In 2025, North Carolina experienced a net loss of 113 child care programs. These closures have disproportionately impacted many rural communities which are already considered child care deserts, further limiting access for families who already have limited options. According to our most recent forecast, without additional investment, North Carolina is projected to lose at least 40 rural programs in 2026 alone.
Similarly, enrollment in North Carolina’s child care subsidy program has declined in recent years as the waitlist has grown considerably, due in part to program closures and funding changes for the Child Care Assistance Program. Over the past year, the number of children receiving child care subsidies in North Carolina declined by more than 8,000, from an estimated 65,000 in July 2024 to 56,420 in March 2026. Over the same period, the waitlist for child care subsidies grew from 2,000 children to nearly 17,000. As of March 2026, more than 8,300 children were on the waitlist for child care subsidies.
Workforce challenges exacerbate child care access issues for families with child care subsidies and private paying families. The current median wage for a lead child care teacher in North Carolina is $13.69 per hour; meanwhile, many short-order restaurants and retail sales establishments are offering starting wages of $18 to $20 per hour. Because of this, paired with a lack of guaranteed benefits including insurance, retirement, and paid leave, high turnover is the norm, with programs frequently losing experienced staff and investing heavily in recruitment and training. In 2023, the turnover rate among child care workers in North Carolina was 38%, far higher than the 4% among North Carolina’s total workforce in 2023. This instability directly affects program quality, limits access for families, and increases long-term costs for the state through workforce disruptions and reduced productivity.
The average subsidy reimbursement for an infant in a five-star North Carolina program is currently $1,061 per month. These rates were set using market pricing from 2021. Since then, North Carolina’s and the national economy have experienced substantial price inflation. If subsidy reimbursement rates had kept pace with inflation, the average reimbursement for an infant in a five-star child care center would be about $1,260.
However, these rates have not increased. The reimbursements child care operators receive for providing care have remained flat while the cost of labor, supplies, and materials they need to provide services to families have all increased.
These challenges extend far beyond the classroom. When child care is unreliable or unaffordable, parents are forced to reduce hours, leave the workforce, or decline career advancement opportunities. This loss of labor force participation diminishes household earnings, reduces state tax revenues, and hampers economic growth. From a business perspective, unstable child care limits the ability to attract and retain talent, putting North Carolina at a disadvantage relative to other states competing for a skilled workforce.
Stabilizing the child care sector ensures that parents can work, businesses can thrive, and the state can maintain a robust, competitive labor market. By linking subsidy payments to the true cost of care, North Carolina has the opportunity to prevent program closures, reduce turnover, and safeguard both workforce stability and long-term economic growth.
Given these challenges and the economic stakes for North Carolina, a deliberate, phased approach to aligning child care subsidy payments with the true cost of care is both necessary and strategic.
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