Why do childcare workers earn so little when childcare is so expensive?

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It’s no secret that Australia faces a significant challenge when it comes to childcare, where there is a large disconnect between the high costs worn by parents to have their children in care, and the low incomes received by educators.

It’s been littered through the media this week, childcare centres closing down and children being sent home due to unprecedented staff shortages. While as an ex-financial adviser I’ve always known that the numbers don’t add up for early childhood educators or parents, it’s a reality that I have not needed to face. Until now.

The transformation of childcare into a ‘luxury’ service is deeply troubling, as it creates an environment where essential care and education are unreachable for many.Credit: Dionne Gain

My husband and I are so excited to be welcoming our first child into our family in February next year, and this week I started to dive into what our childcare options are. While I’ve always been privy to the cost (my local centre charges $194 per day, before any subsidies are applied), this week I was met with the unsettling reality that is not only hard to comprehend but impossible to justify.

Despite the skyrocketing costs of childcare in Australia, the diligent educators responsible for nurturing our children are struggling in a profession that pays them less than workers in the fast-food industry. Walking out of my first daycare centre tour, I felt overwhelming guilt knowing the educators who would be looking after my bundle of joy would not be able to afford the same luxury.

Childcare is not a luxury, but you would not be considered a fool to feel as though today it were. The privatisation and commercialisation of this essential service has inadvertently turned it into a perceived luxury, exacerbating accessibility and affordability issues for many families.

This makes me incredibly frustrated and is driving me to shed light on the plight of underpaid early childhood educators and think deeply about what actionable steps need to be taken to move towards a more equitable and sustainable childcare system in Australia – especially as we have one of the most expensive systems in the world.

It’s time we advocate for those who care for our children, ensuring they are valued and compensated fairly for their indispensable contribution to our society and future.

In typical millennial form, I took to social media to open up the discussion, and as conversations with my community got deeper, the figures they painted revealed a very bleak picture. The majority of these educators, armed with degrees, diplomas, and certificates, earn between $45,000 and $65,000 annually, which is dishearteningly low for a role of such societal importance.

Many fast-food workers, on the other hand, without the need for specialised education, often bring home similar, if not higher, paychecks. The mockery is that parents are shelling out more than ever for childcare services. One in three families spends more on childcare than groceries, an expenditure exceeded only by housing costs for many households – and many families are paying more in childcare costs than they are towards their mortgages.

So, where is the money going? Certainly not into the pockets of those who are shaping the minds and characters of the next generation. What should be an essential, accessible service for all families has turned into a lucrative business venture, where profits overshadow the need for quality and fairness.

A simple Google search proves this. If you look up “childcare centre annual income” there are multiple websites suggesting that owning centres can be incredibly lucrative, and there are even childcare investment funds – funds where they exclusively invest in childcare centres because of how rewarding their profits are.

Having worked in the financial sector and also being someone who wants to see others fairly remunerated for the work they do, it’s challenging to reconcile the discrepancy between the high fees charged to parents and the low wages paid to these educators. I can guarantee that all parents would prefer more of their childcare fees to go directly to the educators – not to the back pockets of men who own the centre (while 97 per cent of childcare educators are female, most childcare centre shareholders are male).

When our childcare educators are on average taking home $21 an hour (approximately half the average hourly wage in Australia) it makes sense that so many are leaving the sector. It’s embarrassing that early childhood educators could earn more working in fast food or at a supermarket, and I can’t blame them for wanting to look elsewhere for work.

While acknowledging the problem is the first step towards resolving it – it’s not enough. I believe there are viable solutions to this issue, provided there is the will to implement them – and I hope after reading through this article, you’ve found that will too.

Firstly, there must be increased government oversight and intervention to ensure that educators are paid wages that reflect their qualifications, skills, and the critical nature of their work – what’s been done thus far is not enough. Subsidies and support for families should not come at the expense of decent pay for educators.

Private providers, many of whom have reaped substantial profits over the years must also step up and take responsibility. It’s imperative for these entities to reassess their business models and priorities, placing the welfare of children and educators above profit margins.

Ethical, responsible business practices can still be profitable, while also contributing positively to society – albeit perhaps that’s not in the value set of those that have benefited from the industry’s privatisation.

Lastly, as a society, we need to reassess and recalibrate how we value the profession of childcare education. It’s not merely a service; it’s an investment in the future of our children and, consequently, our nation. The first five years of a child’s life are the most pivotal in their development, and every early childhood educator knows that – it’s why they’re so passionate about caring for children and watching them develop.

They deserve fair financial compensation, but also they deserve the utmost respect, dignity and acknowledgment of the vital role they play in shaping future generations.

Victoria Devine is a former financial adviser, best-selling author, and host of finance podcast, She’s on the Money. She is also the founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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