Episode 09: The child care challenge for Minnesota's workforce

Christy Kallevig: Welcome to Vital Connections on Air, a podcast brought to you by University of Minnesota Extension Center for Community Vitality that explores the trends and topics important to communities and leaders throughout Minnesota. My name is Christy Kallevig, and today I am joined by Marnie Werner who is the research director for the Center for Rural Policy and Development. Welcome to the podcast, Marnie.

Marnie Werner: Thank you.

Christy Kallevig: So, let's start by getting to know the center a little bit. What exactly is the Center for Rural Policy and Development?

Marnie Werner: Well, I guess you could call us a think tank. We do research on issues that impact Greater Minnesota specifically. We were created about 20 years ago this year by the state legislature to provide information based on research and data about Greater Minnesota on issues that are affecting the area.

Christy Kallevig: And so when you talk about "Greater Minnesota" are you only working with a small communities in greater Minnesota or does it not matter what size of community just as long as it's outside of the metro area?

Marnie Werner: I guess when we define rural and greater Minnesota, we define it as everything outside the seven county metro area. In our experience, we found that we don't work with the larger cities like St. Cloud and Duluth and Rochester as much as we do work with smaller communities.

Christy Kallevig: Do you have to do regular reporting to the legislature then, since you were created by them?

Marnie Werner: Yeah, our audience is the legislature. We were created for that purpose. So, all the research that we do is really focused on the legislature as our primary listening group. But, it's available to anybody who's interested, so we try to focus it so that it's useful to anybody who might be interested in these issues.

Christy Kallevig: So, then I'm guessing that your research is also very much bipartisan, you're not tied to one political party?

Marnie Werner: Right, that's really the most important thing as we do our work is that we stay very nonpartisan and neutral and even when we make recommendations, we don't say you must do this. We say we find that this is the case, and so you may want to consider doing this. But, really we've built our reputation on being nonpartisan and so we like to think that that's why people find us useful.

Christy Kallevig: Right, well, it's great to know there's an organization like yours that's out there doing research on issues across the whole state. So, thank you for your work. What are some of the issues that you have been doing research around? Especially, as we gather today talking about workforce issues. What are some of the things that you've been exploring?

Marnie Werner: Well, the latest article we just posted was on access to mental health services and that affects a lot of people in Minnesota, particularly, in Greater Minnesota. But we also just released last fall an article that's gotten quite a bit of attention on childcare and the changing dynamics of childcare and how that's affecting not just families anymore, really, but employers and economic development in communities.

Christy Kallevig: So, tell me a little bit about that study. How did you conduct it? Who were surveyed as part of it and what were the results?

Marnie Werner: We didn't really do a survey so much as you would think of in a scientific type survey. It's really more of just a lot of information gathering from people and from studies. There are an awful lot of studies that are done by the state and by academic sources around the world but, particularly in Minnesota we have a lot of good information that's collected by various agencies with the state and a lot of those reports never seen the light of day. But, there's a lot of good information in them that people need to see. So, we pull them all together and see what we can glean from that and then we just interviewed a lot of people who are directly involved with childcare and with creating the policy on childcare and people who are affected by it directly. We put all of that together and just try to draw a picture of the landscape and help people understand the larger global dynamics of the issue.

Christy Kallevig: So, you got down to you even folks that are looking for childcare then?

Marnie Werner: Right, yeah.

Christy Kallevig: So, what are some of the things that you gleaned through that research and those interviews that really give a picture of the childcare issue across Minnesota?

Marnie Werner: Well, probably the really big thing out of that is, as you say across Minnesota, it's very different from one part of Minnesota to the next. There was a graphic in the article that shows how the gap in childcare access of some providers versus demand from families and how big those gaps are around the state. But, also we find that even though there is a shortage of childcare providers in all parts of the state, whether metro or greater Minnesota or small rural towns, the solutions to it are going to be different because of demographics and economics and population density.

