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

Lack of affordable childcare is an issue that is plaguing most Americans. However, Minnesotans have it worse. According to data, Minnesota 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.

Certainly, child care is a labor-intensive industry which means that technological advancements do not improve productivity or lower prices. So, this might be a contributing factor to those high prices.

But compared to other states, Minnesota also has high standards. Minnesota, for example, requires that centers have one teacher for every four infants. This drives up labor costs. Minnesota also has stringent hiring qualifications for teachers and other daycare center workers.

Access to high-quality affordable childcare is essential to a functioning economy. But subsidizing childcare is not the way to go. Subsidies might raise costs further by driving demand while supply is constricted.

The state needs to focus on loosening regulations like child-staff ratios and staffing requirements. These provisions raise the cost of providing care but have no apparent effect on quality. Loosening them would help keep existing providers in the business and also encourage new providers to enter the market thereby improving supply and affordability.