or diploma and these centres have on average 6.5 staff members with this level of training.  Finally, 17% of centres have at least one staff member with a four-year ECE degree or higher and on average these centres have 4 staff members with this level of training/education.

Wages

Survey respondents provided information about the most typically paid hourly wage rates for different categories of staff.  The average for supervisors was $27.80 per hour, but for-profit centres paid between $25 and $26 typically, and not-for-profit centres on average paid between $29 and $32. 

The same pattern was seen for wages of staff with an ECE credential – the for-profits paid an hourly average wage of between $20.50 and $21.50.  The not-for-profits paid between $22.50 and $23.00. 

Unfortunately, the wage question asked respondents to include wage enhancements but not provincial top-ups when reporting on staff wages.  This may have resulted in underreporting of wages in some centres.     In any case, it is obvious that typical wages in the sector are rather low.

Benefits

Amazingly, only about 76% of centres report that they provide any benefits at all to centre employees!  Those benefits include supplementary health and dental plans, life or disability insurance, pension plan contributions or group RRSPs, paid sick leave, paid vacation leave and financial assistance or paid time for training. 

The provision of benefits varies a lot by auspice and organizational structure.  Only about 62% of the single-site for-profits have any employee benefits.  Between 78% and 79% of both the multi-site for-profits and the single-site non-profits offer some employee benefits.  On the other hand, 93% of multi-site non-profit centres have at least some employee benefits. 

The biggest gap appears to be in pension benefits.  Only about 20% of for-profit centres of either kind have some pension or RRSP benefits.  About 46% of single-site non-profits have these benefits and 63% of multi-site non-profits do, as well.

Vacancies

The survey also provides information about job vacancies experienced by centres.  In April 2022, there were 7,560 vacancies in centres for ECE positions and another 2,960 vacancies for non-ECE positions.  In other words, nearly 8% of staff positions were vacant.  No wonder expansion of services has been slow and difficult.  In fact, 35% of centres had at least one vacancy for an employee with ECE credentials or training.

All of these issues are good ones to look at and the authors have done a good job with the data, but there are problems that affect interpretation and clarity.  In particular, the data is cross-Canada data; the sample size was too small to break responses down by province and territory. 

Further, CSPCCS is not a survey of members of the child care workforce, with questions answered by each staff member.  Instead, the CSPCCS is a survey of centres, so the respondent is some representative of the centre, and the responses are statements about the whole centre, not about the individual staff member.  So, there is less detail than you would like in some answers.  As an example, the categories for staff qualifications are (1) No ECE-related training, (2) ECE training of less than one year, (3) one, two or three year ECE certificate or diploma, (4) Four-year ECE degree or higher.  So, we can’t see how many staff have certificates vs. diplomas.  That’s potentially a very important difference.

The information is useful, but we still need a workforce survey where the respondents are individual supervisors, educators and assistants (and perhaps support staff as well).  That kind of survey, with a large enough sample, would allow us to get more detailed information about qualifications, remuneration, and recruitment and retention issues. 

Posted on

Turnover and Labour Supply in the Early Care and Education Sector

If we raise wages in the licensed child care sector in Canada, will it make much difference?  How much difference would it make? 

There’s not much research around that can help us answer these questions.  And yet, they are really important to policy makers, to advocates and to parents who are trying to find scarce child care spots.

Now, some really capable economists in the U.S. have published a paper (Cunha and Lee, 2023) in the National Bureau of Economic Research Working Paper series that can help us.  There’s a lot in this paper, but our focus is more narrow.  Let me summarize some key results of interest. 

Turnover is defined as moving out of the child care industry (NAICS code 624410) over the course of one year, between the third quarter of one year and the second quarter of the next. 

The authors are concerned with turnover in the sector, because they believe that turnover is likely to negatively affect children’s development.  Overall, turnover rates are 39% in the ECE sector in Texas where their data is from and that’s quite a bit higher than in other sectors.  And turnover is higher for workers with a college education, which means that workers with more education are more likely to leave. 

The authors estimate that the elasticity of turnover is -0.5, which is to say that a 20% rise in staff compensation will reduce turnover by about 10%. 

The authors go on to estimate the elasticity of labour supply in the ECE sector and find it is equal to 2.0.  To put it another way, an earnings increase of 25% in labour income in the ECE sector would be likely to lead to a 50% increase in employment in the sector. We can say, therefore that labour supply in this sector is highly elastic – highly sensitive to changes in compensation.  If we are able to raise child care staff wages in Canada, we should expect it to have a strong impact on recruitment and retention.

There are previous estimates of labour supply elasticities in the ECE sector in the U.S. by David Blau (1993, 2001), but they are from quite a few years ago.  He, too, found that labour supply in ECE is quite sensitive to compensation levels.  His overall estimates of labour supply elasticity were 1.94 and 1.15.  He was able to estimate what are called the extensive, intensive and total elasticities.  The extensive elasticity refers to the decision to be employed as an ECE or not.  The intensive elasticity refers to the decision to work a larger number of hours.  The total is the sum of the two.  In 1993, his estimates were 1.2 for the extensive elasticity,  0.74 for the intensive elasticity, and 1.94 for the total.  In 2001, using different data, his estimates were 0.73 for the extensive, 0.42 for the intensive and 1.15 for the total.

.

REFERENCES

Blau, David M. (1993) The Supply of Child Care Labor.  Journal of Labor Economics 11(2): 324-347. 

Blau, David M. (2001) The Child Care Problem: An Economic Analysis.  New York: Russell Sage Foundation.


