Early Childhood Educator Pay Equity Fund: Washington, D.C.
Published on: August 19, 2025
MORE ABOUT THE STRATEGY USED IN THIS CASE STUDY Early childhood workforce supports
At-a-Glance
Summary
For years, pay rates for early educators in Washington D.C. were below the city’s living wage, with the poverty rate of these teachers nearly three times as high as the overall rate for D.C. workers. Low compensation levels contributed to stressful working conditions and high workforce turnover rates in the sector, impacting the stability of child care providers and the quality and availability of care.
In 2021, the D.C. City Council embraced a first-in-the-nation approach to address the child care workforce crisis by creating the Early Childhood Educator Pay Equity Fund. The core goal of the fund is to create compensation parity with D.C. public school teachers in similar roles and with similar education levels. To reach this goal, City Council levied a new tax on high earners in the District to fund direct wage subsidies for early childhood educators working at licensed providers. The supplemental pay varies depending on teachers’ part- or full-time status and their educational credentials. The fund also subsidizes the cost of health insurance premiums.
Program evaluations have shown a range of clear benefits created by the Pay Equity Fund. Financial wellbeing and mental health has improved among participating educators. Providers have seen staff retention rates rise significantly. Overall early child care employment levels in Washington D.C. have risen, and a majority of child care providers say the quality of care has improved. A 2024 Mathematica study found that the Pay Equity Fund’s one-year return on investment is 23%: In other words, every dollar invested in the Fund has returned $1.23 to society.
Results and Accomplishments
$194 million
The total amount distributed through the Pay Equity Fund as of June 2025 to boost the pay of early educators across the District of Columbia, supporting 365 child development centers.
69%
Percentage of educators who agreed that their employer’s participation in the Pay Equity Fund is part of the reason they plan to stay in their current job.
18%
The percentage reduction in risk of food insecurity experienced by educators whose employers participated in the fund.
Improving staff retention: Higher compensation levels have had a clear positive impact on teachers’ commitment to their roles and interest in working in the sector. Directors of child care providers participating in the Pay Equity Fund say that educators are much less likely to quit and are less likely to leave the sector. Educators benefiting from the fund were nearly twice as likely to be satisfied or very satisfied with their pay—69 percent, compared with 37 percent of those whose employers did not opt into the fund, according to one study.
Improving financial wellbeing and mental health: The wages of D.C. early childhood educators have risen by $10,000 annually, on average, since the Pay Equity Fund launched in 2022. That significant pay bump has had clear effects in terms of personal finances. Many teachers can now keep up with their bills and some have been able to buy a home. The connection between financial wellbeing and improved mental health is also clear: A Fall 2024 survey found that educators were far less likely to report depression (25% vs. 48%) or anxiety (11% vs. 28%) compared to educators whose employers did not participate.
Expanding supply of high-quality child care: The Pay Equity Fund has bolstered high-quality child care in D.C. in a few different ways. Less staff turnover means more steady relationships between children and their teachers. Because they are more financially secure, educators are happier and more motivated. Because Pay Equity Fund payments are tied to credentials, the Fund incentivizes professional education, helping to produce more highly credentialed early childhood educators. Finally, better pay has led to increased overall employment in the sector in D.C., increasing the number of spots for children available at licensed providers. A 2024 study found that the Fund increased early child care employment by nearly 7% (or 219 teachers). A majority (57%) of child development center owners/directors agreed or strongly agreed that “educators are better able to provide high-quality interactions with children," another study found.
Providing a clear return on investment: Research has shown that the Pay Equity Fund is a public investment that more than pays for itself. The benefits it produces for child care providers and educators, children and parents exceed the program’s cost, according to a 2024 study by Mathematica. The study found that the Pay Equity Fund’s one-year return on investment is 23%. In other words, every dollar invested in the Fund returns $1.23 to society.
Modeling change: Since D.C.’s Pay Equity Fund launched, a number of U.S. states have taken action to stabilize the early education sector through increased compensation, including wage subsidies. And in March 2025, a bipartisan group of lawmakers in the U.S. Senate and House of Representatives introduced legislation that would create a national grant program to provide supplementary pay to home-based and center-based licensed child care providers.
Overview
What was the challenge?
