It’s no secret that the child care industry has been grappling with staffing shortages and high turnover for many months. When federal funding abruptly expired for 220,000 child care programs in September of 2023, it only exacerbated this shortage, with turnover rates for child care workers currently as high as 40 percent in some states, with a gap of 500,000 positions nationwide.
This labor shortage not only affects the child care industry but also virtually every other industry, as working parents depend on reliable child care to maintain their careers. Research estimates the shortage and recent child care cliff could cost states $10.6 billion in economic activity. While there isn’t a single, simple solution to solving this crisis, we believe that changing the pace of pay can play a part in recruiting and retaining child care workers.
Changing the pace of pay: one piece of the puzzle
The first thing that must be done to address this crisis is to pay child care workers a livable wage. But organizations must go beyond this basic non-negotiable to provide other perks and incentives to their staff—ones that can make a meaningful impact on their day-to-day lives, thereby helping boost morale and retention.
It’s no secret that the traditional two-week pay schedule has been failing most of America. With close to 60% of Americans living paycheck to paycheck, most adults don’t have enough savings to cover an unexpected $1000 expense. Providing faster access to earnings can improve cash flow for your child care staff, making it easier for workers to stay on top of essential bills and be prepared for unexpected expenses.
Faster pay solutions for child care workers
There are multiple options for accelerating pay to your child care staff. One is through earned wage access, which grants employees access to a portion of their earnings ahead of their regular payday if needed. This can be an invaluable tool people can use for unexpected bills or expenses, and a better alternative to high-interest payday loans or credit card debt for dealing with financial curveballs.
You might also offer instant digital disbursements to independent child care workers or 1099 staff such as nannies. These digital payments can be made as soon as after each shift, allowing child care workers immediate access to their pay and a renewed incentive to stick with you in today’s competitive market.
And lastly, ensuring that all child care staff have access to direct deposit via a digital wallet—so they don’t have to wait to cash a check—can streamline your paydays while incentivizing your staff. It ensures that all your staff are paid seamlessly and digitally, without the hassle of making trips to the bank. Plus, it allows them to eliminate unnecessary fees from traditional banking options such as overdraft and minimum balance fees.
In turn, a solution that also comes with fee-free financial services can come in handy for unbanked or underbanked workers, who can use a solution like Branch to not only receive their earnings, but gain access to a free digital wallet and debit card, to boot. For employees without a longstanding financial history or who have faced obstacles in becoming banked, being able to issue access to a free digital account and debit card as quickly as Day 1 on the job can be seen as a major tool to keep workers engaged and happy.
Caring for child caregivers through accelerated pay
Similar to the ongoing labor shortages in other industries like healthcare or education, the child care shortage is only expected to continue unless action is taken, with caregivers fed up with inadequate wages, burnout, and dwindling support. By selecting accelerated payment options for your child care staff, you demonstrate that you value their meaningful work and want to offer meaningful benefits in return.
In today’s economic climate, being able to boost cash flow and grant access to fee-free financial services has the potential to change lives and help your staff gain more secure financial footing. It’s incentives like these that will be absolutely pivotal in coming back from the child care crisis and stabilizing an industry that so many other industries depend on.