Mar 22, 2022 - Business

Minneapolis and St. Paul's child care industry in crisis, report says

Illustration of an upward trending bar graph made of legos

Illustration: Eniola Odetunde/Axios

A new report by the Itasca Group says the public and private sectors in the Twin Cities need to step up to help a child care industry that's in crisis.

Why it matters: Child care isn't just important for the development of kids, but it's also key to our economic rebound.

  • 48% of parents with kids under 18 who quit a job in 2021 cited child care issues as a reason for leaving, according to Pew Research Center.

State of play: The Itasca Project, a group of corporate, philanthropic and public sector leaders, said there are three main challenges facing the industry:

  1. High costs.
  2. Limited availability.
  3. A severe shortage in rural areas, low-income communities and for people of color.

The intrigue (for those of you without small kids): In Hennepin County, it costs an average of $18,400 a year for infant care at a center and $13,800 for a 4-year-old, according to Child Care Aware.

  • Minnesota has some of the highest costs of care in the country because we have higher standards for teachers and lower ratios of kids-to-teachers, per the report.
  • While that makes for good quality of care, it also creates a system in which tuition is unaffordable for many households.

The Itasca Project said in addition to more public funding, the industry needs employers to adopt more child care benefits, and businesses and philanthropies should boost scholarship funds.

What they're saying: Chad Dunkley, president of the Minnesota Child Care Association, described a situation in which many day care centers are being propped up by state COVID recovery grants that are tied to increased teacher pay and benefits.

  • But he warned that if government assistance goes away, providers will lose teachers and be forced to raise tuition even higher, or close.

Dunkley is also the CEO of New Horizon Academy, with 70 Minnesota locations. It had 11,000 students before the pandemic.

  • After losing all but 2,500 students in the early days of the pandemic, New Horizon has rebounded to 9,000 kids, but a teacher shortage is holding the company back from returning to 11,000 students, Dunkley said. That's despite a 9% wage increase last year.

What to watch: The topic is a hot one at the Capitol. Gov. Tim Walz has proposed a $5.1 billion education budget that includes more child care assistance for low-income families.

  • House Democrats are pushing for tax credits to offset child care costs. A Senate GOP spokesperson said the caucus' focus is on increasing supply by making it easier to start in-home day cares.

Go Deeper: Read the full report.


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