Why are child care wages so low? An analysis of the effects of wage structure, aggregate low -wage labor supply, and labor market institutions on the distribution of child care wages

Over the past three decades the child care industry has grown exponentially. This growth has largely been fueled by the increased labor force participation of women with young children. However, while the demand for child care has risen substantially, child care wages have not. Therefore, this dissertation set out to develop a theoretical framework, that could be implemented empirically, that could possibly explain why child care wages have remained low, particularly during the 1990s, when the wages of most workers were rising significantly, as a result of the booming economy. The key results of the analysis are: (1) Child care wages appears to have been depressed by the marked increase in aggregate low-wage labor over the past decade; (2) Labor market institutions appears to have a strong positive effect on child care wages; (3) Gender, however, seems to have had the most dramatic effect on the overall distribution of child care wages over the study period. Specifically, both the SIPP and CPS data suggest that if the average characteristics of female child care workers were paid according to the male wage structure, female child care workers' average wage would have been 30 percent higher than their actual (observed) average wage in the SIPP data and 35 percent higher than their observed average wage in the CPS data. Conversely, the data suggest that male child care workers' average wage would have been about 20 percent lower than their actual average wage if their average characteristics were paid according to the female wage structure.