Minnesota’s Economic News – W/E 4/9/21
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Many states have been facing childcare shortage and the corona virus has made it worse. Some states have instituted programs to fund providers and keep them in business. And some other states have focused on loosening regulation to ensure providers stay in business during the pandemic. In Minnesota a lot of childcare providers are struggling financially, and some may not manage to stay open. This is why this is the best time for the state legislature to work on loosening childcare regulation. This will ensure that the state is better prepared to handle the surge in demand that will follow the end of the lockdown.
Long term implications
We do not expect the coronavirus to persist forever. After the lockdown is done and people are back to work the demand for childcare services will go up. And if nothing is done now, Minnesota will be in a much dire situation than before the coronavirus. Childcare shortage will have gone up and so will have prices. The best time to ensure that centers are preserved is now.
While some states have suspended rules like capacity ratios, the state of Minnesota has not made any changes to the rules that providers follow. Minnesota`s childcare landscape is however in a worse shape compared to most states; prices are so high and there is rampant shortage especially in the rural areas. Family childcare providers have been exiting the childcare market the last couple of years, leading to a shortage.
These issues will worsen once people start going back to work. Because some childcare providers are exiting due to financial struggles, capacity will be much worse off while demand will be higher. Starting to ease rules right now will ensure smoother reentry for some providers while also incentivizing new businesses.
As the legislature reconvenes, childcare regulation should be among the things they work on. Childcare service providers are saddled with burdensome regulation which will disturb their operations once the virus is over. What is needed is for the legislature to focus on loosening regulation for childcare providers.