Measuring the impact of childcare in NW Minnesota: A report of the Economic Impact Analysis program

In recent years, the Northwest Minnesota Foundation has collaborated with regional partners on efforts to sustain and increase the supply of quality childcare. Generally, the work reflects a broad, regional strategy focused on strengthening the childcare ecosystem and supporting long-term sustainability.
The Foundation is evaluating the outcomes of the childcare efforts to help guide future investments. As part of that process, the organization was interested in understanding the economic value of childcare slots. Thus, they hired University of Minnesota Extension to conduct an economic impact analysis.
The analysis explored the impact of childcare availability on three aspects of the economy.
• Childcare operations: When a parent enrolls a child in childcare, the provider earns both business and personal income. The provider, in turn, spends a significant portion of the business income on items such as groceries, supplies, and rent. In addition, the provider spends their personal income to support his or her own family. This creates additional economic activity.
• Parent wages: Multiple studies and surveys in Minnesota have shown the same result – the lack of childcare slots results in Minnesota parents opting out of the workforce. Given the state’s workforce shortage, it is clear that an additional childcare slot would likely result in a parent working and earning income. That income also has an impact on the local economy when the parent spends their wages to buy groceries, pay for healthcare, and shop at local businesses.
• Business output: When a parent is able to enter the workforce, that worker generates economic activity for the employer.