Underpaid child care workers: Child care workers are some of the lowest-paid workers in the U.S., even though they play an essential role from both a child development and broader economic perspective (by enabling parents to work). Early childhood educators in Washington D.C. and across the country have long been under-compensated, compared to K-12 educators with similar roles, credentials and experience levels.
Unequal pay among teachers with similar credentials: Prior to the Pay Equity Fund, early educators with a bachelor’s degree who were working in home- and center-based child care providers in D.C. were paid 33% less than their peers teaching grades K-8. In 2021, hourly compensation for early educators in the District was below the area’s living wage, and the poverty rate of these educators was nearly three times as high as the overall rate for D.C. workers (34% vs. 12%).
Stressful working conditions lead to poor outcomes: Low wages were creating financial and emotional stress for early childhood educators, making high-quality teacher-child interactions that facilitate learning less likely. Providers were also experiencing high employee turnover rates as teachers sought greater financial stability.
Unreliable care and child care shortages: High employee turnover rates make providers’ early education services less reliable, posing challenges to working parents. And with providers barely able to break even and attract adequate teaching talent, there is a nationwide shortage of affordable and accessible child care in the U.S. The impact on working parents—especially mothers—is enormous.
What was the solution?
Providing early childhood educators with supplementary pay to meet newly established minimum salary levels: Washington D.C.’s Early Childhood Educator Pay Equity Fund is a first-in-the-nation solution to increase early educators’ pay to reach compensation parity with D.C. public school teachers in similar roles and with similar education levels. The subsidies address a fundamental market failure that negatively impacts early educators: Providers can’t pay more because customers (parents) cannot afford higher tuition and other sources of operating revenue rarely exist. The Pay Equity Fund has provided an average annual wage subsidy of $10,000 to participating educators.
Broad potential eligibility: Early educators working in teacher or assistant teacher roles at child development facilities (CDF) licensed by OSSE—these include both home-based child care organizations and larger child care centers—are eligible for wage subsidies. (Directors, managers and other non-teaching administrators working at licensed facilities are not eligible.) There are a few requirements: A CDF must opt into the program and agree to meet minimum salary requirements defined by an employee’s role and credentials.
Providing early childhood educators with healthcare insurance subsidies: Many child care providers are unable to offer health insurance benefits to staff. Beginning in 2023, child care provider staff (and their dependents) who are DC residents gained the ability to access subsidized insurance through D.C.’s HealthCare4ChildCare initiative. (Employees can choose to opt into the program whether or not their employer participates in the Pay Equity Fund program.) These subsidies advance the Fund’s mission of achieving parity in both wages and benefits between public school teachers and early educators. Offering health insurance also addresses the fact that some educators no longer qualify for Medicaid-based insurance after accepting Pay Equity fund payments.
Who was involved?
- D.C. Council and Mayor Muriel Bowser:Washington D.C.’s City Council played a lead role in setting an early education sector reform agenda. With leadership from At-Large Councilmember Christina Henderson, D.C. Council created the Early Childhood Educator Pay Equity Fund with mayoral support in 2021. A majority of Council members have supported the Pay Equity Fund in the years since, and Council members lobbied Mayor Bowser to continue funding it in her annual budget proposals. Mayor Bowser included full funding for the program in her proposed FY2026 budget.
Early Childhood Educator Equitable Compensation Task Force: Created by the D.C. Council in 2021, the Task Force played a central role in bringing the Pay Equity Fund to life. Task force members included early childhood educators and child care center directors, parents and policy experts and practitioners. They consulted national experts and worked together to make recommendations for how to implement the fund, including specific wage subsidy levels for child care workers depending on their role and professional credentials. The D.C. Council enacted the Task Force’s proposed salary scale.
D.C. Office of the State Superintendent of Education (OSSE): As D.C.’s state education agency, OSSE is charged with ensuring District families have access to high-quality child care. OSSE licenses and monitors child care providers in the District and has administered the Pay Equity Fund program from its inception. OSSE’s Deputy Superintendent of Early Learning Sara Mead served on the Task Force.
