Minnesota is one of the least affordable states for center-based childcare

On January 8, WalletHub released a study ranking Minnesota as one of the best states to raise a family. Minnesota ranked number 3 overall, only behind Massachusetts and North Dakota. According to WalletHub, Minnesota ranked especially well on median family income, family poverty rate, and the cost of childcare.

Minnesota certainly ranks favorably on some of these metrics, such as income, and poverty rates. On childcare affordability, however, the study deserves extra scrutiny.

According to data from Child Care Aware (the website that WalletHub used), in 2022 — the most recent year for which data is available — parents paid $17,441 to send their infant to a licensed daycare center in Minnesota. This was the 7th highest price for infant center-based care in the country. After controlling for median family income (for a married couple), Minnesota still ranked 10th highest. Looking at older children, Minnesota ranked 11th highest for toddlers and 10th highest for 4-year-olds.

Figure 1: Annual Cost of Center-Based Care as a Percent of Median Family Income (Married couples)

Source: Child Care Aware

Childcare in Minnesota is much more affordable for family childcare settings —  whereby providers use their own residential homes to take care of a small number of children. According to Child Care Aware, looking at family childcare, Minnesota was the 8th most affordable state for infants, toddlers, and 4-year-olds.

But family childcare prices still do not explain Minnesota’s favorable WalletHub ranking. Here’s why.

The problem with the ranking

Minnesota gets over two-thirds of its childcare capacity from licensed center-based care. This is mainly because family childcare providers have been exiting the industry in droves, both in Minnesota and the rest of the country. In fact, according to Child Care Aware, in 2022, family childcare providers only made up a little over a third of all available childcare spaces in the state. The rest was provided by licensed daycare centers.

While some states do break down childcare capacity depending on the type of care, they do not break it down further by age category. This makes it impossible to accurately calculate the average price of childcare especially since childcare prices vary both by type of care and by the age of the child.

All things considered, WalletHub’s study is, at best, an inaccurate oversimplification of the childcare landscape in Minnesota.

The majority of childcare in Minnesota is provided by licensed center-based care. And for center-based care, Minnesota is one of the least affordable states in the country for children of all ages. WalletHub’s ranking is misleading and paints a flawed positive picture of childcare costs in Minnesota.