INTRODUCTION The 2016 legislature directed the Minnesota Department of Employment and Economic Development (MnDEED) to develop and publish a manual on starting a child care business in Minnesota. That charge reflected three major economic facts. • Lack of quality, affordable child care is a significant barrier to the participation of women, single parents, low income parents, and rural parents in the workforce. That barrier then creates further spillover barriers to job creation, wealth creation, business expansion and retention, and new business location. In addition, lack of child care is a major factor in employee absenteeism with adverse effects on both employers and employees. • Lack of quality, affordable child care forces parents into what the Child Care Council of America in 2016 called the problem of “accommodation not choice.” Scarcity in child care does not now produce general substitutability of one provider for another, requiring parents to make accommodations to costs, schedules, children’s needs and other characteristics of a family’s demand for child care. Minnesota Department of Human Services data reported that twenty-nine percent of all parents, and thirty-five percent of low income parents, reported taking whatever child care they could get. Those percentages increased to over forty percent for minority and non-English speaking households. • The decision to enter the child care business is both a personal and a business decision where the potential provider often encounters high information costs for information needed to guide entry and operations decisions. Those costs can be particularly high for the forty-six percent of child care providers who operate as family child care providers.
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