Child care providers: Across Washington D.C., there are approximately 321 providers operating licensed child care facilities—including both home-based facilities and larger centers—eligible for the Pay Equity Fund program. The presidents of the DC Family Child Care Association and the Multicultural Spanish Speaking Providers Association both served on the Task Force.
Early childhood educators: Although many preschool teachers and other early childhood educators working across D.C. have earned professional credentials (including associate’s and bachelor’s degrees), the median wage for a child care worker in D.C. was $15.36 in 2019. A child care center teacher and the executive director of the District of Columbia Association for the Education of Young Children were Task Force members.
Working parents with young children: These parents rely on reliable child care to continue working. And their children benefit from high-quality care provided by happy, motivated and highly-qualified educators. A parent of a preschool-age child also served on the Task Force, helping to inform program design.
DC Health Benefit Exchange Authority: This D.C. government agency implements the District's health insurance exchange under the Affordable Care Act and administers HealthCare4ChildCare under an MOU with OSSE. The agency also provides grants to community groups that provide health literacy education and assistance to child care providers and staff navigating the insurance marketplace.
What factors drove success?
Focusing on compensation: The core idea of the Pay Equity Fund program is easy to understand: early childhood educators deserve to be paid at the same levels of D.C. public school teachers. The program’s wage subsidies are an acknowledgment of structural forces that keep the sector’s normal pay levels unfairly low. The relative simplicity of the program helped ensure that uptake by educators and providers was fast and broad.
Building child care sector buy-in: Recognizing the complexity of establishing educators’ salary scale levels tied to specific roles and credentials, the D.C. Council created the Early Childhood Educator Equitable Compensation Task Force in 2021 at the same time it created the Pay Equity Fund. Task force members included early childhood educators and child care center directors, among other key stakeholders. They worked together to make recommendations for how to implement the fund, including specific wage subsidy levels for child care workers depending on their role and professional credentials. The D.C. Council enacted the Task Force’s proposed salary scale.
Partnering with providers: OSSE leaders were mindful that by creating a new salary scale for early childhood educators, the Pay Equity Fund program involved a new level of government involvement in private businesses in D.C. As the government agency administering the program, including designing processes to deliver wage subsidies through providers’ payroll systems, OSSE emphasized thoughtful communication and stakeholder engagement. A goal was to forge partnerships with providers grounded in an understanding of how the organizations operate.
Integrating program administration to support fast implementation: From the program’s inception, OSSE has worked to tie Pay Equity Fund administrative activities into existing systems and teams. For example, the agency’s early education provider licensing team played a key role in quickly implementing the program. (Only educators at licensed providers can benefit from the fund.) This allowed OSSE to successfully stand up a first-of-its-kind program on an aggressive timeline.
Robust evaluations of program impacts: Evaluations of the Pay Equity Fund program have demonstrated positive impacts and helped advocates build support for continued funding. Research conducted in partnership with OSSE since 2022 has documented benefits to early child care educators and providers, and the quality of child care, among other areas.
What were the major obstacles?
Transitioning to provide supplemental payments through provider payroll: At the end of 2023, OSSE began routing payments for educators through providers’ payroll, rather than making lump-sum payments to educators via a third-party vendor. (The agency sends payments on a quarterly basis to participating providers, who then distribute funds to eligible educators through regular payroll.) This shift confused some educators who were used to receiving direct quarterly payments. The new payment approach also required provider owners/directors to understand which minimum salary educators were eligible for and to set up payroll accordingly. OSSE ramped up outreach and education efforts to address educators’ and directors’ confusion and frustration.
Administrative complexity: Because a core goal of the Pay Equity Fund was to help the child care sector match D.C. Public School system salary levels, the program implemented a new salary scale setting minimum salary requirements based on educators’ roles and credentials. (This mirrors the public school system’s salary scale.) This created administrative complexities for OSSE. The agency now gathers specific credential information in its provider licensing system to confirm educators’ eligibility for certain salaries and supplementary payments.
Funding challenges: The Pay Equity Fund has experienced funding challenges in recent years requiring changes to the program. In 2024, with the Fund facing a $17 million funding gap, the D.C. Council reconvened the Early Childhood Educator Equitable Compensation Task Force to update role-based salary standards and adjust the payroll formula based on available funds. Some educators saw cuts in pay under the new guidelines.
