Michigan Childcare Providers Debate Unionization as Industry Struggles with Low Pay and High Costs

Michigan Childcare Providers Debate Unionization as Industry Struggles with Low Pay and High Costs

LANSING — A growing debate is unfolding across Michigan's childcare industry as providers struggle with untenable economics, high costs, and low wages. Some small business owners are considering unionization as a way to force the state to listen to their demands, while others argue traditional unionization models don't work for their industry.

The controversy centers on a fundamental question: In Michigan, where childcare providers operate as small businesses rather than employees of traditional employers, can they unionize to negotiate better conditions?

An Industry in Crisis

Pretty much everyone working in childcare and early education in Michigan agrees on one thing: The business is untenable and something has to give.

Betty Henderson, who owns Angels of Essence Day Care in Detroit and has been in the business for nearly 30 years, says she's seen firsthand the crushing financial pressures that plague the industry. "What we're doing right now isn't working for anybody," Henderson said.

The problem isn't just low pay for workers — it's the entire economic model that keeps the industry afloat. Childcare providers in Michigan are stuck with state-mandated constraints on the number of children per classroom, which limits their revenue. As a result, there's not much money to go around, making it one of the lowest paid jobs not just in Michigan, but across the United States.

Owners describe being unable to pay their workers a living wage or provide them benefits like health insurance. Sometimes, owners don't take home pay for years. There's high turnover, as staff leave the industry for higher-paying roles almost anywhere else.

Unlike in the K-12 system, there's little public investment and parents and providers are left to shoulder the continuously rising cost.

The Unionization Debate

Not as widely agreed upon among Michigan's childcare providers is how to get desperately needed change. Some in the industry say the solution is clear: Childcare needs a union.

In Michigan, the industry is not unionized aside for small pockets of providers like childcare providers working for the University of Michigan who are unionized as university staff and have recently pushed for higher wages in contract negotiations. But the majority of providers, like Henderson, are not unionized.

Henderson is fed up after nearly 30 years in the business and thinks unionization could be a way to get the state, which controls funding for things like the childcare subsidy reimbursement rates that 64% of providers in Michigan rely on, to invest.

"We deserve a union," Henderson said. "The people in Lansing are not listening."

A Different Model

It might seem odd that a business owner like Henderson would want to be part of a union, but that's because unionizing in the childcare industry most often doesn't follow the typical boss versus workers setup.

The industry is primarily made up of a network of small businesses, wherein the owner often works alongside employees. Though state data isn't available, federal Census data tracking the statistics of U.S. businesses show that in Michigan, small businesses with fewer than five employees make up 95% of the state's childcare industry.

Business experts say the lacking presence of corporate-owned childcare is a result of the tough margins. "Often, the owner of the program is also not making very much money and doesn't necessarily have money to pay for time off and all the things we'd expect in a professional job," said Caitlin McLean, a policy director at the University of California Berkeley's Center for the Study of Child Care Employment.

"So that traditional model of let's organize together and collectively bargain against the employer doesn't work really well," McLean said.

Instead of childcare workers unionizing against owners, the model most commonly seen in childcare unions across the country is owners unionizing against their state. This is specifically true for childcare owners who receive state reimbursement payments for care they provide low-income families and therefore can be considered state employees.

The purpose is to get more robust and permanent public dollars through contract negotiation to fund things providers say they can't currently afford because of limits on their revenue, like higher wages, insurance benefits, and overall more stability for the struggling industry.

Critics Push Back

Critics of this model say childcare providers shouldn't be considered public employees just because they receive payments from the state or put them in a position where they may feel they have to pay union dues. They also say the fractured layout of the industry doesn't lend itself well to unionization and could create division among already under-resourced owners and staff.

"We don't need a union, we need a lobbyist," said Nina Hodge, a Detroit-based provider, who said lobbyists can advocate on behalf of a larger swath of the industry, both owners and early educators.

Yet, some experts who study childcare and providers who have started unions point to significant gains that came directly as a result of unionization.

Anneliese Sheahan, a childcare provider and union leader in Oregon's Child Care Providers Together Local 132, said bargaining has forced lawmakers to listen and collaborate with providers in earnest. Sheahan said union contracts have secured a slew of needed investments, including retirement accounts, health plans, and significantly higher reimbursement rates that put hundreds more in providers' pockets to pay teachers more and provide higher quality care.

"It's not just lip service anymore," Sheahan said.

Michigan's Legal Hurdle

In a state like Michigan, historically union-strong and currently still in the top 10 states with the most union members, do childcare providers need a union? Can childcare providers unionize in Michigan?

Unionizing as public employees against the state, known as public-sector unionization, has been the most popular strategy among childcare providers in multiple states including California, New York and Oregon. For providers receiving subsidy payments, it's the easiest path to organizing against the state since this group can meet the legal benchmarks necessary to be considered public employees.

In Michigan, there's a law that excludes childcare providers from being considered state employees. This came as a result of previous unionization efforts in 2006, when Child Care Providers Together, a partnership between two unions — the United Auto Workers and the American Federation of State, County and Municipal Employees — negotiated a three-year contract with the state of Michigan on behalf of 40,000 home-based providers.

Reports from the time mention the negotiated contract included a raise in subsidy reimbursement rates, the creation of a training program providers could complete to get reimbursed at a higher rate, and the establishment of a list of providers' rights.

But the effort was later steeped in controversy due to low turnout in mail-in voting approval of the union and claims from some providers that they didn't know about or want union dues deducted from their state subsidy payments.

In 2011, previous Michigan Gov. Rick Snyder dissolved the union and in 2012, the state passed a law excluding home-based childcare providers from public employee status.

Critics of public-sector unionization in Michigan say these workers shouldn't be considered state employees just for purposes of unionization. "If you're going to unionize, do it through the correct method," said Jarrett Skorup, of the Mackinac Center for Public Policy, a Midland-based conservative think tank, which was critical of past Michigan childcare unionization efforts.

The Political Landscape

In Michigan, where Democrats control the governor's seat and Senate and Republicans control the House, it's unlikely that childcare providers could follow in the footsteps of recently unionized home health care workers and regain the public employee status that would allow them to unionize against the state. Home health care workers were reclassified by legislation passed in 2024, when Democrats held full control of state government.

Though, 2026 elections could bring changes to the political landscape that might affect this debate.

What's at Stake

For Michigan's childcare providers, the debate isn't just about unionization — it's about the future of their industry. The state currently relies on subsidy reimbursement rates to keep the childcare system functioning, but providers argue these rates are too low to sustain quality care or even keep the doors open.

The state-mandated constraints on classroom ratios — the number of children an educator can supervise — limit revenue while increasing costs. Providers say they need more flexibility or higher funding to make the economics work.

Critics of unionization argue that the model doesn't work for the industry's fragmented structure and could create division among already under-resourced owners and staff. They suggest traditional lobbying might be a more effective approach to advocate for policy changes.

But for providers like Betty Henderson who have spent decades in the business, the answer seems clear: They deserve a seat at the table with the state officials who control their funding.

"We deserve a union," Henderson said again. "The people in Lansing are not listening."

Whether Michigan's childcare providers can successfully unionize in the current political climate remains to be seen. But the debate itself highlights the challenges facing one of Michigan's most essential yet under-resourced industries.