Economy

Individuals earning a minimum wage in South Dakota must work 51 hours per week in order to afford a one-bedroom apartment in South Dakota, according to a recent report by the National Low Income Housing Coalition. In order to afford a two-bedroom rental home, South Dakotans would need to make $14.12 per hour, or work 65 hours per week at the minimum wage.

Douglas County is the most expensive county to live in, with an hourly wage of $16.58 per hour required to afford two-bedroom rental housing as defined by 2017 Fiscal Year Fair Market Rent. Pennington, Custer, Lincoln, Turner, Minnehaha and McCook Counties all required earners to make over $15 per hour to afford a two-bedroom apartment.

Regionally, South Dakota required the lowest wage to afford a two-bedroom housing unit at $14.12 per hour, ranking the state 49th nationally. Iowa, Nebraska and Montana also required relatively low wages to afford two-bedroom housing hovering around $14/hour. North Dakota, Wyoming and Minnesota required higher wages to afford housing. The weekly hours required to afford two-bedroom housing at minimum wage as well as the wage required to afford housing at forty hours per week can be viewed below:

 State Wage Required to Afford Two-Bedroom Housing Weekly Hours Required to Afford Two-Bedroom Housing at Minimum Wage National Ranking
 Minnesota  $18.60 70  21
 North Dakota  $16.36 90 28
 Wyoming  $15.80  87 33
 Montana  $14.90 73 42
 Nebraska  $15.22 68 39
 Iowa  $14.57 80 47
 South Dakota  $14.12 65 49

While housing in the Sioux Falls metropolitan area has previously been more affordable than housing in the Rapid City metropolitan area, fewer disparities between the two counties were seen this year. In 2016, the fair market rent for a two-bedroom apartment in Rapid City was $825 per month while it was $734 in Sioux Falls. In 2017, fair market rent in Rapid City for a two-bedroom apartment was $823 per month while Sioux Falls rose to $811 per month. A comparison of housing costs in Sioux Falls and Rapid City can be viewed below: 

To learn more about housing affordability in South Dakota and across the nation, view the full Out of Reach 2017 report by the National Low Income Housing Coalition.  

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Real personal income in Sioux Falls grew faster than in all but three other metropolitan areas in the country in 2015, according to data released this week by the US Bureau of Economic Analysis (BEA). Adjusted for inflation, income received from all sources—including wages, rents and property incomes, and personal transfer receipts like Social Security or Veterans’ payments—rose by 6.9 percent in Sioux Falls, compared to 4.1 percent for the state as a whole.

South Dakota’s growth in real personal income matched the nation as a whole and exceeded all neighboring states. With a 2.3 percent drop, North Dakota was the only state in the union to experience a decline in real personal income.

Growth in real per capita personal income in Sioux City was 5.4 percent, compared to 3.3 percent in the Rapid City metropolitan region.

On a non-adjusted or nominal basis, per capita income in the Sioux Falls metropolitan area in 2015 was $53,769, compared to $50,221 in 2014. It rose from $44,134 to $46,514 in the Sioux City metropolitan region and from $43,481 to $44,775 in the Rapid City metropolitan area.

According to BEA data on the South Dakota Dashboard, economic growth (GDP) in each of the state’s three metropolitan area in 2015 lagged these increases in real personal income. In 2015, GDP increased 2.8 percent in Sioux City, 2.2 percent in Sioux Falls, and 1.0 percent in Rapid City. 

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The economy grew faster in South Dakota than in the United States as a whole, according to a recent release from the US Bureau of Economic Analysis. Real gross domestic product (GDP) increased by 1.7 percent in the Rushmore State compared to 1.5 percent across the nation. This significant growth placed South Dakota 18th among the 50 states.

Nationally, the fastest growing industries were information services at 6.4 percent; professional, scientific and technical services at 3.3 percent; and health care and social assistance at 3.0 percent growth.

The largest contributors to South Dakota’s GDP growth in 2016 were agriculture, health and social services, and finance. Agriculture contributed 0.5 percent, health and social services contributed 0.1 percent and finance contributed 0.1 percent. Declines occurred in manufacturing of both durable and non-durable goods at -0.2 percent and -0.1 percent, respectively.  

With 1.7 percent growth, South Dakota was the fastest growing state in the region. North Dakota and Wyoming experienced among the largest declines in GDP across the nation at 6.5 and 3.6 percent, respectively. A decline in the mining industry contributed to the substantial decline in both states. Meanwhile, Minnesota, Nebraska and Iowa fared well at 1.3 percent, 1.2 percent and 0.7 percent growth respectively. 

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The South Dakota economy grew by 1.1 percent ranking the state 38th in the nation for real gross domestic product (GDP) growth, according to a recent release by the Bureau of Economic Analysis. Current dollar GDP was nearly $48.9 billion, accounting for 0.3 percent of total U.S. GDP.

The finance and insurance industry grew by 6.3 percent nationally in the fourth quarter of 2016. South Dakota contributed the second largest percentage growth to the industry at 0.9 percent in the final quarter of 2016.

