Writer: Ryan Gandolfo
2 min read February 2024 — While transportation and housing needs are often cited as the main challenges faced by U.S. metropolitan areas experiencing positive economic growth, access to childcare for working families is a crucial aspect of infrastructure that has been overlooked at the local, state, and federal levels.
In September 2023, the emergency childcare funding allocated by the U.S. Congress during the COVID-19 pandemic as part of the American Rescue Plan Act, which included $24 billion in childcare stabilization grants, expired — severing a critical lifeline to the industry.
“We’ve already started to see the breaking point for a lot of families. We created childcare historically in a market-based approach that frankly does not work,” Ann McCully, executive director of Chid Care Aware of Minnesota, told Invest:.
“We know we cannot ask parents to pay more and the individuals working in this field can’t take any less in terms of wages. We’ve been feeling that we are teetering on the edge of collapse for years.”
McCully and her team work with 14 different agencies across the North Star State to implement initiatives to support childcare and early childhood, from the business and professional development of child care providers and scholarships to bolster the childcare industry workforce to informing parents about the childcare options available in their area.
To alleviate the pressure faced by childcare providers, U.S. states like Minnesota have directed more funding to child care providers that provide vital services to working families.
At the end of January, Gov. Tim Walz’s administration announced $6.2 million in childcare economic development grants — the state of Minnesota’s largest-ever round of grants that nearly totals the $6.5 million issued by the The Minnesota Department of Employment and Economic Development (DEED) since 2017.
“These grants have been going on for awhile, but this is the first year that we saw significant funding. When this particular program was started through the DEED in 2017, it included $500,000 grants, but now this latest round was over $6 million,” said McCully. “The last [state] legislative session was the first time we saw significant input across the board for early childhood and care, including a $1.3 billion investment. We haven’t seen that kind of money since I started in the organization 20 years ago.”
The average family with at least one child under the age of five years old would need to allocate 13% of total income to pay for child care, a cost considered unaffordable by many families also burdened with higher housing and food costs, as cited by the U.S. Department of Treasury and Bureau of Labor Statistics.
“In order to attract new families and businesses, we need stable childcare. We have been saying that for a long time in the industry, but it has become clear that the business community and our economic development entities are all realizing that childcare and housing are the top needs that every business is talking about,” McCully noted.
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