In 2016, South Dakota ranked 23rd among the 50 states for economic output per working age adult, at $77,644. This compared to No. 1 Delaware, at $100,269, No. 50 Mississippi, at $50,138, and the national average, at $78,304.
South Dakota's tourism tax is on the upswing, going from $745 million in 2015 to $831 million in 2016. (Inflation adjusted figures are used based on 2016 dollars.) South Dakota's tourism tax revenue has continued to increase year over year since 2011.
South Dakota's gross sales decreased slightly in 2016 to $67.5 billion, down from $69.1 billion, (inflation adjusted dollars) in 2015.
Jobs in South Dakota resumed modest annual growth in 2011 after the state shed jobs in 2009 and 2010. Jobs in the Rushmore State hit an all-time high in 2016 at 432,700. The figures exclude the self-employed as well as agriculture, domestic and military workers.
A great deal of concern has been voiced recently regarding wages for registered nurses (RNs) in South Dakota. A recent article argued that South Dakota’s RNs are drastically underpaid relative to the nation as a whole. The article pointed out that average annual wages for an RN in South Dakota were $57,010 in 2017; compared to $57,930 in Iowa and $62,210 in Nebraska, for example.
So why do RNs earn less in South Dakota? A full explanation might be too much, but a couple simple factors like taxes and the overall cost of living can explain much of the disparity.
Let’s start with taxes. The article points out that nationally, the highest average pay for an RN was found in California, $102,700 per year in 2017. An RN in California earning $102,700 would pay an estimated $6,591 in state income taxes, 9.3% of their annual income. They would also have to pay sales and use tax rates between 7.25% and 10.25%, depending on location. In contrast, an RN in South Dakota pays no state income tax and faces a state and local sales tax rate between 4.5% and 6.5%.
The second point of consideration is the general cost of living. Housing in South Dakota, though not necessarily in Rapid City, is generally less expensive than in many parts of the country. Food, transportation, and health care also tend to be less expensive in South Dakota than they are in other states. As a result of these regionally price disparities, a dollar goes farther in South Dakota than in many other areas of the country.
So how do RN wages stack up once we look at the actual purchasing power of RN wages by taking taxes and the cost of living into account? South Dakota jumps from 51st in the nation to 34th in the nation for RN pay. In fact, the purchasing power of the average RN wage is South Dakota ($53,005) was actually higher than the purchasing power of average RN wages in both Nebraska ($52,629) and Iowa ($49,531).
The same pattern shows up when looking at states with even higher average wages for RNs. In California, the purchasing power of the estimated $102,700 in RN wages drops to $63,269. That means that the original $45,690 disparity in wages between RNs in California and South Dakota drops to only $10,264 after taking taxes and the costs of living into account.
And RNs in Minnesota take a big hit as well once we look at purchasing power rather than just average wages. The average annual wage for an RN in Minnesota during 2017 was $77,540 but the purchasing power of that wage was only $58,528. The result, a $20,530 disparity in wages between RNs in Minnesota and South Dakota drops to only $5,523 after taking taxes and the costs of living into account.
The South Dakota Department of Labor and Regulation (SDDLR) recently released an expansive review of the state’s labor market conditions. The report provides insights into recent employment and wage trends across the state. The report also demonstrates the need for diversification in the regional economy.
One of the more troubling statistics highlighted in the report was the continued decline of the labor force participation rate in South Dakota. The labor force participation rate measures the fraction of the overall population that are either employed or looking for work. It typically rises as the economy gains strength and more people either find work or start looking for it. But even though the economy is performing well, SDDLR reported an estimated 8,200 people in 2017 wanted a job but had not searched for one in the last year.
According to the SDDLR report, 54% of all private employment in South Dakota during 2017 was in businesses with fewer than 50 employees. Another 13% of private employment was in businesses with between 50 and 99 employees. As a result, two-thirds of all private employment was in businesses with fewer than 100 employees.
The Rapid City region could benefit greatly from increased small business formation, especially in the goods producing sector. According to the SDDLR report, total nonfarm employment in the Rapid City MSA (Custer, Meade, and Pennington Counties) increased by 1,000 jobs during 2017. All 1,000 jobs were in the service sector, and the SDDLR data showed no net job creation in the manufacturing, mining, or construction industries.