However, agriculture continued to struggle in the Rushmore State, declining by 1.4 percent. Production of non-durable and durable goods also declined in the final quarter of 2016 at -0.2 and -0.1 percent, respectively.

Regionally, South Dakota outperformed Wyoming and Iowa, which each experienced little economic growth at just 0.2 percent and 0.4 percent, respectively.  The Minnesota economy grew by 1.7 percent—the highest in the region. The North Dakota economy grew slightly faster than South Dakota at 1.4 percent. 

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Thursday, 27 April 2017 00:00

Construction Leads SD Job Growth in 2016

In 2016, South Dakota the total number of nonfarm jobs increased by 1.0 percent, according to a release from the South Dakota Department of Labor and Revenue. An additional 4,400 nonfarm jobs were added in 2016 for a total of 432,700 jobs.

The fastest growing sectors included mining, logging and construction; professional and business services; and educational and health services. Educational and health services added the greatest number of jobs in 2016 with 1,300 jobs, reflecting 1.8 percent increase. However, the largest percentage increase was in the mining, logging and construction sector, which grew 2.9 percent and accounted for 700 jobs. Sectors with increases in jobs can be viewed below: 

Industry 2015 Annual Average 2016 Annual Average Actual Change Percent Change
Mining, Logging and Construction 23,100 23,800 700 2.9%
Professional and Business Services 30,600 31,300 700 2.2%
Educational and Health Services 69,100 70,400 1,300 1.8%
Retail Trade 52,900 53,800 900 1.7%
Leisure and Hospitality 46,200 46,800 600 1.3%
Other Services (Excluding Public Administration) 15,900 16,100 200 1.2%
Government 77,800 78,700 900 1.1%

While substantial growth occurred in the construction industry, declines occurred in the manufacturing, information, and financial activities sectors. In 2016, the manufacturing sector lost 600 jobs, reflecting a 1.4 percent decline. Jobs in the information sector declined by 1.7 percent, with a loss 100 positions. Financial activities lost 400 jobs, a 1.4 percent decline in 2016.

There were many differences in jobs between the Rapid City and Sioux Falls metropolitan areas. While construction jobs increased by 3.7 percent in the Sioux Falls metro area, Rapid City only experienced a 2.0 percent growth in this sector. The Rapid City metro area saw a 3.6 percent decrease in manufacturing, while the Sioux Falls metro area’s manufacturing sector dropped by 0.7 percent. Although the decline in manufacturing in the Rapid City metro area was significant, it was the only sector to experience a decline in the metro area. Conversely, several sectors in Sioux Falls suffered job losses. The top and bottom three industries for both metro areas can be viewed in the charts below:

Sioux Falls Metro Area Nonfarm Jobs (Not Seasonally Adjusted)

Industry 2015 Annual Average 2016 Annual Average Actual Change Percent Change
Other Services (Excluding Public Administration) 4,900 5,100 200 3.9%
Mining, Logging and Construction 7,900 8,200 300 3.7%
Leisure and Hospitality 14,600 15,100 500 3.3%
Information 2,700 2,600 -100 -3.8%
Financial Activities 16,200 15,800 -400 -2.5%
Transportation, Warehousing and Utilities 5,600 5,500 -100 -1.8

Rapid City Metro Area Nonfarm Jobs (Not Seasonally Adjusted)

Industry 2015 Annual Average 2016 Annual Average Actual Change Percent Change
Other Services (Excluding Public Administration) 4,900 5,100 200 3.9%
Mining, Logging and Construction 7,900 8,200 300 3.7%
Leisure and Hospitality 14,600 15,100 500 3.3%
Information 2,700 2,600 -100 -3.8%
Financial Activities 16,200 15,800 -400 -2.5%
Transportation, Warehousing and Utilities 5,600 5,500 -100 -1.8%

 

 

 

 

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South Dakota had the fastest growing economy in the nation during the third quarter of 2016, according to the U.S. Bureau of Economic Analysis. The Rushmore State’s gross domestic product (GDP) increased by growth 7.1 percent during the third quarter, while New Mexico ranked last in the nation with a 0.1 percent decline.

The third quarter is typically South Dakota’s strongest as agricultural producers make their biggest sales. In 2016, the agricultural sector grew by 2.01 percent in the third quarter and accounted for the largest share of the state’s robust economic growth.

The finance and insurance sector grew 1.69 percent in South Dakota in the third quarter, compared to 9.0 percent nationally. In this sector, the Rushmore State trailed No. 1 Delaware, with 2.50 percent growth, but outpaced No. 3 Iowa, which had 1.38 percent growth. 

The wholesale trade and government sectors grew 0.75 and 0.39 percent, respectively. Real estate, education, and non-durable goods posted negative growth.

Significant growth in GDP was seen regionally, with North Dakota, Minnesota and Iowa reporting over four percent increases. Nebraska’s economy expanded by 3.9 percent, while Wyoming posted the lowest increase regionally, at 0.3 percent. Wyoming’s small increase may be attributed to declines in the mining, construction and government sectors. 

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People were far more likely to move to South Dakota than move away, according to a new report from United Van Lines. This report is good news for the Rushmore State, but not for the reasons currently reported.

