Spotlight Exclusives

D.C. Equity Fund Boosts Early Childhood Educators, Study Finds

Owen Schochet Owen Schochet, posted on

A new report from Mathematica evaluates the labor market impacts of Washington, D.C.’s Early Childhood Educator Pay Equity Fund (PEF), a pioneering initiative to address pay disparities between child care and early childhood education educators and K–12 teachers. In its first two years, the PEF has delivered supplement payments ranging from $10,000 to $14,000 per year to more than 4,000 CCEE educators in licensed settings. Mathematica researcher Owen Schochet spoke with Spotlight about the report; the transcript has been lightly edited for length and clarity.

Why don’t we start by giving some background on the Early Childhood Educator Pay Equity Fund

Sure. Washington, D.C. has a particularly innovative history in terms of investment in child care. In 2008, the city began offering publicly funded, full day public preschool through the District of Columbia Public Schools for three- and four-year-olds and educators within those classrooms already were earning the same as educators in K-through-12 classrooms. In 2018, the DC Council passed the Birth to Three Act, which expanded the investment to focus on infants and toddlers and their educators as well. At that point, there was a sort of stipulation of a competitive compensation scale, but nothing concrete.

In the summer of 2021, the council voted to raise the income tax rate on people making more than $250,000 a year—in the first year it was about $50 million—and use the funds to supplement the wages of educators who were not working in D.C. public schools, and the Pay Equity Fund launched in the fall of 2022. That pool of money has increased—in 2024, it was up to $70 million—and those funds were used to disperse payments to child care educators primarily teaching infants and toddlers up to age 3.

The initial payments were distributed as a one-time lump sum amount of $14,000 to full-time lead teachers and $10,000 to full-time assistant teachers, and then half those amounts to part-time staff in the position. In 2023, those same amounts were distributed, but quarterly instead of this kind of one-time payment.

And is there an income cap or anything like that?

No, there isn’t, though you do need to be licensed by the state superintendent of education that oversees child care in D.C.

So, fast forward to the analysis of the program that you’ve done. Is this the first look at PEF or have you done analyses in the past?

The current report is our second analysis and the focus of the two reports were the impacts of these payments in both 2022 and then in 2023. I should mention that in 2024, the payment model has shifted a good deal and it’s added some complexity to this system. Rather than going directly to educators in 2024, the payments began being routed through employers. And as part of that, they set up a sort of salary scale based on qualifications, experience, and position of teachers.

A key challenge in estimating the effectiveness of the payment in this context is that everyone, barring the groups we discussed, is eligible in D.C. So, you need information outside of D.C. on similar outcomes and measures in order to get a sense of the efficacy. The goal is to use this information to determine what the child care outcomes in D.C. would have been without the Pay Equity Fund. We can’t know that, but we do our best in this case to project what that would be using information from the Bureau of Labor Statistics at the Department of Labor, which measures the number of workers, the number of employers, and then the average weekly wage that are reported by employers across different sectors and geographic areas.

Using that information, we formed what we called a synthetic Washington, D.C., which was based on a weighted combination of several other counties in the U.S. that had close to identical levels of those three outcomes over time. If there is an impact, you can observe how the actual D.C. diverges from its synthetic counterpart. And what we found in both reports was that the number of child care educators in the District grew in magnitude over time, both overall and within the child care sector specifically.

We didn’t find an impact on the number of employers, which would suggest the increase in educators is being driven by improved retention and hiring among existing employers. Receiving a payment this large provides something like a 40% wage boost for the average educator in D.C., so this is a really substantial.

The most recent quarter of data in our second report was the third quarter of 2023, and at that point in time, the impact was 219 educators, which was about a 7% increase over the levels for the control group when the fund was launched. We contextualized that by using the same procedure with every other county in our analysis that didn’t implement the fund and we basically found that the impact for D.C. was larger than about 96% of the other counties. Those two pieces of information are the key conclusions from this analysis.

And were you seeing decreases in other analogous counties, or just not as strong rate of increases in the number of educators, or both?

That’s a good question. In the synthetic Washington, D.C. we created, there was a slight increase, but you tended to see more of a plateauing pattern over time. A lot of the overall changes in levels prior to the launch of the fund were due to the pandemic and you see this plateau around 2022 as things begin to improve. And then you see additional growth in D.C. as a result of these payments.

What is the status of the program now—I know it’s been under discussion by the D.C. City Council.

There’s been some budget drama over the last couple of months. In the initial budget, the mayor actually had proposed cutting the Pay Equity Fund altogether, which really surprised and energized advocates. Phil Mendelsohn, the chairman of the council, opposed that and thanks to the work of advocates—and I’d like to think our evidence was helpful—the fund was added back in and restored at $70 million. It was a little less than what had previously been planned for 2025—about $15 million less— so I think advocates would call that a partial victory.

We’ll have to keep an eye on it. The program is groundbreaking because it’s so large—it’s serving over 4,000 educators—and it’s expensive. So, the sustainability of programs like this is something to think about

Is this being tried anywhere else?

Not like this. During the pandemic, federal relief dollars were used by states in a number of ways, and one of those ways was to boost educators’ salaries. In September of this past year, those funds dried up, so those programs sort of evaporated with them and they were not nearly as large as what’s happening in D.C. to begin with. But there’s growing interest in these kinds of policies, and I expect to see states and counties continue to pursue creative angles. There are a couple of states that are doing innovative things, such as changing the reimbursement rates for child care subsidies.

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