Timeline
D.C. City Council passes the Birth-to-Three for All DC Act of 2018, which sets comprehensive goals for improving the District’s early education sector. It recommends improving compensation for child development educators (but does not provide funding for doing so).
The D.C. Council creates the Early Childhood Educator Pay Equity Fund as a special fund to be administered by the Office of the State Superintendent of Education (OSSE). At the same time, the Council increases income tax rates on District residents earning more than $250,000 and creates an Early Childhood Educator Equitable Compensation Task Force to make recommendations for how to implement the fund.
After engaging key stakeholders, the Task Force issues a report that provides detailed guidance on minimum compensation levels for early educators based on roles and credentials.
OSSE distributes supplemental payments to eligible early childhood educators via a partnership with AidKit. The third-party company specializes in administering direct cash aid programs at scale. At first educators receive one lump payment up to $14,000 (depending on staff role and full- or part-time employment status). OSSE then shifts to offering quarterly payments up to $3,500.
The Pay Equity Fund begins providing subsidized health insurance coverage for eligible educators and their dependents through D.C.’s HealthCare4ChildCare initiative. (As of April 2025, more than 2,000 D.C. residents working at child care providers have received health insurance through the exchange.)
OSSE stops working with a third-party to make payments, and instead begins distributing funds to participating child care providers, which then increase educators’ pay as part of their regular paychecks in line with required minimum salaries.
Addressing a funding shortfall, City Council reconvenes the Task Force, asking it to review how the Fund has been implemented to date and make recommendations to ensure the Fund’s long-term equity, efficiency and sustainability.
The Task Force issues a report with recommendations for updating educators’ minimum salaries for Fiscal Year 2025 and the child development facility (CDF) payroll funding formula in accordance with reduced Pay Equity Fund funding levels for fiscal year 2025.
D.C. Council passes the Early Childhood Educator Pay Scales Emergency Amendment Act of 2024. The measure adjusts the minimum salaries that child care employers participating in the Fund are required to pay eligible early educators.
D.C. Mayor Muriel Bowser supports FY2026 funding of $70 million (the same as previous year’s budget) for the Pay Equity Fund, ensuring the program will continue into its fifth fiscal year.
City Council passes its FY2026 budget, including $70 million in funding for the Pay Equity Fund.
Implementation process
What were the key components of the program’s design?
Creating a new revenue source and a dedicated fund: The success of the Pay Equity Fund is directly connected to new revenues generated by increased income tax rates on District residents earning more than $250,000. In 2021, the DC Council raised the rate for those earning over $1 million from 8.95% to 10.75%. It also created two new income tax brackets: $250,001-$500,000 (9.25%) and $500,001-$1 million (9.75%). Funds go into a dedicated account managed by OSSE and cannot be used for another purpose. The arrangement has helped funding for the program remain relatively steady since 2022.
Taking a compensation-first approach: The Pay Equity Fund program starts from the premise that an array of benefits flow from a better paid early childhood education workforce. The program does not require educators to complete professional development or earn a new credential to receive additional pay. It doesn’t require providers to meet additional quality standards for their employees to be eligible. Instead, it unconditionally provides wage and health insurance premium subsidies to educators working at licensed providers.
Tying wage subsidies to credentials and roles: This has motivated some early childhood educators to earn an additional credential so they can qualify for increased wage subsidies through the program. Because it incentivizes professional development and training, the program is helping to create a more stable skilled workforce and higher-quality child care.
Providing health insurance premium subsidies: The Pay Equity Fund seeks parity for early childhood educators with D.C. public school educators with respect to total compensation, including both wages and benefits. In recognition of the importance of health insurance as part of educators’ overall compensation, the program in 2023 began to subsidize health insurance premiums of educators at child care providers. It does this through D.C.’s HealthCare4ChildCare program and a partnership between OSSE and the federal health benefits exchange.
How were key partners engaged?
Creating a task force: The Early Childhood Educator Equitable Compensation Task Force brought together various important stakeholders to make key recommendations for implementing the fund. Members included: early childhood educators, child care center directors, Washington D.C. parents, early childhood policy experts from academia and the nonprofit sectors, and OSSE’s Deputy Superintendent of Early Learning Sara Mead. It was chaired by Abigail Smith, a former deputy mayor of education for D.C.