South Dakota is not the most popular destination for people to move to—in actuality, California had the most number of inbound moves at 12,259 compared to South Dakota’s 341 total inbound moves. However, California had 12,488 outbound moves, resulting in California’s balanced migration. Conversely, South Dakota reported only 163 outbound moves.

A couple of factors likely play into South Dakota’s top ranking, including retirees who want to live in the inter-mountain west. The United Van Lines report notes that one in four inbound moves nationally was for retirement reasons. With no income tax and a high quality of life, especially in the Black Hills, this may be a key factor.

Second, people across the nation are less likely to move based on economic opportunity and more based on personal reasons, such as a desire to be closer to family or for retirement purposes. Additionally, the age of the internet has made working remotely a possibility—a substantial aid to those wishing to relocate to South Dakota.

Within the Great Plains region, South Dakota had more inbound moves than North Dakota and Wyoming, states with struggling economies in 2016, but fewer inbound moves than Nebraska, Iowa and Minnesota.

State

Total Shipments From To Percentage From Percentage To Ranking
South Dakota 504 163 341 32.3 67.7 1
North Dakota 626 337 289 53.8 46.2 36
Wyoming 599 290 309 48.4 51.6 16
Nebraska 1,468 762 706 51.9 48.1 27
Iowa 1,509 793 716 52.6 47.4 30
Minnesota 3,704 1,813 1,891 48.9 51.1 18
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While 41 states experienced an increase in gross domestic product (GDP) in the second quarter of 2016, South Dakota’s economy lagged, according to a recent release from the U.S. Bureau of Economic Analysis. South Dakota’s GDP declined by 1.0 percent in the second quarter, placing the state at No. 46 in the nation for economic growth.

Regionally, South Dakota outperformed North Dakota and Wyoming, which experienced declines of 5.6 and 5.3 percent, respectively. Nebraska led the region in growth at 4.3 percent, while Minnesota experienced no growth and Iowa increased modestly at 1.3 percent.

South Dakota agriculture played a key role in the state’s economic slowdown, dropping by 2.2 percent while mining fell by 0.4 percent. Real estate, durable goods and health care industries each edged up by 0.4 percent. South Dakota’s transportation industry increased marginally at 0.1 percent in the second quarter, but it was well below the national growth rate of 14.0 percent for this sector. 

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Although the unemployment rate in South Dakota remains low, sales tax revenue has fallen short of projections and the state’s projected budget deficit has increased substantially over the past four months, reports the Capital Journal. The combination of these conditions means that Governor Dennis Daugaard and the legislature will either have to find additional revenue or make cuts to balance revenues and expenses before the end of South Dakota’s 2017 fiscal year in July.

After the Legislature approved a 0.5 percent increase in sales tax to supplement teacher pay, lawmakers anticipated a 16.9 percent increase in sales tax revenue, but so far sales tax revenues are up only 9.4 percent. To ensure that educators’ salary increases are maintained and property tax burdens are relieved, the state needs an additional $19.9 million.

Sales tax revenues have been hit by a slowdown in agriculture, which has resulted in a significant decline in farm equipment purchases. Alongside the decline in the agricultural economy, an increase in online sales may be contributing to the declining retail industry in South Dakota, according to KSFY News. State Economist Jim Terwilliger noted that out-of-state online retailers are not required to charge state sales tax. Although consumers are supposed to pay use tax for these purchases, many do not. Last year the Legislature passed Senate Bill 106 to force large out-of-state online retailers to collect and pay sales tax. The law seeks to challenge a 1992 US Supreme Court case that bars states from imposing tax collection on retailers who do not have a physical presence in the state. The issue is currently being considered in state court. 

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Sales tax revenue collected in South Dakota rose by roughly 9 percent in the first quarter of fiscal year 2017 relative to the first quarter of fiscal year 2016. Normally an increase of this magnitude would send legislators scrambling for ways allocate new found revenue. However, the increase can largely be attributed to the 0.5 percentage point increase in the sales tax enacted in June. As a result of the increase, sales tax revenues were expected to climb by approximately 16 percent

Why did revenue fall short of expectations? The baseline forecast of taxable sales might be to blame. While budget analysts forecasted around a 3 percent annual increase in taxable sales, the first quarter of fiscal year 2017 saw taxable sales decline by 1.8 percent relative to the first quarter of last fiscal year.

How did budget analysts arrive at a 16 percent growth in revenue from a half-point increase in the sales tax rate and 3 percent forecasted growth in the base? A half-point increase in the rate (from 4.0 percent  to 4.5 percent) represents an increase of 12.5 percent. Coupled with modest growth and moderate inflation, revenue growth of 16 percent isn't out of the question.

What caused the decline in taxable sales? This is more complicated. Slower economic growth, more un-taxed e-commerce sales, and shifting big purchases forward to avoid the higher rate all might have contributed. In the first edition of our forthcoming monthly newsletter, we plan to explore these potential factors in greater detail.

For more information on the economy in South Dakota, visit the South Dakota Dashboard economy page

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