The push for a higher federal minimum wage could help those who are underpaid, particularly childcare workers.
However, raising that minimum pay rate could also make childcare unaffordable for many families.
Such is the Catch-22 that policymakers now face as they look to rebuild the economy from the Covid-19 pandemic, according to recent research from the Bipartisan Policy Center, a Washington-based think tank.
“The business model for child care is broken, and Covid taught us that,” said Linda Smith, director of the early childhood initiative at the Bipartisan Policy Center.
More from Personal Finance:
The $7.25 minimum wage can’t pay all the bills in any state
What Delaware’s move to a $15 minimum wage would mean
Early end to extra benefits not driving job searches, data suggests
Moreover, raising the minimum wage could create a “vicious cycle with no end in sight,” she said.
“If parents can’t pay any more, it will basically exclude more parents from childcare, not increase their access to it,” Smith said.
The federal minimum wage is currently $7.25 per hour. However, legislators have proposed kicking that hourly rate up to $10 per hour or as high as $15 per hour.
In 2020, the hourly median pay for childcare workers was $12.24 per hour, or $25,460 per year. That is below the federal poverty level of $26,200 for a family of four, according to the Bipartisan Policy Center.
Raising the minimum wage to $10 per hour would not help most childcare workers, according to the research, due to the fact that 84% of those professionals already earn more than that rate. The remaining 16% earn within $1 of the proposed $10 rate.
However, a $15 per hour minimum wage would result in a boost for more childcare workers, due to the fact that 71% of professionals now earn between $10 to $14 per hour. Another 16% would see a 50% wage increase because they now earn less than $10 per hour. Meanwhile, 9.8% earn wages within $1 of the proposed $15 per hour rate, and 3.9% earn more.
Many families already have a tough time covering the costs of childcare, a recent survey by the Bipartisan Policy Center and Morning Consult found.
About 47% of parents said the most they can afford to pay is less than $200 for childcare per week. Respondents who were most likely to fall in that group included parents with incomes under $50,000, as well as service and trade workers.
