Wednesday, January 15, 2014

Memo to Governor Daugaard: You Want Skilled Workers, You Gotta Pay The Going Rate.

     Governor Daugaard's State of the State speech in Pierre yesterday took another stab at dealing with the shortage of skilled workers in South Dakota.  Having given up on the state's New South Dakotan program that burned through $1 million while it coaxed a mere 100 workers into South Dakota, the Governor's new emphasis will turn to selling former South Dakotans on the benefits of moving back here via the Dakota Roots program.  Okay, it's worth a try.  After all, the Governor thinks the idea is sellable because, as he said yesterday 1)  "Our per capita income now exceeds the national average", and 2) "the average South Dakotan earns about 3.8 percent more than the average American."  Wow. You'd think we'd have a labor surplus, not a shortage, with those kinds of numbers.  I have no reason to believe that Daugaard was fudging, but when I see data extended over per capita numbers or further spread out as averages, I admit to being dubious.  Take "per capita" for example.  1 guy makes a million bucks while 9 others make a buck.  Per capita income is $100 thousand each.  Averages can give you the same unrealistic picture.  Take a hundred people.  Have one guy make a million bucks while all the others make $10 thousand.  Average income for that group is $20 thousand.
     My curiosity piqued, I just went to the Governor's Office of Economic Development website to see what I could dig up from Pierre's perspective.  You can read it  here.  Sure enough there's a glowing conclusion "based," as it says "on  data from the U.S. Department of Labor," that the GOED uses to tout that "we as state can and do compete in offering jobs that pay living wages.”  This is a misleading claim, based on data whose methodology seems questionable, particularly with respect to its conclusions about average wages here.   Consider that the GOED itself, in the same press release acknowledges that, "in addition to the GOED study, the U.S. Labor Department report included analyses of personal income, using varying methodologies. In that study, South Dakota ranked 50th in average wages and salaries for employees. When all personal income is included, such as that of self-employed farmers and small business owners, South Dakota’s ranking increases to 37th."  This is an amazing juxtaposition, actually, with the State of South Dakota claiming it can compete in the labor market, even as two studies conducted by a federal agency rank us 50th and 37th, respectively, when it comes to measuring personal income.
     Sorry, Governor Daugaard, I'm just not buying the claims that you made of SD being competitive in the labor market during yesterday's speech.  But back to the conundrum that I referenced at the top of the page.  Given that skilled workers have shunned the idea of relocating to South Dakota even after we spent a million bucks trying to entice them to come here, why do you expect South Dakota-trained workers to stay here after they've obtained their skills, which seem to be more valuable in many, many states than they are in South Dakota?  I understand you'll kick in $5 thousand toward their tuitions if they agree to stay and work in South Dakota for three years after graduation, but honestly, if these jobs are worth, say, $50k to $100k a year, seems to me that the $5k enticement, spread out over three years, is little more than chump change to them..
     I admire and support Governor Daugaard's efforts at building up South Dakota's labor force, but as with every business or economic consideration, we have to stare reality in the face.  In this case, we have to conclude that reality means we just don't pay enough money to attract a sizable force of skilled workers into South Dakota.  I hope that the Governor and his economic development schemes focus more on finding ways to raise wage levels in this state, less on kidding ourselves about where we stack up when it comes to paying people for their skills and labor. 


  1. This was a great speech by a liberal Democrat. The answer to all our problems is for more government, more government involvement, and spend more tax payer dollars on something the public can and has done for ever for itself. Ask Daugaard about Solyndra and he will cluck his tongue and say how wrong it is for Obama and the Democrats to involve government in such ventures, then he will assure you that his crony-capitalism efforts of creating and involving more government in the free-market is good governance.

    Isn't it great we have such "conservative" limited government "Republicans" leading other such "conservative Republicans" increasing government, government spending, and government involvement in the free-market?

    "South Dakota is the best place to live.. we have some of the lowest unemployment rates in the nation.. we love SD just the way it is.. but we want to change SD to be like everyplace else!"

    Imagine how great this state would be if we had an actual super-majority of conservative Republicans as our governor and legislature instead of being controlled by moderates and liberals:

  2. You make some great points, my anonymous friend. The whole GOED/Building South Dakota matrix just reeks of potential crony capitalism to me. That the governor wants to take $30 million of the windfall money and dump it into BSD is still pretty distressing to me, as I continue to think that its best use is in the one institution that the state rightly should take a pro-active role in: public education. Thanks for commenting.

  3. I agree with that last sentence, John: there's far more consensus that government has a role in education than it does in business development. Even the Governor seems to agree: in his SDPB interview this noon, he said that the private sector bears the primary responsibility for workforce recruitment. I doubt he would say that about education. So given $30 million in mad money, one would think that we would only invest in business development first if we thought that (a) the private sector was already doing all that it should to boost business and (b) the state was already doing all that it should for education.

  4. Cory,I sometimes wonder if Daugaard, whose single-minded obsession with economic development came through so clearly in the SOS, can connect the dots between cultural assets and economic development. It's very frustrating, because a great public school system, K-college, is the foundation of a great society. He said nothing about SD's abysmal ranking in per pupil funding or lousy teacher pay, even as he ticked off some dubious stats about how wonderfully well our workers are doing income-wise. Schools to him are places that crank out robots with specific vocational skills, or at least that was the impression he gave while he was going on and on about training more workers in our vocational schools, at the expense of any consideration for turning out great thinkers. A Philosopher-King (I wonder if he'd get the reference) he is not.