By Martha Njolomole
The American Experiment
The Center of the American Experiment recently released a report exposing the overly expensive and increasingly scarce childcare in Minnesota. Parents are paying some of the highest costs in the nation — a dangerous trend that depresses workforce growth and disproportionately affects already struggling families, especially in rural areas.
The crisis spans the country, but Childcare Crisis: Regulation and the High Cost of Childcare in Minnesota argues that excessive regulations set Minnesota apart from other states. Strict laws governing child-staff ratios and hiring qualifications directly raise the cost of childcare, with little to no demonstrable impact on quality of care, according to research. As such, the most meaningful response would be to loosen child-staff ratio requirements, hiring and training requirements, and administrative rules.
Legislators need to realize that simply throwing more money at the problem will not fix the childcare crisis. Daycare centers are more expensive in Minnesota compared to most states mainly because of excessive regulation. The crisis is government-made.
Findings of the report include:
In 2019, the average family in Minnesota paid over $16,000 to keep their infant at a day care center for the whole year. Compared to the rest of the country, Minnesota had the sixth highest annual cost for center-based infant care.
In 2019, Minnesota households with median income paid nearly 22 percent of their income for center-based infant care — the fourth highest rate in the country. According to the U.S. Department of Human Services, childcare is affordable if it does not exceed 7 percent of household income.
In addition to high costs, Minnesotans are plagued by a shortage of childcare slots. The average family in Minnesota lives in a location where there are nearly two children for every slot of licensed capacity within their vicinity.
Differences in the cost of living fail to explain why childcare is more expensive in Minnesota compared to most states. Minnesota has a lower cost of living compared to the national average, meaning that it is not an expensive state. And other factors like age of children, type of providers as well as economics of the childcare industry are universal among all states.
Instead, state differences in cost of center-based care are mainly explained by differences in state regulation. More specifically, states with stricter staff-child ratios and group size limits as well as more stringent hiring and training requirements — like Minnesota — are generally plagued with higher prices for center-based care.
Expanding public assistance programs is unlikely to address the root cause of the crisis but would transfer costs to taxpayers. Moreover, subsidies and other public early childhood education programs raise costs, restrict choice, fail to meet parental preferences, and are often associated with negative outcomes among children that use them.
Martha Njolomole, American Experiment economist and author of the report, Childcare Crisis: Regulation and the High Cost of Childcare in Minnesota.
A copy of the full report can be accessed at www.americanexperiment.org/reports