‘Will we ever solve the childcare crisis?’

On August 17, Boston magazine asked, ‘Will We Ever Solve the Childcare Crisis?‘

The article explained,

We live in one of the most innovative and progressive regions in the country—not to mention one of the richest. Yet Massachusetts is also the state with the most expensive childcare in the nation, which is crippling families, mostly working moms. Will we ever figure out how to solve the childcare crisis?

The same can be said of Minnesota. Despite investment and subsidies, Minnesota parents still pay some of the highest prices for childcare. For instance, after accounting for differences in the cost of living, center-based infant care costs $16,499 in Minnesota, the third highest among the 50 states and Washington, D.C. In addition to high costs, parents are also crippled by an extreme shortage, which has only gotten worse since the pandemic.

Figure: Annual cost of center-based infant care by state (Adjusted for differences in the cost of living

Focusing on the wrong solution

Like in the past, efforts are underway to put more money toward childcare. Just recently, the Minnesota Department of Employment and Economic Development (DEED) announced a round of grants to be used

for child care business startups or expansions, training, facility modifications, direct subsidies or incentives to retain employees, or improvements required for licensing, and assistance with licensing and other regulatory requirements.

If history has taught us anything, however, it is that throwing money at childcare does not address what’s ailing the industry. Instead, it shifts costs onto taxpayers.

Childcare is a complex, labor-intensive industry. This partly explains the high costs. At the same time, however, the state burdens providers with a myriad of rules that barely contribute to safety or quality but raise the costs of providing care.

So, will we ever solve the childcare crisis? That depends.

If childcare solutions do not incorporate regulatory reform, legislators only risk raising costs while shifting costs onto taxpayers.