Wednesday, November 12, 2014

Good To See That South Dakota Retailers Won't Fight The Minimum Wage Hike. Hoping Our Elected Officials Feel The Same Way. Let's Give This Demand-Side Initiative A Chance To Play Out.

     Okay, we get that South Dakota has long been rated as a great place to do business. Governor Daugaard touts our consistent standing in those rankings as evidence of what a great job our elected officials have been doing. That's just wonderful, of course, but the fact that we're supposedly such a great state for doing business doesn't mean much when lackluster economic results follow suit. For example, in this nationwide study using U.S. Bureau of Labor Statistics from the University of Arizona, South Dakota's job growth ranking from early '13 through early '14 is at a lowly #40. An up-to-date (also based on BLS data) results is just as disheartening:  While job growth nationally so far this year has been around 1.8%, South Dakota's increase has been a fraction of  1%. Granted, these are narrow windows both in time and scope, so for a broader perspective I went to Business Insider, which ranked us #27 in overall economic performance in "recent years."  That's considerably better than BLS job creation results, but still keeps us in the bottom half of the country.
     Governor Daugaard's pride isn't supported by economic results.  South Dakota's traditional supply-side emphasis in tax (no corporate or personal income tax) and spending (lots of economic stimulus programs in the Governor's Office of Economic Development) policies hasn't produced much better than so-so results.
     It's long past time for a change of emphasis, and that is just what we got last week when voters approved a minimum-wage increase with cost-of-living adjustments built into it.  This demand-side initiative will put more money into the hands of about 77,000 South Dakotans (17% of a workforce of 450,000), per the non-partisan South Dakota Budget and Policy Institute.  My guess is that somebody at the South Dakota Retailers Association, which fought the initiative, realized that 77,000 South Dakotans who will suddenly have about $200/month more to spend equals a $15 million a month upside spending bump going right into the coffers of those retailers themselves.  As a dues-paying member in good standing of SDRA, I'm definitely okay with that.  The announcement in the past day or so that SDRA won't carry the fight into the 2015 legislative session signals a welcome willingness to wait and see how the results of the measure play out.
     There's been some blogospheric discussion--too scattered and numerous to list here--about Governor Daugaard's intentions toward the new law when the legislature meets in January.  I think the Governor would do well to let this one move into the state's economy without taking a stand one way or the other when and if it comes up spontaneously among the legislators themselves. Our supply-side-infatuated political culture hasn't produced anything noteworthy in the way of comparative results.  This new measure should be given a chance to prove itself, not only on how it impacts the economic lives of tens of thousands of our fellow South Dakotans, but on the purely economic terms that are so near and dear to our Republican hearts.

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