Wednesday, May 14, 2014

Governor Daugaard Touts Job Growth In South Dakota. Meh. It Really Hasn't Been So Hot. It's Time To Get Real About Medicaid Expansion And Job Growth.

      South Dakota's Governor Dennis Daugaard is mighty proud of the "thousands of jobs" created in South Dakota since his inaugration in 2011.  You can see him touting it in his campaign's  youtube video, which was posted on the Dakota War College blog site (go to the 60 second spot)  where it was posted this week.  Overall job growth in South Dakota has been steady since the trough of the "Great Recession," but as the Joint Economic Committee of the United States Congress notes in a report just issued, there has been a sharp downturn in SD job growth during the most recent 12 months as compared with the twelve months that ended in March, 2013, by a factor of 25%.  The report also notes a loss of 400 jobs during March, 2014, alone.  The trend is not favorable to Daugaard and makes me wonder:  why is this man bragging?
     The fact is, predicted job growth in South Dakota is expected to lag far behind the rate of national growth.  In 2012, the South Dakota Department of Labor and Regulation reported its projections for the decade ending in 2020 and found that SD would gain jobs at about a 9% rate, compared to a 14% rate nationally.  The report notes that because South Dakota didn't lose jobs during the recession at anything close to what the nation did as a whole, there were fewer jobs to recover since the economic tide turned in 2010, explaining the slower rate of overall growth in job numbers.  I suppose that where you set your baselines has a lot to do with making excuses or providing explanations--pick your poisons, but the conclusion is that South Dakota won't be adding jobs at anywhere near the national pace for the rest of the decade.
     More telling in the SD Labor Department's report about our state's job expansion through the rest of the decade are the two industries that will gain the most.  Ambulatory care services and construction are the two leaders, and the factors explaining the growth in those areas are really endemic to South Dakota, having little to do with Daugaard's leadership.  Ambulatory care is expected to increase because of the state's aging population, while construction gains will occur because of the continuing shift of populations from rural to urban areas in the state.  On a subjective note, I see that some manufacturing gains are likely to occur in the west end of the state as the North Dakota oil boom has set some oilfield service equipment businesses into locating operations in the Rapid City/northern Black Hills region.  Nothing wrong with that, but the gains don't have much to do with policies set in Pierre by the governor's office.
     If Daugaard really wants to do something about jump starting job growth in South Dakota, he'd reconsider his decision on Medicaid expansion and welcome it to South Dakota.  Common sense should tell us that the $2 billion windfall created by accepting the federal offer will provide the state with a serious economic boost.  Though I haven't been able to find any South Dakota-specific studies or projections on how expansion will affect our state's economy (Does the University of South Dakota have an Economics Department capable of researching these kinds of issues?  I can't seem to find one.) I did check around--and came up with a somewhat parallel situation.  Mainly, I was looking for a "net-receiver" (in terms of the money gained from the D.C. over the money sent to D.C.) mostly rural state with a strong natural resources and tourism-based economy that is having political issues regarding Medicaid expansion similar to South Dakota's.
     That state is Maine, which incidentally also has an Ellsworth-like tie to the "military industrial complex" via the Bath Iron Works, where some American warships are built.  In a recent Bangor Daily News piece titled "Get Real On Job Growth and Expand Medicaid", the dollars and job gains are plain to see.  As with South Dakota, expansion in Maine has been politically stymied--for no apparent good reason other than partisan opposition to the Affordable Care Act.  A deeper economic examination lays out the numbers more specifically (click on its pdf link--very interesting stuff).  I think the benefits to Maine's economy would virtually parallel the gains that could be made here in South Dakota.  That the political fight continues to drag on here seems dumb to me.  It's time for some pragmatic, not political, consideration of Medicaid expansion to take place. 


  1. We know of the NBP 250 jobs lost last year, in the failed economic development project. Starting in January of this year, Minnesota Rubber and Plastics in Watertown started the phase out of 180 jobs as it closes its operations there. Jobs were lost at the Anderson Seeds company as well as hundreds of thousands of dollars owed to the farmers who had dealt with Anderson. The Turkey plant in Huron which is a GOED project was formerly a pork plant that whose start up was funded with taxes and tax breaks from the State and the City of Huron.

    John to my way of thinking, until South Dakota is willing to fund education properly, and pay our teachers to stay here, long time viable employers will look at South Dakota as the state that we have become, one that is always looking to do things on the cheap, and that is then the type of employers we will be able to attract.

    It will be interesting to see what effect the Bon Bel plant in Brookings has on the economy.

    1. Most frustrating to me, Lanny, as a dad, an uncle, and friend to many families with grown kids in the area, is the way our young people leave the state in droves. I agree that a bottom-up approach, starting with great educational opportunities is what it will take to turn this ship in another direction.

  2. John, as I travel the state for my job, I notice minimum wage fast food jobs and Walmart advertising all over for workers. I wonder if that is what Daugaard is so proud of, after all, this is the stuff his business friendly attitude brings. Agree with Lanny, until the gov and single party legislature figure out that what they are doing with teachers and education isn't working not much will change I'm afraid. Since they don't seem interested in bringing wages up to draw people here, the next best bet is to teach our own, but they don't seem interested in that either.

    1. There is indeed a culture of complacency in the state's leadership circles, Tim. Indifference and apathy seem to have been institutionalized. Not sure how the SD Labor Dept takes into account in its jobs calculations. If you go to the SDLD link in the piece above, it doesn't have a category for restaurant and hotel workers (in its top 10 industries), who must number in the thousands, but does have three categories of workers who number in the hundreds. Maybe I'm missing something. Also, I wonder how the many jobs that go to temporary workers overseas are counted, if at all. The website isn't much help. Frustrating stuff.