Childcare costs grew by 60% in Minnesota during the pandemic

Childcare costs were high before the pandemic. In Minnesota, they were among the highest in the nation. Unfortunately, the coronavirus pandemic has exacerbated this issue. Social distancing rules as well as cleaning requirements, coupled with low attendance, have led to daycare closures and higher prices for parents. h

While this is a national issue, some states have it worse than others. Minnesota is one of those states.

Using data from Childcare Aware and the Center for American Progress, Lending Tree recently published a study that found the following:

The COVID-19 crisis is costing center-based child care providers an extra 41% annually per child — $14,117, up from $9,977 pre-pandemic. The spike in costs for these care providers impacts households with children younger than 5 especially hard.

For Minnesota, the average price for centers grew 60 percent from about $11,200 (13th highest) to $18,000 (or sixth-highest).

Source: Lending Tree

Source: Lending Tree

I have long argued that the legislature should look into loosening regulations for childcare to tackle both prices and shortage. This increase in cost is the more reason to do that. High childcare costs, as well as scarcity, are a hindrance to a growing economy. And these high prices will be a restraint to Minnesota’s recovery.

While suggestions to cap tuition or subsidize childcare seem appealing and are all around, we need to understand that these come with their own issues. Government subsidization in recent years, for instance, has been closely linked to excessive government oversight and higher costs, as well as limited choice. In the long-run, solutions should be more focused on the root cause of the crisis which is overregulation. Otherwise, anything else will end up making services more expensive and restrict supply even further.