We find in a lot of issues that we look at population, density has everything to do with it, because it changes the way things work financially and economically and it can be a big determiner in how if you want something to be sustainable. It might work in an area that has a very dense population, and it might work in an area that has sparse population, but it won't work the same way. That's what we found with childcare.

We found over the last 10-20 years, actually, going back 30 years, the number of people providing in-home family childcare, where you have a daycare in the home, has just been on the down slide. And in the last 10 years it's been pretty precipitous; it's been going down quite a bit. What we see on the other hand, is that the use of daycare centers has been going up, and if you look at it on a statewide basis it looks like the daycare centers are doing a good job of making up for that gap that's being left by in-home child care. That's providers who are leaving the job. But, when you break it out between metro and Greater Minnesota and look at it differently, that way separate those two different groups, you find that the in-home providers are going away at about the same rate in Twin Cities versus the rest of the state. But, the daycare centers are not filling that gap in the same way. In the metro area, the daycare centers are filling the gap really quite well and they've actually made up for the loss of providers over the last 10-15 years. In greater Minnesota, that's not the case at all and daycare centers, actually, are doing very little to make up that gap at the moment.

Christy Kallevig: Can you explain what you mean by doing very little to make up the gap? Just that they're not growing at the rate that you would expect them to or that we need them to?

Marnie Werner: Daycare centers, because of the dynamics of a business model. When you start a business and you want to sell a product, you have to have somebody who's going to buy the product; otherwise, you can't keep making that product to sell, it's unsustainable. So, it's the same thing with daycare centers. You have to spend some money up front to get everything ready for the kids. But, then if you don't have enough kids coming in, or the families can't afford to pay, what you need to make to be able to make up for what you paid up front to get that daycare center going [or] you're going to start losing money and it's going to eventually just be unsustainable and you can't stay open. So, if you're going to start a daycare center, that's going to require building and paying for utility bills. If you're going to serve food there, you need a restaurant quality kitchen. There are licensing fees and various regulations that need to follow. So, starting a daycare center involves quite a bit of upfront cost. Then, there's the staff that you need to be able to hire too. So, if you're opening your daycare center with all of this money invested in it, you have a lot of money behind that to support you as you're going along, because you have to pay those bills as you go along. If you don't have enough kids coming in with parents paying those rates to help you cover your bills then you can't stay in business. So, that's the problem that we've seen in smaller communities. There just simply aren't enough kids to support the cost that it takes to start a daycare center. So, daycare centers just aren't a viable solution in small communities the way they have been operating in the past.

Christy Kallevig: So, what you see then in the data that daycare centers are maybe more likely to pop up in your regional hubs or your regional centers like a Mankato or Crookston or are those larger communities that draw people in for work?

Marnie Werner: Right, yeah like Duluth or St. Cloud. They're going to have enough population where a daycare provider will live in a densely populated area — like the metro area. The problem they're having with day care providers is that they're very expensive. So, there's a supply of daycare centers for people to send their kids to but, the parents can't necessarily afford them. So, if they have to drop out because if they can't afford the rates, there's another family standing by waiting to get in. We'll pay the rates and so that daycare center isn't going to have a lot of trouble paying their bills because there's always somebody ready to take that space. You don't have that case in smaller towns in less densely populated areas. If someone has to drop out because they can't afford what you need to charge to cover your bills, there isn't necessarily another family standing by ready to jump in and take that family's place.

Christy Kallevig: So, it becomes an issue of not only quality childcare, but affordable childcare.

Marnie Werner: Right, in the Twin Cities, the issue is really getting affordable daycare. Outside the Twin Cities, the issue is getting any kind of daycare. And of course I should qualify this saying that we're talking about licensed daycare. Now, there's all sorts of unlicensed daycare going on. Nobody's really measuring and regulating and that's what's known as the family, friends, and neighbors. Grandma and grandpa look after the kids and whatnot during the day. So, what we're talking about is licensed.

