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Childcare cost is high in Minnesota, but state subsidies are not the answer.

Americans are generally facing high and growing child care costs. But the state of Minnesota ranks  ranks as the fourth most expensive state for childcare, only behind California, Massachusetts and Washington D.C. According to EPI (economic Policy Institute);

  • Minnesota annual average infant case is $16,087/ $1341 per month
  • Infant care costs 30.8% more than average rent.
  • only 5.8% of Minnesota families can afford infant care under US Department of Health and Human services (HHS) affordability guidelines of 7% of income
  • Infant care costs 78.4% share for minimum wage earnings.

A big part of the high costs in childcare remains the fact that Minnesota has higher standards for child care providers than other states. For instance, Minnesota requires centers to have one teacher for every four infants which drives up labor costs. But regardless of ratio, child care is a labor intensive industry that will  continue to be plagued by high labor costs.

The fact that this industry is faced with low wages also presents an issue with attracting new workers hence the shortage of child care services.

Be that as it may, that the child care costs will remain high due to high labor costs, this does not justify the proposals for state subsidization of child care. Subsidization has a probability of raising costs even higher with the option of state funding and the lack of market signaling.

Child care is a tight industry, with high prices but low wages, but there is always room to loosen regulations in order to invite new businesses and also keep existing ones in a way that cuts their costs. Easing caretaker to infant ratio as well as staffing regulations should incentivize more would be entrants into the child care industry.

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