Should St. Paul provide free childcare? Here’s what the evidence says
The idea that our state should spend, or as politicians like to say, “invest,” more of our tax dollars on childcare was not only prevalent in this year’s legislative session,…
When he announced his $65.2 billion two-year “One Minnesota” budget, a 26% increase from the current two-year budget, Gov. Walz claimed that it will “lower costs, cut taxes, and improve lives for Minnesotans.”
A closer look at the budget indicates that it will not do these things. Gov. Walz’ proposals relating to childcare expenses are a case in point.
It is true, as my colleague Martha Njolomole has written, that Minnesota has some of the most expensive childcare in the United States.
In her report “Childcare Crisis,” she explains how:
In 2019, the average family in Minnesota paid over $16,000 to keep their infant at a day care center for the whole year. Compared to the rest of the country, Minnesota had the sixth highest annual cost for center-based infant care. And for 4-year-olds, the average family paid over $12,000 for center-based care making Minnesota the seventh most expensive state for center-based care for that age group.
The key question, then, is why is childcare so much more expensive in Minnesota than in other states? Martha explains that:
…state differences in cost of center-based care are mainly explained by differences in state regulation. More specifically, states with stricter staff-child ratios and group size limits as well as more stringent hiring and training requirements — like Minnesota — are generally plagued with higher prices for center-based care.
» Report findings estimate that reducing the number of infants allowed per caregiver by one — i.e., making the ratio stricter — raises the cost of infant center-based care by $2,800. And reducing the number of 4-year-olds allowed per caregiver by one raises the cost of center -based care for 4-year-olds by about $450.
» Furthermore, requiring teachers to have a high school diploma raises the cost of center-based care by over $1,900 for infants and by over $1,300 for 4-year-olds. These costs are tripled when teachers are required to have a bachelor‘s degree or more.
The cause of our our relatively expensive childcare — the thing we must address — is these excessive regulations.
Gov. Walz’ budget does not even attempt to treat these problems. Instead, he proposes not to actually reduce the cost of childcare, but simply to pass that cost on to the taxpayer. He proposes to expand tax credits so that families making under $200,000 with one child could receive up to $4,000 a year for childcare costs, families with two children could receive up to $8,000, and families with three children could see up to $10,500.
These expensive measures treat the symptom — the relatively high price of childcare in Minnesota — not the underlying problem — our state’s relatively high regulatory burden on childcare providers. Whatever else they do, they do nothing whatsoever to reduce the cost of childcare in Minnesota.
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