Christy Kallevig: Right, and thank you for making that clarification because there are a lot of people who depend upon that family and friends piece, where someone doesn't have to be licensed and they can drop their kids off. I'm guessing that's especially true in our rural communities but, also for families that are maybe working those third shifts.

Marnie Werner: Exactly, yes, for those families that are working those nontraditional shifts, those night shifts, and weekend shifts, it's very hard to come by a regular daycare for them. So, they really do depend on family and friends to look after their kids

Christy Kallevig: Something that I know definitely took for granted when my daughter was in daycare that the center was open. So, it was easy to take her there. So, when you take a look at everything across the state and the metro versus rural comparison, do you see this issue becoming better or worse in the short term?

Marnie Werner: In the last 6–8 months since we released that article, people really started talking about it. I'm not sure about the metro area but, in Greater Minnesota, I just heard a lot of talk about this and a lot of chatter, and a lot of people really thinking we need to look at this differently. This isn't just a personal family issue where the parents are just going to have to figure it out. Communities are really starting to come together and think about this and think about how can we work at this at a larger scale to figure out solutions to this. So, I keep hearing about one community or the other coming up with some creative way of solving the problem. So, I think it's actually going to start improving fairly quickly.

Christy Kallevig: Well, that's exciting. Would you be able to share some of those stories that you've heard about what communities are doing?

Marnie Werner: Well, there was one community — and unfortunately I can't remember which one it is or which county it is now — but, it's somewhere in the Willmar area because it was at the Region Five regional Development Commission Meeting that I heard about. But it was one of those cities out there they decided to just waive their licensing fees for anyone who wanted to open a daycare. So, they would go out and do all the requisite inspections and everything that needs to be done because we need to keep kids safe. But they weren't going to charge for it. And that is a good thing because that reduces that overhead cost and that helps the provider be profitable sooner and it is sustainable.

Christy Kallevig: Are the licensing fees fairly expensive for providers?

Marnie Werner: You know, I actually don't know but that is a factor in adding to costs. And they must be high enough that the city that this would make a difference. So, they were happy to do this. Another good example that I heard was out in big Stone County, in the city of Clinton, [a] fairly pretty small town. They had four empty church buildings just because the population has shrunk so much and these congregations were shrinking too. And they had these buildings there and the congregations were wondering what to do with them, and women there in town came forward and said I'd really like to start a daycare center in one of these churches. So, the city and various organizations and the church communities got together and figured out how they could help this woman start the daycare center and I think they basically gave her the church building. I've been working with her to help her cut the overhead costs and get this daycare started. So, it's those kind of community solutions that I think are going to be the most successful.

Christy Kallevig: How do you see the impact of childcare or the lack of childcare? What impact does that have on a community that we might see and not recognize?

Marnie Werner: It's stressful for the families. It's stressful for the parents because they're at work and they're worrying about childcare. Or something happens to their childcare.  Either their provider is sick one day, or their provider just suddenly decides [to quit]. It may seem sudden to the family, [but] it's probably not sudden to the provider. But she decides I'm going to do something else with my life. It's a distraction for the parents when they're at work because they end up having to skip days and it just adds stress to the family. It's stressful for your kids because they lack stability and he's getting hopped around to different places and people and what not. The worst case scenario that they have to leave that job. And they may even have to leave the community if they can't get things to work.

Christy Kallevig: And that was going to be my question for you. Did you hear stories from people who made decisions about relocating or taking a job strictly based on childcare?

Marnie Werner: I heard from employers who would be interviewing people for jobs and the people would say, "Oh yeah, but there isn't any daycare in this town so we're not going to be able to take this job." Yeah, that's pretty much it. You know it's a deciding factor for workers especially with the workforce shortage that we have nowadays. People really can pick and choose. They don't have to just take any job that's presented to them nowadays anymore. So, they'll interview at a job and if they don't find adequate childcare in that community, they will move on and the employer is stuck looking for someone else.

Christy Kallevig: So, it's not even just a community issue, it's a business owner issue.

Marnie Werner: It is getting to be, yeah.

Christy Kallevig: Are you seeing businesses come to leaders within the community saying, "Hey we recognize that we have to do something about this? Will you help us?" Or is it one or the other?

Marnie Werner: I haven't heard too much about businesses coming to community leaders. There are some businesses that are taking the initiative on their own. I know of a couple that have started their own daycare for their businesses and for the community. They also know that at Hormel in Austin this is a big issue for them — childcare, and so they are doing a lot of work for their employees figuring out how to handle these issues. I'm not sure if businesses are feeling the full impact yet, but I think they're starting to and I think the communities who maybe hopping on this faster.

Christy Kallevig: What do you think has led us to this?

Marnie Werner: Oh, there's a bunch of different things. I'm sure part of it is just the fact that, actually, there's a few distinct things going on of a good chunk of it is the baby boom generation. It's just a very large group of people that provided a large part of the daycare services, and they are getting older and they're retiring. And the generation coming up behind them…women have a lot more options now than even the baby boomers. We think of baby boom generation as being people, the women that really started getting out there and getting out of the traditional roles. But the fact is they really did provide a lot of daycare services. And the next few generations they have other options, and they don't necessarily even if they want to work with kids and they get degrees in early childhood education or something similar. They have too many other options that just plain pay better. That's a lot of the reason that a lot of providers are getting out of the business now is that they just can't make money at it. You know even if it's a side business, you still have to be able to support that as a business and they can't make money on it and so they think "Why should I go into something where I'm just going to be losing money?" and so they prefer to go into teaching, or something else. So, those are really the big factors the demographics and just the economics of the issue.

Christy Kallevig: You said that you do report to the legislature so, obviously they've seen your study. What actions do you think might come from this report? Or do you hope might come from this report?

Marnie Werner: Yeah, well, I know one thing they were looking at this session. I'm not sure if anything came of it, but they were looking at the regulations. There was a lot of talk from like providers and regulators that the regulations were getting a little crazy. They were overlapping and conflicting, and in some cases, people thought they were just getting a little too strict and onerous especially in the area of infants. It's very, very hard to find daycare services for infants anymore. And a lot of it has to do with a lot of these regulations that were put in place last few years.

Christy Kallevig: And I know some women who know their daycare provider noticed that they were expecting before family noticed that they're expecting just so they can get that infant spot.

Marnie Werner: Exactly, yeah, and a lot of these regulations come down from the federal government. The state does have some input into this. So, I would hope that there would be a review of these regulations and looking at which ones are conflicting and which ones maybe just a little too onerous and a little too strict and getting the regulations straightened out. One thing that I've heard people talk about is the education levels that are required to work in a daycare. I'm not talking about just the annual training that providers need, but they just plain the degrees that providers need to be able to work and be paid a certain amount in daycare and apparently it's fairly high.  It's like if you went to the trouble to get this degree, why would you work in a daycare center for what they can afford to pay you? Just go into teaching and so there's self-defeating policies out there that really need to be looked at. And I think that's probably the main thing that there are just plain policies out there that have gotten in the way, and if they're just reviewed and looked at and in the broader scope of things then I think that would go a long way to helping straighten this out.

Christy Kallevig: So, you've said it a couple of times now just that the education requirements and the pay that you get either as owning your own childcare business or working at a center. What are the workforce dynamics for childcare providers in the centers? Is it hard for them to recruit staff and keep them?

Marnie Werner: Especially, in rural areas it's very hard to find staff. Partly because of the educational requirements that are required. Also, just because of the workforce shortage these days in rural areas. It's very difficult to staff a daycare center and to staff it consistently to find people who can stay around. And so that's a big problem with daycare centers in rural areas too.

Christy Kallevig: So, what do you think, besides looking at policy, are there any other long term solutions to this issue?

