Analysis and Commentary By Gary Dickson, Editor garydickson@siouxlandobserver.com

Employment in South Dakota appears to have risen in October. This is compared to the same month in 2022 according to the most recent information bulletin from the state’s Department of Labor Information Center. At the same time, the unemployment rate is lower.

Preliminary estimates show South Dakota’s unemployment rate increased from 0.1 percent to 2.0 percent in October 2023. The labor force increased over the month by 800 workers (0.2 percent) to 484,700 workers. The level of unemployment increased by 500 (5.3 percent) to 9,900 workers.

South Dakota’s October 2023 labor force of 484,700 increased compared to the October 2022 level of 475,000. The level of employed increased by 10,400 (2.2 percent); the level of unemployed decreased by 600 persons (5.7 percent). The unemployment rate decreased 0.2 percent to 2.0 percent.

South Dakota unemployment rates by county as of October 2023

Here in Siouxland, unemployment ranged from a low of 1.7 percent in Lincoln County to a high of 2.5 percent in Union County.

The unemployment rate represents the number of unemployed as a percent of the labor force. People are classified as unemployed if they do not have jobs, have actively looked for work in the prior four weeks and are currently available for work. People who were not working and were waiting to be recalled to jobs from which they were temporarily laid off are also included as unemployed.

Labor force estimates for South Dakota are produced by the Labor Market Information Center in cooperation with the U.S. Bureau of Labor Statistics. The concepts and definitions underlying the labor force data come from the Current Population Survey (CPS), the household survey which is the official measure of the labor force for the nation. The statewide estimate of the number of nonfarm jobs is a component of the model used to produce the labor force estimates. Other data used in this model include the number of continued unemployment insurance claims and survey data from the Current Population Survey (CPS) which is specific to the state.

Although state-specific data is used in the production of the labor force estimates for South Dakota, the state monthly model estimates are controlled in “real-time” to sum to national monthly labor force estimates from the CPS. Therefore, variations in the estimates of the employed and unemployed are somewhat controlled by what is happening nationally.

Sept-Oct comparisons

Based on a monthly survey of South Dakota establishments, preliminary estimates show the total nonfarm wage and salaried worker level decreased by 100 from September 2023 to October 2023.

Leisure and Hospitality continued trending downward with a loss of 1,700 workers (3.4%). Leisure and Hospitality worker levels declined by 700 in the Rapid City Metropolitan Statistical Area (MSA) and fell by 500 in the Sioux Falls MSA. Losses are expected this time of year as tourism-reliant establishments reduce staff to match the decline in visitors.

Government increased 700 workers (0.8 percent) over the month. Local government had a gain of 900 workers (1.7 percent) with local government educational services increasing 1,100 (4.0 percent). Growth in educational services is common this time of year as establishments continue to build their workforce during the earlier part of the school year. State government remained unchanged with 19,000 workers in October 2023. Federal government worker levels fell 200 (1.7 percent), dropping to 11,500 workers.

Private Education and Health Services added 600 workers (0.8 percent) in October 2023. Private educational services accounted for most of this growth, adding 500 workers (5.8 percent). Gains are expected this time of year as private schools like their public counterparts mentioned above, continue increasing their workforce in the earlier part of the school year. Health care and social assistance had a gain of 100 workers (0.1 percent). Hospitals remained unchanged with 29,000 workers in October 2023.

Retail Trade declined 500 (0.9 percent), dropping to 53,700 workers in October 2023. This drop took place primarily in the Sioux Falls MSA (500 workers). This loss is related to small drops in worker levels spread throughout many of the establishments in this sector.

One year comparison

The total nonfarm wage and salaried worker level increased by 10,900 workers (2.4 percent) from October 2022 to October 2023. The top contributors to this growth were professional and business services; private education and health services; construction; government; and wholesale trade.

Professional and Business Services added the largest number of workers with the addition of 2,800 workers (7.6 percent). The state DOLR reports a majority of this growth took place outside the Rapid City and Sioux Falls MSAs. While the Rapid City MSA added 200 workers over the year, the Sioux Falls MSA remained unchanged over the year with 17,300 workers in October 2023. Examples of establishments included in this supersector are tax return preparation services, engineering consulting services, computer software consulting services, centralized administrative offices, temporary staffing services, landscaping services and garbage collection services. The SDDOLR says growth in professional and business services indicates other businesses are growing at a rate where additional professional services are required.

Private Education and Health Services increased by 2,300 workers (3.0 percent). A majority of this growth took place in the Sioux Falls MSA (1,800 workers). Statewide, health care and social assistance gained 1,300 workers (1.9 percent). Hospital worker levels rose 3.6 percent with the addition of 1,000 workers. Private educational services also showed strong gains over the year with the addition of 1,000 workers. Over the year growth in private education and health services is related to population growth and an increase in medical specializations, both increasing the demand for workers.