As federal dollars pour into the area to support Ellsworth Air Force Base and the Sanford Underground Research Facility, many new business opportunities will arise for manufacturing and materials support. Some existing companies such as VRC Metal Systems – a specialty manufacturing firm that contracts with the Air Force – have already started to take advantage of such market opportunities. VRC, supported by a 75% increase in revenue since 2017, expanded from 36 to 50 employees over the same period. Increasing the number of companies like VRC is crucial to improving the overall economic health of the region.
According to new estimates released by the U.S. Bureau of Economic Analysis (BEA), personal income increased in 2,787 U.S. counties, decreased in 318, and remained the same in 8 in 2017. Personal income increased 4.5% in metropolitan areas, and only 3.2% in non-metro areas, ranging from 41.4% decrease in Slope County, North Dakota, to a 23.7% increase in Crosby County, Texas. Per capita personal income, which is found by dividing total personal income by population in a given area, is useful in comparing personal income levels across counties.
As defined by BEA, “personal income” is the income received by, or on behalf of, all persons from all sources. This includes traditional wage and salary income, income from home or business ownership, as well as income derived from financial assets, and government or business transfer receipts. Personal income also includes international income alongside income from domestic sources. These estimates were calculated based on midyear population estimates from the U.S. Census Bureau. Dollar estimates are reported in 2017 dollars and are not adjusted for inflation.
Ziebach County had the lowest per capita personal income in 2017, with $20,764. Turner, Hand, and Grant Counties saw the largest decreases in personal income between 2016 and 2017, with a 13.2% drop in Turner County, a 10.4% decrease in Hand County, and an 8.4% loss in Grant County.
Neighboring North Dakota had a per capita personal income of 52,269 in 2017, which was down 0.7% from 2016. Other neighbors saw growth in per capita personal income, like Wyoming, which saw a 3.4% increase from 2016 to 2017 and a 2017 per capita personal income of $57,346, or Minnesota, which saw a 3.1% increase and a per capita personal income of $54,359 during the same time period.
Rural South Dakotans have greater access to wired broadband telecommunications services than many of their counterparts across the country, according to a new report released by the South Dakota Dashboard and the South Dakota Telecommunications Association. Better than 76 percent of customers who lived outside of the state’s major metropolitan areas were able to subscribe to broadband speeds of 25 MB download and 3 MB upload or higher as of December 31, 2017, compared to 61 percent nationwide.
The new report, entitled Connecting South Dakota’s Future, also shows that rural telecommunications providers in the state are installing fiber optic lines at an accelerating pace. Over 65 percent of South Dakota Telecommunications Association customers were served by fiber-to-the-premises. In contrast, a nationwide survey in 2016 found that just over 40 percent of rural telecommunications companies’ customers were being served by fiber-to-the-premises.
“This pace of broadband deployment bodes well for rural communities,” says South Dakota Dashboard Project Director and Regional Economist Dr. Jared McEntaffer, “because the internet is rapidly becoming a central marketplace for the exchange of goods and services.”
McEntaffer says capital investments by South Dakota rural telecommunications companies also play a significant role in economic development. Between 2013 and 2017, the state’s rural telecommunications companies invested nearly $392 million in fiber optic lines, switches, equipment, buildings, and other long-term assets and generated nearly $480 million in economic impact.
Just over half of all South Dakotans live in non-metropolitan areas served by the community-based companies that are members of the South Dakota Telecommunications Association. These companies include cooperative, small commercial, municipal, and tribal telecommunications entities who cover 60,159 square miles, or more than three quarters of the state’s geography. Serving remote communities can present serious challenges. While the report estimates that it costs an average of $25.54 per resident to install fiber optic lines in Sioux Falls, the average cost per resident rises to $3,571 in rural South Dakota.
SDTA Executive Director Rich Coit noted that federal loans and grants provided through the U.S. Department of Agriculture’s Rural Utilities Service (RUS) and the federal “Universal Service Fund” (USF) have played a significant part in addressing these cost differentials and in speeding rural broadband deployment in South Dakota. In 2016, telecommunications companies in South Dakota, including non-rural and rural local exchange carriers, received nearly $100 million in USF funds. In 2017, the RUS approved loans to rural telecommunications carriers in South Dakota that totaled $116.7 million, accounting for 17 percent of all dollars allocated nationally under the related RUS programs. “These dollars ensure that rural telecommunications companies are able to serve customers who live in remote or sparsely populated parts of our state,” says Rod Bowar, president of the South Dakota Telecommunications Association and manager and majority owner of the Kennebec Telephone Company.