Cunha, Flavio. and Lee, Marcus. (2023) One Says Goodbye, Another Says Hello: Turnover and Compensation in the Early Care and Education Sector.  Working Paper 31869, National Bureau of Economic Research. Cambridge, MA.

Posted on

What  the Australian Competition and Consumer Commission Can Tell Us About For-Profit Child Care

What would Canada’s child care system look like if we let it be dominated by for-profit child care providers?  Particularly with Pierre Poilievre lurking in the wings, it’s an interesting question to ask.

So, into my inbox arrives a fascinating study from what they call the “A triple-C” (ACCC) or Australian Competition and Consumer Commission.  When the new Labor Prime Minister of Australia – Anthony Albanese – arrived in office in 2022, he commissioned two big studies of child care.  He asked the ACCC to examine how well or badly the market for child care was working.  And he asked the Productivity Commission – a permanent body rather like the old Economic Council of Canada – to report on how best to make child care universally accessible and affordable in Australia.

Both of these bodies have now produced Interim Reports.  This blog post will comment on the one from the ACCC.  The ACCC report focuses on the cost of producing child care services, the nature of competition in child care markets and the effectiveness of Australian government attempts to regulate child care fees.

You don’t want to read the whole report, so let me cherry-pick some findings for you.

  • The cost of child care in Australia is pretty high.  Centre-based child care fees per hour (averaged across ages 0-5) were $11.72 in 2022 or $117.20 for a 10-hour day. 
  • Australia’s Child Care Subsidy system (like a tax credit for child care expenses) costs the government a lot but does not make child care affordable.  For a couple on average wages with 2 children (aged 2 and 3) in centre based day care full-time, net child care costs came to 16% of net household income in 2022. In contrast, the average for OECD countries was 9%, with Australia ranked 26th out of 32 countries. This is despite the Australian Government contribution to fees being significantly higher than most other OECD countries – 16% in Australia compared to the OECD average of 7%.
  • From 2018 to 2022, gross fees in Australia increased by 20.6% in comparison to the OECD average of 9.5%.
  • Looking at detailed data on the cost of producing centre-based child care for children younger than school age, 69% was accounted for by labour costs, 15% by land/occupancy, and 9% by finance and administration costs.  But these proportions are quite a bit different for for-profit and not-for-profit providers.  69% of centre-based child care services in Australia are provided by for-profit operators.
  • Land and occupancy costs are about 18% of the total of all costs for large for-profit providers compared to about 10% for large not-for-profit providers. This is not due to what the Aussies call “peppercorn rents” (i.e., below-market rents provided on a goodwill basis).  As the ACCC report says, this may be due to non-arms-length transactions in land rental of for-profit providers (to be investigated in the final report).
  • Not-for-profit child care operators pay a higher proportion in labour costs for two reasons.  They are much more likely to pay “above-award” wages – in other words, wages that are above the minimums set by the Fair Work Commission wage grid.  About 95% of the staff in not-for-profit centres are paid “above-award” compared to 64% in for-profit centres.  The second reason is that not-for-profit providers are much more likely to hire their staff on a full-time basis, whereas for-profit providers primarily rely on part-time staff.  As the report suggests: “large not-for-profit centre-based day care providers invest savings from lower land costs into labour costs, to improve the quality of their services and their ability to compete in their relevant markets.”  The ACCC finds that centre-based day care services with a higher proportion of staff paid above award and with lower staff turnover have a higher quality rating under the National Quality Standard. 
  • The ACCC finds that parents and guardians typically prefer centr- based day care services located close to their home. Most households travel a short distance to child care – between 2 and 3 kilometres.
  • Parents’ and guardians’ perception of quality is a key factor driving decisions for selecting a child care service. As child care is an ‘experience good’, meaning it is difficult to accurately determine quality of a child care service without having used it, parents and guardians appear to rely on informal measures of quality over formal National Quality Standard ratings.
  • Providers’ decisions to establish child care centres are highly influenced by expectations of profitability within a particular area or market, which are driven by expectations of demand and willingness to pay. The willingness to pay for child care within a local area is heavily influenced by household incomes, as this influences the opportunity costs of not using child care services. These factors encourage supply to markets where demand for child care is highest, and parents and guardians are likely willing to pay higher prices. In particular, for-profit providers are more likely to supply these markets as the opportunity for profit is greater.
  • These markets tend to be in metropolitan areas of higher socio-economic advantage. This higher demand and greater willingness to pay explains why we find operating margins are higher in areas of higher socio-economic advantage and Major Cities of Australia.  The child care sector is widely viewed as a safe and strong investment with guaranteed returns, backed by a government safety net
  • While providers’ supply decisions are generally driven by considerations of viability, we note that there are providers that supply some services at a loss. This reflects that – like many other human services – child care plays an important societal role. This results in not-for- profit providers accounting for a greater proportion of services in areas of very low advantage.
  • The nature of child care markets and the role played by price, as well as the impact of the Child Care Subsidy, also mean it is unlikely that market forces alone will act as an effective constraint on prices to ensure affordability for households (including households with low incomes and vulnerable cohorts) and to minimise the burden on taxpayers.
  • Large for-profit providers of centre based day care have consistently had higher profit and operating margins than not-for-profits since 2018. The average profit margin for large centre based day care providers was about 9% for for-profit providers and about 6% for not-for- profit providers in 2022.

In conclusion, the ACCC sees substantial benefit in a detailed consideration of supply-side models, the role of market stewardship and direct price controls for child care services. There will be a final report from the ACCC soon.