Iowa City, Johnson County partner to fund $2 pay increase for childcare workers

In a progressive, first-of-its-kind push in Iowa, a collaboration between Johnson County, the city of Iowa City, and local businesses will help provide childcare services with funding to increase caretaker wages by $2 an hour.

The decision aims to facilitate the growth of the local childcare system as demand and cost to families rise.

The Iowa City City Council unanimously approved $750,000 in American Rescue Plan Act funding as part of the county’s Child Care Wage Enhancement Program at its meeting on Tuesday. Johnson County will contribute an equal amount of ARPA dollars alongside the city to fund the wage increase.

As part of the plan, the Johnson County Childcare Coalition also asks businesses to contribute $150 per employee per business “to grow the program and allow it to become sustainable,” the coalition’s program summary reads.

The Iowa League of Cities believes Johnson County's wage program is the first such initiative in Iowa.

Funding will phase out over three years

Johnson County Social Services will distribute $500,000 per year over the next three years to local childcare providers for a total of $1.5 million. The providers must apply for funding through the county social services office.

For every $2 per hour increase, roughly 15 cents will also be used to alleviate the payroll tax burden childcare centers have faced.

The initiative should provide a significant boost to an industry well-behind county averages.

According to the Bureau of Labor Statistics, childcare workers in Johnson County are paid an average of $12.02 per hour. City documents indicate they are the lowest tracked wages of any professional occupation in the county. The average hourly wage for a full-time, local childcare worker equates to a little more than $25,000 per year.

A $2 per hour wage hike would bring in $4,000 more yearly for those full-time employees.

Plan is the first of its kind in Iowa to address childcare worker crisis

Iowa League of Cities Executive Director Alan Kemp said cities in Iowa have been heavily involved in the development of strong childcare systems in a number of creative ways, including helping to open care centers and even exploring opening city-run child care.

But, no town, to the organization's knowledge, has taken steps to raise wages for local childcare professionals like Johnson County has.

“That’s a new approach,” Kemp said. “It’ll be interesting to see how it works.”

On average, childcare workers in Iowa are paid $11.61 per hour, a total yearly income of approximately $24,000. It's the sixth-lowest average annual wage out of more than 700 professions in the state tracked by the Bureau of Labor Statistics. The nationwide average wage for childcare workers is $14.22 an hour, also in the bottom 10 for pay relative to more than 1,100 tracked professions.

Iowa has more than half a million children age 12 and under, though the state only offers 175,000 registered spaces for childcare according to Iowa Child Care Resource & Referral’s July 2022 data. In 76% of families across the state, both parents of a child under six years old are employed.

Johnson County follows the statewide trend. Data from the ICCRR shows more than 22,000 children ages 12 and under in the county, but only 9,500 facilities are available for childcare. Both parents work outside the home in 73% of Johnson County families with children under six. 

Iowa City Councilor Pauline Taylor said Tuesday she's interested to see how things pan out with the new wage enhancement program, referencing how little action has been taken despite a multitude of concerns.

"It's really great to see this and [I'm] hoping to see over time that it's helpful, because we hear over and over again and see the effects, that the lack of childcare does affect the economy," Taylor said. "People can't go to work if they don't have the childcare."

Cost is a major factor in the state's childcare crisis. For licensed centers and preschools, the average cost of care for children five and under is $195 a week. In Johnson County, child care is more expensive than the statewide average, with families paying approximately $166 per week in a registered child development home and $230 per week for their child to attend a licensed center or preschool.

Across the state, for families making the median income with an infant child to care for, an average of 10 to 14% of their pre-tax income is used for childcare.

Extending a helping hand

The Child Care Wage Enhancement Program aims to raise wages without forcing care centers to increase their cost to attend and further burden families, city grant specialist Cassandra Gripp told the council on Tuesday.

Childcare center support is vital to the initiative. They are encouraged to contribute $150 annually per employee to help ensure the program continues beyond the three-year, government-funded plan.

Councilor Megan Alter said the COVID-19 pandemic added risk factors for childcare workers, forcing many out of the industry. The amount of childcare workers decreased by 8% across the country compared to pre-pandemic levels, a city report from November 2022 revealed.

Alter said it is important to appreciate the workers and push to mitigate the childcare crisis piece by piece.

“There’s so many layers to child care,” she said. “The thing that is so wonderful about this particular piece of the puzzle is that it is so concrete and it helps in such a pragmatic way to professionalize what is an incredibly difficult and specialized skill set and job.”