Connecting South Dakota’s Future: A Report on the Deployment & Impact of Rural Broadband provides data on the state of rural broadband in South Dakota and compares the state to the nation as a whole. It focuses particularly on the services provided by the 18 companies who are members of the South Dakota Telecommunications Association and the broadband backbone provider the SDN Communications. For the full report, see attachment at the bottom of this webpage.
ABOUT THE SOUTH DAKOTA TELECOMMUNICATIONS ASSOCIATION:The South Dakota Telecommunications Association supports the efforts of its member companies to effectively deliver state-of-the-art communications services to the communities they serve. SDTA also provides educational and training opportunities on the newest and best technologies available to the industry. (www.sdtaonline.com).
The US Bureau of Economic Analysis released its Q1 Personal Income report on June 21, 2018. The report showed signs that the South Dakota economy may be turning around. Personal Income, which includes wage, business, and investment income, grew by 4.9% between Q4 2017 and Q1 2018. South Dakota ranked 20th in the nation as a result.
Net earnings (i.e. the portion of personal income derived from wage and salary earnings) also rose by 5.7% from Q4 2017 to Q1 2018 versus only 4.7% for the nation overall. Growth in net earnings is typically a sign of a healthy labor market where either more people are working, wages are rising, or some combination of both.
The report also hints that the Ag sector may be turning around after significant declines in 2017. Personal income in the Farm sector grew by 0.28% percentage points, or $29 million during Q1 2018. Farm sector personal income growth in the South Dakota was 4th in the nation, trailing behind only Vermont, Wyoming, and North Dakota, where farm incomes grew by 0.96%, 0.63%, and 0.42%respectively.
Other signs of an improving economy were seen in strong personal income growth in the Construction, Durable goods manufacturing, and Health care industries whose rates of personal income growth were 0.44%, 0.40% and 0.57% respectively.
The performance of the construction and durable goods manufacturing industries are often considered leading indicators of economic performance, but their performance can also be volatile and highly sensitive to macroeconomic conditions and market confidence. Trade frictions between the United States and its trading partners could slow these sectors in the near to medium turn. The Ag sector could face similar headwinds in the future as well. In light of these considerations, it may be necessary to temper expectations of such strong performance in Q2 2018.
The economy in South Dakota grew by 0.3% from 2016-2017, according to recent data released by the Bureau of Economic Analysis. Nationally, the Rushmore State ranked 45th in the nation for growth in real Gross Domestic Product (GDP).
A decline in Agriculture contributed to slow growth across the region. South Dakota experienced the slowest economic growth rate and was the second hardest hit by the decline in Agriculture. Wyoming performed the best in the region with a 2.0% increase from 2016-2017, followed by Minnesota with an economic growth rate of 1.9%.
Substantial drought conditions across the states examined contributed to the decline in the Agriculture industry. The top three states impacted by the dwindling Agriculture industry—North Dakota, South Dakota, and Nebraska—also had the highest rates of drought in 2017. Last year, 62.8% of South Dakota was abnormally dry, 41.5% experienced moderate drought, and 18.3% fell into the severe drought category. In North Dakota, 59.9% of the state was abnormally dry, 37.9% experienced moderate drought, and 17.1% suffered from moderate drought. Nebraska fared slightly better with 37.4% of the state in abnormally dry conditions and 7.7% in moderate drought.
Not all sectors saw the same contractions as the Agriculture industry, however. Several industries contributed positively to economic growth in South Dakota during 2017. Health Care and Social Assistance contributed the most to economic growth at 0.4% from 2016-2017, while Durable Goods contributed 0.3%. The leading contributors to economic growth in South Dakota can be viewed below:
South Dakota’s Gross Domestic Product (GDP) grew by just 0.5% in the third quarter of 2017, according to a recent release from the Bureau of Economic Analysis. This was the slowest rate of state GDP growth in the nation.
The Agriculture, Forestry, Fishing and Hunting industry was the primary reason for slow growth in the third quarter; owing to dry conditions and low crop prices in 2017. In South Dakota, the Agriculture, Forestry, Fishing and Hunting industry contracted by 2.7% in the third quarter, as compared to 2.4% nationally. A view of the Agriculture industry’s impact on the regional third quarter GDP is below:
|State||% Decline in Agriculture||% Change from Q2||National Ranking|
The primary growth driver in the third quarter was the Finance and Insurance industry, which grew by 1.7%. Nationally, the Finance industry increased by 14.7% and was the top contributor to growth in seven of the ten fastest growing states. Several other industries also contributed to third quarter growth: Durable Goods Manufacturing (0.5%), Retail Trade (0.4%), and Health Care and Social Assistance (0.4%).
