Does Toronto daycare staffing cost more when rent and wages both climb?

What to take away

Toronto's licensed centre concentration and what it means for competition

The City of Toronto manages the local child care system under the Canada-Wide Early Learning and Child Care agreement and tracks close to 1,000 licensed child care centres within its boundaries, with more than 50,000 licensed spaces. No other Canadian city comes close on either count.

The centres cluster rather than spread evenly. Downtown, Yonge-Eglinton, North York Centre and Scarborough Town Centre each hold dense pockets. A downtown operator competes with dozens of centres within a few blocks, and families there compare on hours, food and outdoor play rather than price, because CWELCC fee caps narrow the range.

The same density shapes hiring. Every centre in a pocket recruits from the same pool of registered early childhood educators, and that pool, not the number of families, is the binding constraint. Toronto operators report that filling an RECE vacancy takes longer than filling a space.

For a prospective owner, the concentration means the market is deep but demanding. You need a clear plan for daycare enrollment staffing before you sign a lease, because rent and wages are both higher here than in most Ontario cities. That planning follows the same discipline as paying childcare centre staff in any tight labour market.

Commercial lease rates by district and the rent line in your budget

Toronto commercial space is quoted per square foot, usually net, so the tenant pays property tax, insurance and common area maintenance separately. Child care adds a constraint. Licensing, accessibility and playground rules push most centres toward ground-floor space with outdoor play area, which is a thin slice of the market.

Asking base rents for that kind of space, net of additional rent, run roughly as follows.

Treat these as asking ranges to check against live listings, not quotes. Additional rent is the line owners miss. Toronto commercial property tax, insurance and common area charges typically add $12 to $20 a square foot, so a $42 downtown headline becomes roughly $60 all in.

The 2025 Rental Market Report from CMHC shows how tight Toronto's rental market remains, which shapes landlord expectations at renewal. The Housing Market Outlook 2026 points to continuing rent pressure in major centres, so build annual escalation into your model.

Convert rent to a per-space figure before you compare districts. A 3,500 square foot midtown unit at $38 net costs $133,000 a year in base rent. Spread across 60 licensed spaces, that is about $2,200 per space, or $185 a month, before additional rent.

Add the second table's extras and margins, explained down to the break-even, get very thin very fast.

Ontario wage grid expectations for registered early childhood educators

The Ontario wage grid under CWELCC sets minimum hourly pay for registered early childhood educators. At the start of 2025 the floor reached $24.86 an hour for RECEs and $25.86 for RECEs in supervisory roles, up from $23.86 and $24.86 the year before. Provincial funding covers part of the increase for eligible centres.

The floor is not the Toronto market rate. Postings for experienced RECEs in the city often advertise $28 to $32 an hour, and centres competing for the same candidates add benefits, paid planning time and professional development. Paying only the floor means recurring vacancies and expensive agency cover.

Assistant teachers, cooks and administrators are not on the grid. Their pay must still meet Ontario's general minimum wage, which is indexed each October, and the overtime, break and vacation rules that apply to every employee. The Employment Standards Act guide sets out minimum wage, overtime and vacation entitlements.

Turnover is the hidden cost. Replacing an RECE means recruiting, onboarding and temporary coverage at a higher hourly rate. The numbers that tell a childcare centre owner the truth each month include turnover rate and cost per hire, not just enrolment.

How rent and wages interact in the city's tightest child care market

Rent is fixed by a lease for years. Wages are fixed by ratios and by the provincial floor. Revenue is capped by CWELCC fees if you are in the system. Occupancy is the only lever left, which is why the two lines interact so sharply here.

Run the comparison. A 4,000 square foot centre paying $42 net downtown spends $168,000 a year on base rent. The same space in Scarborough at $24 net costs $96,000. That $72,000 gap equals about five and a half full spaces at $1,100 a month per child, or 9 per cent of a 60-space centre.

Wages swing the same way. A $2 an hour increase across eight full-time staff adds about $33,000 a year before payroll taxes, and Toronto market rates sit several dollars above the floor for experienced RECEs. Two such increases in a lease term can wipe out a small operator's surplus.

Scheduling is the counterweight. Ontario sets maximum ratios by age group, with infant rooms near one staff member to three children and preschool closer to one to eight. Matching shifts to actual attendance, rather than to licensed capacity, removes payroll without breaking a ratio.

A centre that mixes infant, preschool and kindergarten rooms can also spread fixed costs across fee levels.

Staffing cost scenarios for a mid-size Toronto centre

Take a 60-space centre in a midtown building of 3,500 square feet, with three RECEs, three assistants, a full-time director and a part-time cook. The budget below is illustrative, built from the district ranges above and current Toronto wage levels.

Revenue at full occupancy, using an average CWELCC-capped fee of $1,100 a month, comes to $792,000. A full house leaves about $25,000. At 90 per cent occupancy revenue falls to $713,000 and the centre loses roughly $54,000.

To build your own version of that table:

In this example the break-even sits near 97 per cent occupancy, which is why a downtown or midtown lease is a bet on enrolment. The same centre in Scarborough at $24 net carries about $49,000 less base rent, moving break-even down several points.

The best places to run a childcare centre trade foot traffic against that rent line.

Employer Health Tax and payroll costs on top of wages

Employer Health Tax is an Ontario payroll tax levied at 1.95 per cent on remuneration above the exemption. The exemption is $1 million for most employers, phased down between $1 million and $5 million in total Ontario payroll, and it belongs to the employer rather than to each location.

The Employer Health Tax page explains the exemption and the rates.

EHT is where growth in Toronto bites. A single centre with $433,000 in gross wages pays no EHT at all. An operator running two Toronto sites with $2.4 million in total Ontario payroll gets a reduced exemption of about $650,000 and pays roughly $34,000.

Toronto wage levels push an operator past the $1 million threshold sooner than a centre in a smaller Ontario city would.

CRA payroll obligations sit on the same payroll. Employers match CPP contributions at 5.95 per cent on pensionable earnings, add a second tier of 4 per cent above the yearly maximum, and pay EI premiums at 1.4 times the employee rate. For 2025 that meant $2.30 per $100 of insurable earnings on the employer side.

The CRA payroll guidance covers registration, deductions and remittance deadlines.

Do the arithmetic on one Toronto wage. An RECE earning $30 an hour, or about $62,400 a year, costs the employer roughly $3,500 in CPP and $1,400 in EI. That is about $4,900, or nearly 8 per cent on top of wages, before EHT and WSIB.

Across eight staff the same math adds close to $40,000.

If you are opening a centre, capital for a childcare centre should include working capital to cover payroll and rent for the first few months, while enrolment fills at Toronto's slower licensing and intake pace.

Common questions