Labor Market Report Demonstrates Need for Diversified Economic Development South Dakota Department of Labor & Regulation
Mar 26, 2019

Labor Market Report Demonstrates Need for Diversified Economic Development

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.

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