Solving Child Care Needs, Especially in Greater Minnesota

Q&A With Elizabeth Davis, University of Minnesota applied economics professor, on child care needs and solutions

I am a Professor of Applied Economics at the University of Minnesota. My research has been focused largely on child care and early learning and the decisions families make about both child care and employment and how those are interrelated. I have been interested in rural child care issues — there are a lot of challenging issues there. The pandemic has made it apparent to more people what some of the issues are, but also increased the challenges that families face.

Q: What are the bright spots in childcare?

What the legislature in Minnesota passed this last session was definitely a bright spot. Minnesota and a few other states are moving in the direction that the federal Build Back Better Act would have done had it passed — it would have provided more federal support for investment in early care and education. Now the state is instead trying to address the problems of affordability and availability, and low compensation for the workforce in early care and education. 

Minnesota’s enhanced child tax credit is not specifically targeted to child care or early learning, but helps families with whatever costs they have for raising children. That is a big step towards reducing childhood poverty. Families can use the money on housing or child care or whatever they need. 

  • The legislature increased the child care assistance program funding and the payment rates to providers. So that should help families both afford care and find it more available because providers will be paid more.
  • They also gave a pretty big increase to the Early Learning scholarship program, which is a subsidy to help low-income families pay for care or early education. It’s expanded to include infants and toddlers, which was missing before.
  • They’ve expanded public preschool, known as voluntary pre-K. (It’s voluntary in the sense that school districts can opt into it or not, and it’s not like K-12, where you have to send your kids to school.)
  • They did a number of expansions to try to help the availability and the retention of providers with increased scholarships and grants.
  • The facilities revitalization grant is something they have been giving out the last few years, which is a great model for how to help family child care providers who take care of children in their own home. There’s a lot of wear and tear on their homes. I got to see some of the applications and how the money was being spent, and it’s remarkable. Flooring that is easier to clean, a new door that is safer and actually latches, fencing, playground equipment. 

Being able to give money directly to providers rather than always to families, is going to help people feel more supported in providing care. That’s going to be really important in rural areas, because there aren’t enough kids to operate a child care center. That business model doesn’t work. 

Q: How are child care and early childhood education defined in policy and funding options?

Learning and development happens wherever the child is. All the environments that the child is in —  whether it’s a childcare center, or a family home provider, or a grandparent — affects their development and their future trajectory.

Early learning programs, preschool, and pre-K also provide care. During the pandemic, we discovered that elementary schools also provide care. Even high school takes care of children. So the separation in our policy between care and education is really a false dichotomy. There are programs that are more focused on the learning aspect, and others that focus more on the care, but we need to have policies that support both of those.

I think the way policymakers are moving is to lessen the separation between the two and recognize that child care needs to support early learning.

Early learning also needs to support parents’ employment and care for children, or else it’s not going to work. A parent who qualifies for Head Start or a public pre-kindergarten program, but needs full-time care, is not likely to use a three-day-a-week, or a mornings-only preschool program.

A child care center or a family child care provider that is taking care of children all day may provide safe and loving care — which is the most important thing — but if they have no curriculum, no early learning component, no child development focus, they might not help the child be ready for school in quite the same way. 

One of the things that Minnesota did this year will be to create a new agency to combine the subsidies for the child care assistance program with the Early Learning scholarships. 

Q: I know this isn’t an either/or issue, but in economic terms, is a greater solution related to having families be able to afford what they need? Or is it about having child education workers paid better so there’s more availability? 

There are two challenges that seem at odds, affordability for families and better pay for child care providers. They both stem from the same cause, which is insufficient resources. Compared to other wealthy countries, we put a lot fewer public resources into this sector. Because it depends so much on what families can afford, the staff does not have decent wages. That is leading to supply shortages and high levels of staff turnover, which affects the quality of care that’s provided. 

If families had more resources — if we subsidize family cost of child care — they could afford to pay more. Therefore the staff could get increased compensation. We don’t know if that arrow actually works [since we have not tried it yet].

If the prices paid go up, would compensation go up? If the market is working, it should. But it’s not a guarantee, because markets aren’t perfect. So there are efforts underway to more directly increase the compensation of child care providers. 

Minnesota has done some of this in the past with grants and scholarships for teachers and assistants, so that those who provide child care and early education can improve their credentials and be rewarded for staying in the field, increasing their compensation. So there are direct ways of trying to tackle that problem. But the sector still needs more resources overall. 

It’s really hard to find infant care anywhere, especially in rural areas. If one adult can only take care of three or four infants — and we don’t really want them taking care of more than that — how many miles do you have to drive for it to be available?

Q: What have you seen elsewhere that is providing good options for families? 

What New Mexico is doing is really interesting. Almost all families with children are now eligible for some subsidy to help pay for child care, increasing the eligibility to something like 400 percent of the federal poverty level. They are trying to address the lack of affordability for not just low-income families, but also middle-income families. They expanded who is eligible. They put more funding into it. And they raised the payment rates for providers in the program. They are coming fairly close to universal, subsidized child care.

However, it’s taking a while to make an effect — for providers to actually expand and increase their compensation. I’ve heard the commissioner in New Mexico talk about the low uptake; part of it seems to be a lack of trust. [Child care and early education providers recognize that these policies] in the next election could all be pulled back. They are reluctant to believe this is going to [consistently] be the new system [so do not want to make significant changes to payroll]. 

Q: Some communities are teaching high school students caregiving skills. Do you see that as a potential long-term solution to the state’s child care needs?

That might be more of a stopgap measure. If we really want people to go into caregiving, and stay in caregiving as a career, then the compensation and the career paths have to be there for them. Some of the community colleges offering two-year programs in early education are closing. We’ve set our system up in some ways to say that college succeeds if you get a well-paying job. If you’re going into child care, those are [currently] not well-paying jobs. That’s a catch-22.

We do need people trained. And we’re still fighting against this perception that it’s “just babysitting” that doesn’t take any particular skills. If you read the science of early brain development, and realize how important it is to have a caregiver who has some understanding of child development at the different stages, [you realize that] every interaction and experience is affecting the child’s development [and early education child care should offer that]. 

Q: A lot of women in particular left the workforce during the pandemic. Do you know how Minnesota in particular looks in terms of people returning to the workforce, and figuring out their child care issues?

The Minneapolis Federal Reserve survey has been tracking that information. We’re still hearing about labor shortages, and child care shortages, but maybe not as much. I do track the data on the numbers of child care providers, but it’s been challenging to really know what’s going on.

During the pandemic, providers could be closed but not give up their license, so it might look like there was more supply than there was. 

Now providers are open, but they might have closed a classroom because they don’t have enough teachers. Instead of two toddler rooms, they have only one open. I keep hearing that finding and retaining staff is still a huge issue. 

Q: Closing thoughts?

Affordability and availability and low compensation are all interrelated. And the movement towards streamlining and combining programs to make them work better for both families and providers is going in the right direction. The new agency and Great Start Scholarship program has a lot of great potential.

But it’s still a few years out in terms of being created. It’s not going to help families who need care today. 

Related Resources

Center for Rural Policy and Development: