South Dakota cannot afford to ignore the child care crisis

Yahoo

20-03-2025

(Photo by Lourdes Balduque, via Getty Images)
Child care is not just a family issue. It is a business development issue. The ability of South Dakota families to access quality, affordable child care directly impacts workforce participation, economic productivity and long-term growth. As the CEO of the Economic Development Professionals of South Dakota, I see firsthand the challenges businesses face in attracting and retaining workers due to the child care crisis.
Across the state, we have seen communities bring together business leaders, community stakeholders, child care providers and parents to work toward viable solutions. I have had the privilege to work on this issue over the past two years as a member of the Statewide Childcare Task Force, led by Sen. Tim Reed, R-Brookings. The task force worked tirelessly with businesses and individuals across the state. This effort yielded an in-depth report that led to the introduction of legislation this past session.
One bill, HB 1132, passed the House and Senate but was vetoed by the governor. While we disagree with the governor's reasoning, we look forward to partnering with the administration in the future and will engage over the summer with all stakeholders.
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Child care is an essential support system for families, allowing parents to pursue careers, education and financial stability while ensuring their children are cared for in a safe, enriching environment. Without access to reliable child care, families are forced to make difficult choices — many parents, particularly mothers, must scale back work hours or leave the workforce, straining household incomes and limiting career growth. This also places stress on extended family members who may step in to provide care, often at the cost of their own employment and well-being.
For working families, child care is a pathway to financial independence. A lack of accessible child care can lead to lost wages, decreased career mobility and increased reliance on public assistance programs. Ensuring all families have access to affordable, high-quality child care strengthens our workforce and promotes economic resilience.
Beyond the economic implications, high-quality, state-licensed child care environments provide significant benefits for children. Research shows that children who participate in structured early learning programs experience better cognitive, social and emotional outcomes. These programs provide young children with opportunities to develop critical thinking skills, build relationships and establish early literacy and numeracy foundations that prepare them for success.
Quality child care environments also contribute to healthier emotional development by providing consistency, positive social interactions and nurturing relationships. Children in these programs learn essential skills such as problem-solving, communication and collaboration. Studies have demonstrated that children who receive early education are more likely to graduate from high school, pursue higher education and achieve higher earnings in adulthood.
South Dakota is home to nearly 70,000 children age 5 and under, and 72% of them have all parents in the workforce, underscoring the need for reliable child care. Yet the state faces a 35% shortfall in licensed child care capacity, leaving thousands of families scrambling. This child care deficit costs the state an estimated $329 million annually in lost productivity and economic growth.
Employers across the state recognize this as a barrier to workforce participation. This, in turn, contributes to labor shortages, increased turnover and reduced economic output. In an era where talent attraction is key to economic growth, South Dakota cannot afford to ignore the child care crisis.
Child care is an essential part of the workforce infrastructure. Just as roads and broadband facilitate commerce, a strong child care system enables parents to work, employers to operate efficiently and communities to thrive. The U.S. Chamber of Commerce has identified child care as a critical economic driver, emphasizing that industries across the board suffer when child care is unavailable or unaffordable.
Just as roads and broadband facilitate commerce, a strong child care system enables parents to work, employers to operate efficiently and communities to thrive.
Moreover, investments in early childhood yield significant returns. Studies show that every dollar spent on high-quality early childhood programs generates a return of $4 to $9 through improved educational outcomes, increased earnings and reduced social services costs. The Heckman Equation, a leading economic model on early childhood investment, demonstrates that early interventions lead to higher productivity and a more skilled workforce.
The child care sector in South Dakota operates on a broken business model. The cost of providing quality care exceeds what many families can afford to pay, leading to chronic underfunding and high staff turnover. Early educators earn an average of $12.67 per hour, below the state's living wage of $19.58. This wage disparity makes it difficult to attract and retain qualified child care professionals, further exacerbating the shortage of available care.
Additionally, nearly 44% of South Dakota's population resides in rural communities, where access to licensed child care is even more limited. Families in these areas often rely on informal care arrangements, which can be inconsistent and lack the developmental benefits of formal early childhood programs.
South Dakota's future depends on strong families and a stable workforce, and neither of these work well without affordable and amazing child care. We can no longer afford to treat child care as a secondary issue. It is a fundamental component of economic development, workforce participation and long-term prosperity for families. While we were not successful in our legislative efforts this year, we will continue to search for legislative and non-legislative solutions to solve the child care crisis in South Dakota.
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