Why housing and child care cost too much
On housing and child care, Minnesotans face higher costs than many other Americans. In 2019, the average Minnesota family paid over $16,000 to keep a child at a day care…
In our recently published report, American Experiment noted that the childcare crisis in Minnesota is largely due to excessive government regulations. Strict staff-child ratios and group size limits, as well as stringent staff hiring and training requirements, are among the rules that raise the cost of providing care — costs that providers pass on to parents through high daycare tuition.
So, what can be done to alleviate the childcare crisis in Minnesota? Lawmakers largely focus on expanding funding. For example, the recently published Economic plan that Gov. Tim Walz unveiled calls for expanding the Child Care Assistance Program and Early Learning Scholarships in order to make childcare affordable and accessible.
But as our report show, spending taxpayers’ money on early childhood does nothing to alleviate high costs or shortages. Instead, it only transfers those high costs to taxpayers. This is because public funding does not address the root cause of the crisis.
If Minnesota lawmakers are serious about addressing the childcare crisis, American Experiment suggests that they focus on the root cause of this issue — excessive regulation — instead of expanding funding.
Among other things, our study suggests that Minnesota lawmakers should consider;
Legislators should increase the number of infants and 4-year-olds allowed per caregiver, as well as per group. This will also save providers money leading to lower prices.
In addition, legislators should also consider relaxing the infant definition in order to allow older children to be placed in bigger sizes.
Older children usually face more lax staff-child ratio and group size requirements. In Minnesota, for example, childcare centers can have 7 toddlers — defined as aged 16 to 33 months — per staff, and 14 toddlers per group. This is in contrast to 4 infants — defined as aged 6 weeks to 16 months — per staff and 8 infants per group. For 4-year-olds, centers can have 10 children per staff and 20 children per group.
But compared to a lot of states, Minnesota has a strict definition of infants. In a lot of states, infants are defined as aged 0 to 12 months. But in Minnesota, the cut-off age for infants is 16 months. This means that providers in other states are able to put slightly older children — like those ages 12 months to 16 months — in toddler group sizes that are larger. This saves providers money leading to lower costs. But In Minnesota, centers cannot put a child aged 12 to 16 months in toddler groups.
To reduce costs, legislators should lower the cut-off age for infants to 12 months as this will mean that children between 12 and 16 months will be defined as toddlers, allowing centers to put them in bigger sizes thereby reducing the cost of providing care — savings that could be passed on to parents.
Per evidence, hiring requirements have little to no effect on quality, but they increase the cost of childcare. According to American Experiment’s study, requiring childcare center teachers to have a high school diploma and college credits raises the annual cost of care by $3800 for infants and $2,600 for 4-year-olds, on average.
Research, however, indicates that the length of training does not matter; rather, the type of training does. Training focused on early childhood education and workplace development as well as activities supporting the interaction of teachers and children, for example, have been associated with high-quality childcare.
Legislators should consider loosening childcare training length requirements and instead emphasize on-the-job training focused on early childhood learning and child development or related topics. Making it easier for educators to gain skills, and creating multiple pathways into the profession are good ways to attract workers.
Administrative rules sometimes reduce flexibility and increase compliance costs contributing to high costs. In Minnesota, for example, the DHS requires that the first person used by licensed centers to satisfy staff-child ratio requirements — or lead caregiver — should have the qualifications of a teacher.
Teachers are, however, more expensive since they face more stringent hiring requirements compared to other caregivers like aides or assistant teachers. This rule means that providers cannot use equally capable, but more affordable workers with less educational qualifications like assistant teachers or aides as the first staff person to satisfy child-staff ratio requirements.
Allowing providers the flexibility to use other skilled workers like aides or assistant teachers as lead caregivers would lower costs for providers without lowering quality, especially considering that assistant teachers in Minnesota face more stringent requirements than lead caregivers in many states.
Like most of our woes, the government is to blame for the childcare crisis through excessive regulation. So, any solution that does not address these excessive rules is unlikely to address high prices or shortages. Lawmakers must loosen childcare rules if they are serious about addressing high childcare prices as well as shortages.
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