Increasing funding for childcare will not lower prices or reduce shortage

It is no secret that high and increasing child care costs are becoming a big concern around Minnesota. This is the case especially in rural areas. Parents in Minnesota as well as the rest of the country face high prices or lack of childcare providers. Current programs that have been in place to assist low income parents have failed to address the needs of these families.

High cost of childcare is not only detrimental to families but it also presents a loss to businesses as well as the rest of the economy when parents cannot work. When businesses lose workers or cannot find workers due to childcare, the economy takes a hit.

While the state has taken some action in addressing the childcare crisis, those proposals fail to address the underlying cause of high prices. Those proposal also do not deal with shortage. The recent proposals to expand financial assistance available for families to enroll in Early Learning programs is a good example of that. This proposal, like other ones, does nothing to address what is causing high prices. Instead it will increase demand while doing nothing to incentivize more supply.

But one of the main issues contributing to lack of affordability is the fact that family childcare providers, which are cheaper compared to centers, are leaving market at high rates. While Minnesota is one of the least affordable state for center based care,  it is one of the the most affordable state in the nation when looking at family child care providers. So, one way to ease the burden of cost for families would be to incentivize the entry of more family child care providers.

There are a lot of issues plaguing the childcare industry that will not be solved by merely increasing funding. For instance, providers have a hard time attracting and retaining workers due to low wages and stringent hiring qualifications.

Legislators need to address issues leading to these high prices. These include excessive regulations. In as long as new providers continue to exit the market at high rates, prices will remain high, services will still be scarce, and parents will have no use for these subsidies that keep on coming.