Marnie Werner: I think understanding the economic forces at work. What makes it difficult to operate a daycare center in a sparsely populated area? I think once people understand that, then they can start looking for solutions that will work in those kind of dynamics, because you can't sit there and think, "Why can't we get a daycare center to work here in our small town?" Because I look at the daycare centers in St. Cloud, and those work just fine. But, here in our small town we can't get a daycare center. Well, once you understand that because there aren't a lot of people in the area, the economic forces created by the fact just means it's difficult to make one sustainable. Then you can say, "Okay, now we can deal with what we know and we can work with what we have." And that means finding ways to cut overhead costs and finding ways to cut the costs of the initial startup, because those are the big barriers. And once you figure out how to get around those [barriers], then you can start making things work. And so once you know the dynamics of what's going on in your area then you can start finding solutions.

Christy Kallevig: And who knows what else you might find if you know the dynamics of your area? Did your research show anything about how new immigrants are impacted by the childcare shortage?

Marnie Werner: They are very impacted by it. They have a very difficult time finding regular childcare. What we would consider regular childcare. There's a few different things going on there. One is that immigrants tend to be lower income and so they can't necessarily afford childcare. They may come from a place that's not used to having formal child care, like we have. They're used to you know family taking care of the kids. They may want only family taking care of the kids, because they want people who understand their culture taking care of their children. You have immigrants who come from places with a different religion, different dietary restrictions, and things like that. And so they want someone who understands them taking after their kids, and a lot of times immigrants are working those non-traditional shifts, and that just adds to the difficulty of finding anybody. And so yeah, they do have particular difficulty with the issue.

Christy Kallevig: There has been a lot of focus on the baby boomer generation aging and leaving jobs and a big push on making sure that we have senior care set up. Care for our aging parents for those of us that are the sandwich generation that is taking care of our parents and our kids. Does the fact that there was maybe a shift to focusing on setting up a structure to care for those that are aging? Did that impact our ability to catch this childcare thing happening on the other side?

Marnie Werner: I haven't really thought of it, but it's possible because I think a lot of what we focus on is what we see and we see the baby boom generation aging and people having to figure out how to help their parents as they age. But, childcare has always been a family issue — a very personal issue. It's like it was always you just have to figure it out for yourself. That's a family issue. "Oh, you lost your daycare that's too bad. Go and figure it out." And so I think it remained largely invisible and under the radar because families were trying to figure it out themselves. And it's only now really that it's where it's really interfering with business and employers and the community itself and people are starting to talk about it and they're starting to realize you know hey we're having the same problem too. That it's really come to the fore now. So that's very possible that it was just a quieter, more invisible issue than the aging population issue has been. And another thing that may have kept childcare under the radar is that I think a lot of parents think, "Okay, we only have to figure this out for five years and then our kids will be in kindergarten." So once the kids enter kindergarten, then they don't really have to worry too much about it and it's not as big of an issue. And so it's more of a temporary thing, whereas, you know if your parents are getting older they're going to be getting older for 20 or 30 years and it's not going away quickly.

Christy Kallevig: That's a great point.

Marnie Werner: I think that might be an issue too. And so it's just makes it difficult and makes it more difficult for people to you know sit and compare notes and think oh maybe this is a problem too.

Christy Kallevig: Well, thank you so much Marnie for spending some time with us and we will make sure that we have a link available to your great article about this research and I wish you luck as you advocate for your childcare changes with the legislature. So thank you so much for your work.

Marnie Werner: You're welcome.

Christy Kallevig: Thank you again to Marnie Warner for joining us for this episode. You can read the original research that Marnie referred to in this interview as well as to update at the Center for Rural Policy and Development has recently issued on their website at ruralmn.org. Join us for our next episode, where we will learn about a unique program in Northwestern Minnesota that is working to help increase access to childcare. See what Extension is doing in your community by visiting the Center for Community Vitality website at extension.umn.edu/community. We will also have links and information from this episode on our leadership and specific engagement alumni blog. Join in the conversation with us by following us on Facebook and Twitter. My name is Christy Kallevig, and thank you for joining me for this episode of Vital Connections on Air.