This article originally appeared in the Duluth News Tribune on April 8, 2026, and includes contributions from Edward Timmons (Archibridge Institute).
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.
Indeed, a 2022 analysis by researchers at the Federal Reserve Bank of St. Louis found that, “There is a negative relationship between child care affordability and the average child-to-staff ratio in each state.” That is, states that allow a higher number of children per caregiver, spreading labor and overhead costs over more families, on average, see lower prices.
Published academic research confirms this and estimates that states could lower costs for center-based infant care by up to $1,890, on average, by allowing an additional child per caregiver. Similarly, repealing rules that require a high school diploma for applicants could potentially reduce costs by up to $4,350 per infant. Compared to these reforms, DCYF is proposing much tamer changes.
If new rules are adopted, applicants for a center teacher position would still need a high-school diploma and some college-level education. But they would require significantly less work experience compared to the current state rules, which should expand the state’s labor pool and make it easier for centers to find workers.
In 2024 alone, the DCYF issued more than 4,000 variances to allow centers to hire workers who did not meet Minnesota’s hiring requirements. This indicates a structural mismatch between state rules and the qualifications of the applicant pool that is unlikely to be addressed by increased funding. It also suggests that some centers could be operating below capacity due to worker shortages, making reform urgent.
The length of training has no meaningful effect on quality. However, overly stringent requirements drive away day care centers from the market, pushing families into using lower-quality care or forcing mothers to exit the workforce entirely.
One published study finds that an additional year of education for center directors potentially reduces the number of child care centers by up to 4%. These results were especially strong in poorer neighborhoods.
While positive interactions between teachers and children predict children’s outcomes, achieving this level of care requires a much lower education threshold than Minnesota requires. A longtime child care researcher, David M. Blau, concluded in one of his studies that even one recent college course in early-childhood education was enough to improve quality.
Research also indicates that education beyond high school is all that is needed to reduce the incidence of accidents: Staffing ratios have little effect on child safety.
Taken together, academic research suggests that lawmakers can shorten training without jeopardizing the quality of child care. The state can instead utilize other avenues, such as preservice and annual training requirements, to expose teachers to early-childhood development.
The child care crisis is government-made. It is a result of stringent regulations that exacerbate worker shortages, restrict supply, and drive up costs for providers.
Amid mounting affordability challenges, reform cannot wait.
