The research by the Education Policy Institute warns that this could hamper the Government's expansion of funded childcare and in the longterm have a negative impact on young children.
Career progression has slowed in the workforce with fewer staff working towards higher qualifications, particularly the younger generation.
The analysis also reveals that graduate-level staff (Level 6 or higher) are more likely to be older with almost half of staff with at least a Level 6 qualification over 40, and a fifth over 50 and approaching retirement in the next ten to 15 years.
The survey also highlights how low pay remains an issue for the sector, but varies considerably, with junior school-based staff earning on average more than senior managers in private and voluntary provision.
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