Childcare service shortage is bad not just for parents, but also for the economy.

In 2018, Wilder research provided data showing how much  Northeastern Minnesota’s economy loses due to childcare shortage. Among other things, the report showed that:

(1) Families in that region lose approximately $8.1 million in potential earnings due to a lack of access to childcare.

(2) Employers face a 13% reduction in worker productivity which translates to a loss in thousands of dollars per worker without access to childcare.

(3) Local, state, and federal governments lose an estimated $5 due to lost economic activity in that region.

(4) The region will experience an estimated loss of $13.3 million in lifetime earnings from children currently without child care who would probably not complete their high school education, reducing their future employability and earnings.

The economic losses mentioned above are much more times greater for the whole state. Looking at data from other states gives an idea of how much state economies lose.

The Iowa economy for instance loses $1 Billion annually due to childcare issues. Iowa is one of the states with high labor force participation rates. But lack of access to childcare costs the state $935million in lost taxes and employee absences. Iowa, like Minnesota, and many other states face increasing childcare costs as well as a shortage of care providers.

The U.S Chamber of Commerce recently found that Idaho loses $479million annually due to childcare issues. Similar to Iowa, the majority of these losses are incurred by employers due to high turnover as well as employee absence. Other states like Louisiana, Maryland, Georgia, Washington, and Indiana have conducted their own reports over the years and found that they lose over $1Bn annually in economic activity.

Minnesota is one of the states facing a more critical issue with childcare when it comes to cost as well as a shortage in capacity. This potentially puts Minnesota`s loss as a state very well among the highest in the nation. It is only imperative that this crisis is handled in a way that tackles both cost and shortage; and this is through enacting policy that incentivizes an increased supply of childcare services.