With 72 hours ’til opening day, the Minnesota State Fair is short of workers
On Aug. 16, the Star Tribune reported that with just a week to the state Fair opening, vendors were having a hard time attracting workers. With the Minnesota State Fair…
The National Association for the Education of Young Children (NAEYC), in their survey taken between June 15 and July 5, reported that “81% of respondents say it is the same or more difficult to recruit and retain qualified educators now than before the pandemic, with fully half of the respondents saying it is more difficult; this is particularly true for programs serving families who need financial assistance, 88% of whom report it is as or more difficult.”
According to the report, the main reason for this difficulty in hiring was because childcare providers could not compete with the high wages that other businesses were providing. Unemployment benefits were also cited as a reason why providers preferred to stay home rather than return to work.
Weeks after the expanded unemployment benefits ended, the situation has not changed. Even in Minnesota, a lot of providers are still having difficulty finding workers. Some are even experiencing high quit rates. What is the reason for this? A deep analysis still brings us back to a government-caused worker shortage.
Childcare is generally a low-wage industry. This is because childcare is very labor-intensive and there are no mechanisms through which providers can increase productivity over time. Therefore, it takes a big number of providers to take care of a small number of kids, causing the costs of providing care to be high.
During the pandemic, expanded unemployment benefits caused workers to stay home, leading to worker shortages. Signs indicate that the government’s subsidization of leisure has encouraged workers to not return to their old jobs. Data indicates that even though unemployment numbers are declining, job vacancies still remain significantly over the number of unemployed individuals receiving jobless benefits.
In response to this trend, numerous businesses are continuing to raise wages in order to attract workers. Childcare providers, however, cannot compete. The economic setup of the childcare industry makes it impossible to find cost-saving mechanisms that would allow providers to get higher pay without raising tuition on parents.
Considering that parents need childcare to go to work, the inability of providers to find workers will keep more parents out of the workforce, further worsening the worker shortage. Evidence already indicates that parents are facing high tuition and even long waitlists for childcare as they try to return to work.
Of course, some people will look at this problem and think that grants and subsidies are the best way to tackle this issue. But the worker shortage problem would not exist if it weren’t for government action in the first place. Grants and subsidies, furthermore, only transfer the cost of bad government policy to taxpayers, doing nothing for providers which close permanently due to worker shortages or other issues.
The worker shortage is something that is facing the entire economy, but overregulation in childcare makes it especially hard for providers to compete with other businesses.
According to research, one of the issues that workers complain about is the stringent hiring requirements associated with childcare work. At a time when restaurants are starting at $15 or more, the industry doesn’t pay anyone to go through the complex training system for a job that pays, on average, $12 an hour. Therefore, loosening certain requirements in the childcare system would contribute to getting workers back in the system.
Notwithstanding, lawmakers need to realize that paying people not to work encourages them to do just that.