Child care operates in a “broken market,” or so goes the popular explanation for its high costs and low wages. But the economics of child care are the same in South Dakota as in Minnesota, and yet parents in South Dakota spend less than half as much as their Minnesota counterparts on center care.
After adjusting for income differences, Minnesota ranked as the ninth least-affordable state in 2024, with day care costs for infants eating up 18% of the median family income. South Dakota was the country’s most affordable state.
This difference alone should bolster legislative support for proposals by the Minnesota Department of Children, Youth, and Families, or DCYF, to loosen licensing rules and to make it easier for day care centers to hire staff.
Reflecting years of discussion among various stakeholders, the DCYF’s proposed revisions are a chance to not only address what’s truly ailing the child care industry — overly strict regulations that restrict supply and raise prices — but also move Minnesota away from the tax-and-spend approach that has characterized the Legislature in recent years.
In the State Childcare Regulations Index published this year by the Archbridge Institute, Minnesota ranked as the 10th-most-restrictive state nationwide. In the Midwest region, only Wisconsin, another high-cost state, maintains a more prohibitive regulatory climate. North Dakota and South Dakota both outperformed Minnesota on the index and on affordability, indicating a strong link between regulatory stringency and child care costs.
This article originally appeared in the Duluth News Tribune. Continue reading at The American Experiment.
Edward Timmons, PhD, is Vice President of Policy at the Archbridge Institute. He leads the institute's economic policy strategy, identifying focus areas and disseminating work to key stakeholders and policymakers. His own research focuses on labor economics and regulatory policy; he is regularly asked to provide expert testimony to U.S. states on occupational licensing reform and the practice authority of nurse practitioners. Dr. Timmons received his Ph.D. in economics from Lehigh University and his B.A. in economics and actuarial science from Lebanon Valley College. He publishes a weekly newsletter on Substack with the latest research and policy insights surrounding occupational licensing.
Economics of Flourishing
Child care operates in a “broken market,” or so goes the popular explanation for its high costs and low wages. But the economics of child care are the same in South Dakota as in Minnesota, and yet parents in South Dakota spend less than half as much as their Minnesota counterparts on center care.
After adjusting for income differences, Minnesota ranked as the ninth least-affordable state in 2024, with day care costs for infants eating up 18% of the median family income. South Dakota was the country’s most affordable state.
This difference alone should bolster legislative support for proposals by the Minnesota Department of Children, Youth, and Families, or DCYF, to loosen licensing rules and to make it easier for day care centers to hire staff.
Reflecting years of discussion among various stakeholders, the DCYF’s proposed revisions are a chance to not only address what’s truly ailing the child care industry — overly strict regulations that restrict supply and raise prices — but also move Minnesota away from the tax-and-spend approach that has characterized the Legislature in recent years.
In the State Childcare Regulations Index published this year by the Archbridge Institute, Minnesota ranked as the 10th-most-restrictive state nationwide. In the Midwest region, only Wisconsin, another high-cost state, maintains a more prohibitive regulatory climate. North Dakota and South Dakota both outperformed Minnesota on the index and on affordability, indicating a strong link between regulatory stringency and child care costs.
This article originally appeared in the Duluth News Tribune. Continue reading at The American Experiment.
Edward Timmons
Edward Timmons, PhD, is Vice President of Policy at the Archbridge Institute. He leads the institute's economic policy strategy, identifying focus areas and disseminating work to key stakeholders and policymakers. His own research focuses on labor economics and regulatory policy; he is regularly asked to provide expert testimony to U.S. states on occupational licensing reform and the practice authority of nurse practitioners. Dr. Timmons received his Ph.D. in economics from Lehigh University and his B.A. in economics and actuarial science from Lebanon Valley College. He publishes a weekly newsletter on Substack with the latest research and policy insights surrounding occupational licensing.
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