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.



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.


It is now widely acknowledged that the pay of early childhood educators is too low.  Comparisons of ECE hourly wages to those in other competing occupations show that educators are paid as if they had a high school education rather than a college certificate or diploma.  We can see the effects of this in the extreme shortages of fully-qualified ECEs for existing and new child care facilities.  In most Canadian provinces and territories, growth in spaces is held back as much by the lack of staff as it is by the lack of organizational and financial support for planned and funded expansion.  

The big questions for governments are (1) how much will it cost to raise wages? (2) how should they do it? and (3) who will pay? 

Up till now, it’s been hard to answer the “cost” question because we haven’t had good data on how many program staff work in licensed services and what their average wages are now. 

I’ve spent a large amount of time pulling together and analyzing the best publicly available data on this, province by province (sorry, I haven’t done the Territories yet).  The details of this (staff numbers and typical wages by qualification level for each province) will appear in another blog on this site once I have finished crossing the t’s and dotting the i’s (lots of numbers and boring reading for most people).  But, using those numbers, I can now make estimates of how much raising ECE wages will cost.  If you have better numbers, I’m happy for you to send them to me so I can make revisions.

The table below shows my estimates of how much it would cost to raise the wages of fully-qualified ECEs across the country by 25% from whatever their current level is.  For the average ECE, that would mean a raise of $5 to $7 an hour from current levels.  I’m not trying to say that’s enough, or that this is the right way to raise ECE wages.  If I look at the data on wage comparisons to other occupations, it very likely isn’t enough.  But, it may begin to move the needle on the supply of early childhood educators.  It may encourage more new ECE graduates and existing ECEs to stay in the sector. 

Have a look at the last column province by province. Each cell shows the overall cost of raising qualified ECE hourly wages by 25% compared to what they are now (including the effects of wage grids, wage grants and wage supplements).

This is simply a simulation to give us all an idea of how much it will cost to have a significant rise in ECE wages.  It is not a carefully thought out design for wage increases. What is needed will vary from one province to another; some provinces have done a lot already, others have done little.  In provinces with generally high wage levels for all types of workers, a 25% rise in ECE wages may not do very much. In provinces that have already done a lot to raise wage levels and establish wage grids, a 25% wage rise might be very significant.

To see all of the columns, view the table below in a new window


ProvinceNumber fully-qualified incl directors/ supervisorsNumber of less qualifiedTotal program staffTotal FTE program staffCurrent annual wage bill ($ mil)Cost of 25% increase for fully-qualified ($ mil)
QC (0-4)29,00010,30039,30035,000$1,576.0+$315.9
CA – QC76,67545,450122,125110,450$4,879.5+$882.1
To see all of the columns, view the table above in a new window
  • Fully-qualified refers to ECEs with a 1-year college ECE certificate or a 2-year college ECE diploma, or more.
  • These calculations are produced by Gordon Cleveland, based on the estimated wages and staff numbers in Estimates of Staff Numbers and Wages in ELCC Centres, by Province, August 16, 2023.  Numbers for the Territories are not yet included.
  • It is assumed that wages would have to rise equally for ECEs caring for children 6-12 years of age.  However, in Quebec where fully-qualified staff caring for children 5-12 years are employed by the school system, numbers refer only to staff caring for children 0-4.

These numbers do not include the extra cost of compulsory benefits like contributions to pay for EI and CPP/QPP and vacation pay.  That would add another 15%-18%, perhaps.  However, these estimates do include an allowance for supply staff.

There is no magic in this 25% wage rise simulation.  But, now, with data on current numbers of staff and on current wage levels, we can do whatever simulations we think are appropriate and estimate the costs of taking action (and compare them to the costs of inaction).  That, I think, is a big step forward.

With these simulations in hand, we can turn to the next two questions.  Question #2 was how exactly we should raise wages.  That debate is too big for this blogpost, but let me make some observations. I believe that the big staff supply problem is centred in the inadequate supply of fully-qualified early childhood educators, whether that is a one-year ECE college certificate or a two-year ECE college diploma.  Recruiting untrained staff or recruiting staff that need to take only an orientation course or two is not where the problem lies.  That means we need to concentrate our scarce funds on raising the wages of qualified educators.

And once we have decided to concentrate our wage-raising efforts on fully-qualified staff, we need to avoid the Ontario mistake.  Ontario decided to raise wages by concentrating their efforts on low-paid educators.  In 2022, they boosted all early childhood educators earning less than $18 an hour up to $18, but they did nothing for anyone else.  In 2023 and beyond, they are raising the pay of other educators by $1 per hour each year, but only if the educators currently earn less than $25 an hour; $25 is the top wage for this program.  This focus only on low-paid educators ensures that ECE will continue to be a low-paid profession; even $25 an hour will keep educators well below competing occupations.

And, the Ontario wage supplement design ensures that most of the wage assistance will go to centres that previously were underpaying their workers, disproportionately those in the for-profit sector.  The Doug Ford government is developing a bit of a reputation for favouring for-profit friends, whether it be the Greenbelt or child care, but this kind of wage supplement design will not do a good job of retaining the best-qualified and most experienced staff and making ECE an attractive profession.

Finally, there is the question of who will pay.  I would be overjoyed if the federal government decided to come up with a billion dollars of extra annual funding, but I don’t think that will happen very soon, and wage rises do need to happen very soon.  Some provinces may be willing to up their spending to solve wage problems, and that is welcome.  But the most obvious immediate place to get funding for educator wages is to change priorities for the expenditure of federal dollars under the Canada-Wide Early Learning and Child Care Agreements.  The very large majority of the federal funds under current Action Plans goes to lowering parent fees.  Right now, many provinces are renegotiating Action Plans to cover the next three years.  Why not allocate a larger portion of money in the next three years to cover wage increases for fully-qualified early childhood educators?  And there should be provincial contributions to cover the wage increases for staff caring for 6-12 year-olds. 

The numbers in the table above tell us about how much reallocation of dollars is needed in each province.  Let’s get it done, or expansion will not happen and access to affordable child care will continue to be a dream for most families.