Gross domestic product (GDP) fell by 0.3 percent in South Dakota during the second quarter of 2017, according to the Bureau of Economic Analysis. South Dakota was one of two states to experience a decline in GDP during this time period, largely due to a slump in the Agriculture industry.
Most of the Northern Plains Region was hard hit by the national downturn in Agriculture. Across the United States, the Agriculture industry contracted by 10.6 percent; 1.7 percent in South Dakota. Iowa was particularly hard hit by the downturn in Agriculture, leading to a 0.7 percent reduction in state GDP, the largest decline in the nation. The table below highlights GDP in the region in the second quarter:
An uptick in Mining offset many of the declines in Agriculture across the region, however. Nationally, the Mining industry increased by 28.6 percent. While Agriculture declined by 2.6 percent in North Dakota, Mining increased by nearly 7.0 percent. Owing to this strong performance of the Mining industry, North Dakota and Wyoming ranked first and second for GDP growth among the fifty states.
|Iowa||Minnesota||Montana||Nebraska||North Dakota||South Dakota||Wyoming|
In South Dakota, the Construction, and Finance and Insurance industries also decreased by 0.5 and 0.6 percent, respectively. However, Real Estate and Rental Leasing, Healthcare and Accommodation and Food Services all increased slightly, by 0.4 percent.
Personal income grew by just 0.4 percent in South Dakota during the second quarter of 2017, according to a recent release from the Bureau of Economic Analysis. South Dakota lagged behind the national average of 0.7 percent, placing the Rushmore State at No. 44 in the nation.
As in the first quarter of 2017, a contraction in the farming industry contributed to slow personal income growth in the second quarter. Personal income in the farming industry declined by 0.25 percent in the second quarter of 2017—an improvement from the decline of 0.5 percent in Q1 2017. While the construction industry contributed to growth in the first quarter, the industry declined by 0.07 percent in the second quarter. Limited personal income gains in the second quarter were driven by finance and insurance at 0.12 percent growth and healthcare and social assistance at 0.9 percent growth.
Regionally, South Dakota outperformed Minnesota, Iowa, and Nebraska. North Dakota experienced the greatest growth in personal income in the region at 0.7 percent, while Iowa and Nebraska tied for last with a mere 0.1 percent rate of growth. Second quarter personal income growth for the region can be viewed in the table below:
Both Rapid City and Sioux Falls made modest gains in economic growth in 2016, according to recently released figures from the Bureau of Economic Analysis. Rapid City’s economy grew by 1.2 percent, while the Sioux Falls economy grew by 2.2 percent gain. The average growth in real Gross Domestic Product (GDP) across all US metropolitan areas was 1.7 percent.
As measured in current dollars, real GDP in the Rapid City metro area grew from $6.3 billion in 2015 to $6.5 billion in 2016. In Sioux Falls real GDP increased from $17.9 billion to $18.7 billion over the same period.In Rapid City, economic growth was driven primarily by activity in Education/Health Care/Social Services, Construction and Government. However, there was a significant decline in Finance/Insurance of 0.19 percent, placing the Rapid City metro area at odds with the national trend of growth in finance of 1.2 percent. Meanwhile in Sioux Falls, the Trade and Construction sectors grew by 0.42 and 0.37 percent respectively. Durable and Non-durable Goods were the only sectors to experience declines in 2016 at -0.1 and -0.3 percent, respectively.
Economic growth across the wider plains region varied greatly in 2016. The Casper, WY MSA experienced the second largest decline in real GDP in the United States at -11.6 percent, largely due to a decline in the Natural Resources/Mining sector. In North Dakota, the economy of Bismarck declined by 4.1 percent while Fargo’s GDP increased by 2.3 percent. Sioux City, IA grew by 2.5 percent.
With its release of 2016 data, the BEA also revised its calculation of economic growth in prior years based on new information. For Rapid City, the revised numbers indicate that the economy was weaker than originally reported. In 2015, the economy contracted and GDP was declined by 1.3 percent, rather than the earlier projection of the 1.0 percent increase.
For Sioux Falls, the new numbers indicate that the metro area’s economy was much stronger than previously estimated. In 2015, the Sioux Falls economy grew by 4.0 percent, up from last year’s projection of just 2.2 percent.