Childcare Solutions Wage Enhancement Program prepares for future

Johnson County has been tackling one of the top three barriers to workforce participation within its region: childcare. Childcare workers in Johnson County earn an average of $12.57 per hour, placing them among the lowest-paid professionals in the workforce. The low wages contribute to high employee turnover, creating staffing shortages that force childcare centers to turn families away due to inadequate staff-to-child ratios. These disruptions also impact early childhood development. “Given that 90% of brain development occurs by age five, consistent, high-quality childcare is essential for our community’s long-term success,” Johnson County economic development agency Greater Iowa City, Inc. stated on its website. To combat the staffing shortage, a childcare solutions group in Johnson County comprised of area stakeholders introduced the Childcare Solutions Wage Enhancement Program (WEP) in 2023. Under the program, childcare workers’ wages increase by $2 an hour with coverage for associated payroll tax costs for the employer.

“The cost does not get passed on to the center or the parents, which is really important, because if you think about it, childcare costs are already an exorbitant amount,” said Michael Chen, Greater Iowa City, Inc.’s community development program manager who promotes the program throughout the community. According to data from Iowa Child Care Resource & Referral, a Johnson County family with a median income of $105,652.00 spends an average of 15% on childcare, a little over double what the U.S. Department of Health and Human Services defines as affordable childcare. The WEP is funded by Johnson County American Rescue Plan Act (ARPA) funds, Early Childhood Iowa funds and investments from employers and businesses across the region. With the ARPA funds set to expire in 2026, the childcare solutions group is working to maintain the needed $500,000 it takes to fund the program for one year.

Wages not competitive

“We've known for a long time that childcare staff are underpaid. It is one of the lowest paying jobs,” said Laurie Nash, Johnson County’s youth and family service manager. Following the pandemic, the county decided to take the community’s pulse and assess the state of childcare programs in the region. “One of the big things that came out of that survey was that there were classrooms that were closed and slots that were not filled because they were understaffed,” she said. “And so our childcare programs were not enrolling at full capacity because they didn't have the staff to do that.” “What we needed to do was open up those closed classrooms," said Jennifer Banta, president and CEO of United Way of Johnson & Washington Counties. “And to do that, what we needed to do was come up with something that would encourage workers to go into child care and to stay in child care.” A childcare solutions group was formed that grew to include staff from United Way of Johnson & Washington Counties, the cities of North Liberty and Iowa City, Johnson County, the Iowa City Community School District, the University of Iowa, 4Cs of Johnson County, Iowa Women’s Foundation, Community Foundation of Johnson County and Better Together 2030. To retain childcare staff, the coalition recognized that it had to make the wages competitive. “It was really hard to compete with Target paying $15 an hour,” Ms. Nash said, so the coalition began researching counties that already had a wage enhancement program in place.

Childcare centers must meet criteria

Little Clippers Child Development Center in Tiffin is one of ten Johnson County childcare centers that participates in the program.

“What we do isn’t easy,” said Director Amanda Rairden. Being on staff requires a lot of time invested in continuing education classes on top of day-to-day duties. “To get somebody to want to do that for a really mediocre wage and commit to it and stay with it is hard.” Since participating in the program three years ago, Ms. Rairden says staff retention has improved “significantly.” “It has probably kept (floater staff) around a lot longer,” she said. To become eligible for the program, a licensed childcare center needs to have an existing starting wage no less than $11.56 an hour, a number that Little Clippers had increased following the pandemic. “We had to increase wages to even stay competitive with someone like Target or Walmart or even McDonald's,” Ms. Rairden said. Childcare centers must also participate in the state’s quality rating scale – Iowa Quality for Kids – or stay accredited through the National Association for the Education of Young Children. Additionally, it must also accept childcare assistance and serve children up to age five. “With 85 centers in Johnson County, we had to have some way of making decisions about who was able to participate,” said Ms. Nash, adding that they needed a way to “ensure that was a good investment in high quality childcare.”

Dependable childcare crucial to workforce

Greater Iowa City, Inc. has been at the forefront of efforts to secure funding from area businesses. “If we're thinking about strengthening our workforce, we need to have the people that are in the workforce have every opportunity to succeed, especially the ones that have kids,” Mr. Chen said. According to Iowa Child Care Resource & Referral, 76% of children in Johnson County under the age of six have both parents in the workforce. “If you're missing days or you're tardy because of childcare needs, that essentially lowers productivity,” Mr. Chen continued. It’s a worthy investment, Ms. Nash said. “We look at it as businesses are investing in an infrastructure so that their employees can get to work,” she said. “It's kind of similar to investing in dental care or paying taxes for roads or things like that. When you think about what your staff needs to be at work every day, many of them need reliable child care.” Area businesses like GreenState Credit Union and Hills Bank have made contributions to the program. “As an organization with many working parents on our team, we understand the importance of quality, affordable childcare,” said Lisa Shileny, president and CEO of Hills Bank, in an email to the CBJ. “We’re honored to support Johnson County’s Child Care Wage Enhancement Program which defrays tuition costs for families while enhancing childcare staff wages – it’s truly a ‘win-win’ for our community.” “GreenState understands there are many mechanisms to improving childcare, and we wanted to participate in this pilot to help boost wages and retention of centers in Johnson County,” a spokesperson with GreenState Credit Union said. “We know when the community has reliable childcare, staff can focus on being better employees, which makes for better outcomes at work.”

A collaborative effort

Operating the WEP is a collaborative effort. Iowa City and Johnson County each contribute $250,000 annually to support the program, while participating businesses in the Iowa City area invest $150 per employee per year. The Community Foundation manages business contributions, holding and distributing funds to Johnson County. In turn, the county’s social services department collaborates with providers to issue hiring bonuses for new employees and supplement wages for staff at approved child care centers. Additionally, 4Cs partners with child care centers to provide education on the program and assist with the onboarding process. “Now that we've kind of proved the concept, we know that it's working, it would be really excellent if we could expand it to more child care centers,” Ms. Banta said. “I really hope that they can find a way to keep it going,” Ms. Rairden said, adding that it’s not unusual for staff to burnout from working additional evening and weekend jobs to supplement their income. “When they don't have to work as much just to make ends meet, you get a more quality staff, someone that's energetic and ready to come in and do their job and be the best they can be.”