Construction added 1,900 workers (7.0 percent), jumping to 29,200 workers in October 2023. Specialty trade contractors increased by 1,100 (6.8 percent) over the year. Specialty trade contractors perform a specific activity, such as site preparation, pouring concrete, plumbing, painting or doing electrical work. Construction of buildings and heavy and civil engineering construction also had over-the-year growth, adding 600 workers and 200 workers, respectively. Growth in construction is driven by increased demand for housing and new commercial projects that come with population growth. Apartment complexes, strip malls, home renovations, and road improvements are just a few examples of projections underway throughout the state.

Government had a gain of 1,600 workers (2.0 percent). Local government accounted for half of the growth within government, adding 800 workers (1.5 percent). Local government Educational Services increased by 400 workers (1.4 percent). State government gained 500 workers (2.7 percent) with state government educational services adding 300 (3.1 percent). Over the year, the Federal government added 300 workers (2.7 percent), climbing to 11,500 workers. Gains in government can be attributed to population increases, as city programs and services expand to meet the needs of communities.

Wholesale Trade increased by 1,200 workers (5.4 percent). This sector has consistently had over-the-year growth since April 2021. The Sioux Falls MSA added 400 workers over the year, while the Rapid City MSA added 100. The wholesaling process is an intermediate step in product distribution. Wholesalers sell merchandise received from manufacturers to other establishments and normally operate from a warehouse or office. If supply increases, the demand for workers also increases.

Wages and salaries

So, with a positive outlook on employment in the Mt. Rushmore State, how do wages and salaries look? We found the most recent official state picture of employee wages published by the SDDOLR — the 2021 Annual Report, Quarterly Census of Employment and Wages.

This annual summary displays information about workers covered by the South Dakota Unemployment Insurance law and the Unemployment Compensation for Federal Employees (UCFE) program. Employment covered by these two unemployment insurance programs represents about 96 percent of all wage and salary civilian employment in the state. Covered workers include employees who are paid a wage or salary during the year; it excludes the self-employed and unpaid family workers. Wage and salaried workers are covered regardless of type of ownership. Employees working at privately owned businesses and federal, state and local government agencies are all included.

How ’bout those median incomes?

This is where people get confused – mostly between median and mean. Median income is the amount that divides income distribution into two equal groups. Half of the people or families have incomes above the median and half of them have incomes below the median. The median is right in the middle. The mean income is simply the average income. In other words, you take the sum of all the salaries that people make and divide them by the number of people making those salaries to get an average.

Economists and others who write about labor statistics often use median household income to ascertain buying ability in communities, states and the nation.

According to information obtained from the Bureau of Economic Analysis (BEA), the U.S. Department of Housing and Development (HUD), and the U.S. Census Bureau, median household income is the amount that divides the income distribution into two equal groups, half having incomes above the median, and half having incomes below the median. A household consists of all the people – related and unrelated – who occupy a housing unit. A house, an apartment or other group of rooms, or a single room, is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters. A person living alone is also counted as a household.

The most recent year we have records for is 2021, for which data was released on Dec. 12, 2022. That census of wages and income shows that the median household income in the U.S. was $69,717, while the median household income in South Dakota was $66,8443 (95.88 percent of the national median).

So how did South Dakota Siouxland counties make out?

• Union County’s median household income comes to $87,314 (130.63 percent of the state’s median and 125.24 percent of the national). It had the second-highest median household income in the state.
• Clay County’s median household income was $51,288 (76.88 percent of the state’s median and 73.71 percent of the national).
• Yankton County’s median household income was $65,826 (98.48 percent of the state’s median and 94.42 percent of the national).
• Turner County’s median household income was $66,854 (100.02 percent of the state’s median and 95.89 percent of the national).
• Lincoln County’s median household income was $91,352 (136.67 percent of the state’s median and 131.03 percent of the national). It had the highest median household income in the state.
• Minnehaha County’s median household income was $73,040 (109.27 percent of the state’s median and 104.77 percent of the national).

What do all these numbers mean? When one looks at the high level of employment in the state of South Dakota it tends to make you feel good. It means that people aren’t going without jobs in the old Friendly Land of Infinite Variety, as the state was once called.

But when you look at the salaries people are getting paid to be teachers (we still are one of the worst states in terms of teacher pay in the nation), natural resources and mining, construction, trades, transportation and utilities, leisure and hospitality services (shame on you tourism industry), and even local, state, and federal government a person has to wonder why we’re paying our workers such low wages?

Yet here we have our galloping governor, Kristi Noem spending $1.5 million of our state’s money for round two of the “Freedom Works” television and social media campaign that she and an Ohio advertising agency think will fill about 20,000 open jobs in the state. And she’s asking city and regional economic development councils to kick in funds to help pay for something that lacks any sound evidence of working.

Noem seems to be determined though to get her face on these TV spots played on stations and distributed through social media across the country. She has made her ambitions known that she wouldn’t mind being Donald Trump’s running mate should he receive the republican party’s nomination next year. It was interesting to note that in a recent story in the New York Times about possible running mates for the oft-indited Trump Noem wasn’t even mentioned.

Perhaps our governor should spend more time endorsing the concept of higher wages for educators, hospitality workers, construction workers, healthcare workers, etc. rather than political candidates. Then maybe the Mt. Rushmore State’s median income would rise to the extent that college graduates might want to stay put and others didn’t need to hold down multiple jobs to make a living.

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