To help small businesses, lawmakers should loosen regulations
This week is National Small Business Week. And to celebrate small businesses, a bunch of events have been planned around this topic in Minnesota. As the Department of Employment and…
According to data from the Bureau of Labor Statistics, the share of Minnesota’s population in employment – the employment ratio – in 2018 was 67.7%, second only to Nebraska. This was down from 72.6% in 2000. To some extent, this is part of a general trend which has seen the employment ratio fall nationwide from 64.5% in 2000 to 60.4 in 2018.
It is often said that this is the result of an aging population. But, between 2000 and 2018, the employment ratio for those aged 55 to 64 rose by 9.5 percentage points nationally and 5.4 percentage points in Minnesota. For workers aged 65 and over, the increase was 4.5 percentage points nationally and 6.5 percentage points in Minnesota.
The declines in employment ratios have been seen in other sections of the labor force. One of these is among women. Across the United States, the employment ratio for women fell by 2.9 percentage points between 2000 and 2018. But in Minnesota the fall was steeper, 3.6 percentage points, as shown in Figure 1. We also see that our state under-performed the national average among women aged 45 to 54, white women, and women aged 20 to 24.
Figure 1: Percentage point changes in employment ratios, 2000-2018
Source: Bureau of Labor Statistics
There is a large body of research into the causes of these declines. One of these is higher child care costs which standard labor supply models imply should be associated with lower parental labor force participation rates. According to economists Katharine G. Abraham and Melissa S. Kearney, “the available evidence shows clearly that the cost of child care can be an important impediment to mothers’ employment.”
Where childcare costs are particularly high you would expect to see these effects even more strongly. And a new report from the Economic Policy Institute finds that Minnesota ranks 4th out of 50 states and the District of Columbia for most expensive infant care. The EPI finds that
Minnesota’s child care expenses are a real problem for families and even moderate earners. It is highly likely that they account for some of our state’s lagging performance on female employment.
John Phelan is an economist at the Center of the American Experiment.