Outreach to providers and educators: During the initial rollout period, there was skepticism among some educators that the government would really deliver on its promise of substantial wage boosts. To build awareness and overcome skepticism, OSSE did extensive outreach to explain how the Fund worked and recruit providers to opt into the program. Outreach included sending fliers in multiple languages to providers for distribution to educators and holding virtual information sessions that were attended by thousands of early childhood educators.
Advocating for continued funding: Pay Equity Fund proponents including D.C. Council member Christina Henderson, D.C. Council Chairman Phil Mendelson, early childhood educators and parents have lobbied D.C.’s mayor for continued program funding in the District’s annual budget.
How did the program ensure universal access?
- Any educator at a licensed child care provider in Washington D.C. is potentially eligible to benefit from the Pay Equity Fund if their employer opts in. Early childhood educators who are D.C. residents can obtain subsidized health insurance through the District’s HealthCare4ChildCare program even if their employer hasn’t opted in.
What were the key activities leading up to and following launch?
Submitting Task Force reports to D.C. mayor and City Council: The Early Childhood Educator Equitable Compensation Task Force played a pivotal role in fleshing out how the Pay Equity Fund would achieve its goals. The Task Force first met in October 2021 and issued three reports, each of them providing critical blueprints for how the Fund should function. The Task Force initially recommended a two-phase strategy beginning with direct-to-educator supplemental payments in the short term (FY2022) and then transitioning to a payroll-based payment system built around a new salary scale tied to roles and credentials. The Task Force then designed this latter long-term approach. In 2024, as City Council grappled with reduced funding levels for the Fund in FY2025, a final Task Force report updated the salary scale and payroll funding formula.
Shifting to payroll-based payment approach: This shift to routing supplemental wage payments through employers moved the program into its current set-up. Rather than receiving checks from two entities (employer and OSSE), early childhood educators are only paid via regular payroll by employers. One benefit relates to taxes: teachers no longer have to deal with paying taxes on lump-sum payments as they had to during the program’s initial period.
Launching health insurance subsidies: By offering these subsidies beginning in 2023, OSSE addressed a pressing issue for some teachers eligible for supplemental wage payments: Their higher income level would disqualify them from Medicaid-based health insurance—but still leave private-market insurance out of reach.
How was the approach funded?
Creating a new tax and a special fund: In 2021, the D.C. Council approved an income tax rate increase on residents earning more than $250,000 per year to generate revenue for a new Early Childhood Educator Pay Equity Fund. Four percent of D.C. taxpayers were impacted by the increase, and residents earning $1 million or higher were most affected. As a special fund distinct from the District’s general fund, revenue in the Pay Equity Fund can only be used for that program, and can roll over into a new fiscal year if unused.
Annual budget allocation: For the Pay Equity Fund to remain adequately funded, D.C.’s mayor must include an appropriation in the annual budget submitted to City Council, and the Council must approve the appropriation. In July 2025, the Council approved a FY2026 budget that included $70 million for the Pay Equity Fund.
How was the approach measured and refined?
Tracking credentials of early childhood workforce: As the Pay Equity Fund program has grown, OSSE has been able to analyze growth in the number of specific credentials seen in the early education workforce at licensed providers in the District. This has helped OSSE understand how the program may be incentivizing educators to pursue professional development.
Tracking salary requirements compliance: OSSE closely tracks payments made by participating providers to employees via payroll to ensure that minimum salary requirements are met. This data informs the agency’s outreach efforts to ensure new and newly eligible employees at participating providers benefit from the program, and that newly licensed providers in the District participate in the program.
Healthcare benefit data tracking: Through a data-sharing agreement with the federal health insurance exchange, OSSE gathers and analyzes data detailing which early childhood educators receive healthcare premium subsidies through the Pay Equity Fund.
Partnerships with research and evaluation organizations: OSSE has worked closely with the Urban Institute, Child Trends and Mathematica to support research about the Fund’s impacts and benefits. The Urban Institute has shown how wage increases have benefited provider staffing, financial well-being and mental health, and the quality of child care, for example. Mathematica has shown how the benefits of the Fund surpass its costs.