Thursday, November 13, 2014

Governor Daugaard, These Trends Are Not Our Friends.

     With good political reason, Governor Daugaard has been touting what he considers to be the successes of his administration for the past umpteen months.  It's a shame that the limp-wristed candidacy of Democrat Susan Wismer couldn't have made a more forceful counter argument during the just-ended campaign, because some facts about the state and direction of South Dakota belie Daugaard's self-congratulatory rhetoric.  While his vaunted claims of economic growth are probably statistically supported, it seems obvious to me that the growth has been concentrated in the relatively compartmentalized ag sector, given that grain and livestock prices have had several very good years.
     Nothing wrong with the fact that a lot of great South Dakotans are doing very well these days.  It's a wonderful turn of economic events for some of the hardest working and most decent people I've ever known, especially considering how hard they toiled for literally decades before this excellent market for $2+ calves and "beans in the teens" came to fruition.  More power to 'em, and I really mean that.
     The problem is that the spillover effects into South Dakota's general economy seem to be marginal at best, nonexistent at worst.  In yesterday's post I supplied some data from the U.S. Bureau of Labor Statistics that showed the job growth rate for the past couple of years in South Dakota has been about half the national rate (a fraction of a percent for us, nearly 2 percent for the U.S. as a whole).  This is anemic from the get-go, but it looks even more pallid when considering that South Dakota, in Daugaard's view, has been having strong economic growth during his term.
     Now comes news that's even more disconcerting, considering that captain Daugaard's ship is supposedly plying the economic waves at full speed ahead.  The poverty rate in South Dakota last year increased by about a half-a-percent, while here in the Black Hills it jumped by an astounding 3.3%, or nearly 6,000 people who will add significantly to the strain on local welfare agencies.  The Black Hills Knowledge Network's graph in the link (sourced out to the U.S. Census Bureau) shows another fact that should be of some concern to those who want to pat themselves on the back over South Dakota's "economic boom":  While our poverty rate has been going up per the latest data, the overall rate in the United States has been going down.
     As if sub-par job growth and a negative contra-trend in poverty rates aren't challenging enough to the rosy image presented to us by Daugaard, here's the one that should be, if anything, more troubling.  If you check out page 12 of this comprehensive report  on South Dakota's labor imbalances completed this year by Philadelphia's Drexel University, you'll see a U.S. Census Bureau table that shows a rather unsettling trend from 2008-2012: South Dakota is a net importer of folks with high school diplomas or less, a net exporter of those with Associate degrees or higher.  And the differences aren't just marginal, reaching into the 5%-6% range in both cases.  Considering that the report shows that almost 40% of South Dakota's population growth comes from in-migration, a continuation of this trend will result in a workforce that is heavily overweighted with a population that has little-to-marginal educational attainment.  Not a good thing in a state that is chronically short of skilled and well-educated workers.
     I appreciate that Daugaard made a pro-forma attempt at addressing these issues with a "Workforce Summit" program. I doubt that it will yield significant results because its conclusion didn't bother to mention low wages as being part of the problem.  Daugaard's campaign-colored, facile display of data that indicates South Dakota has been advancing briskly on the economic front notwithstanding, it seems obvious that those "gains" haven't done much to improve life on the streets.  I look forward to the Governor addressing these issues, up front and post haste as his second term gets underway.

9 comments:

  1. The Drexel University report is especially troubling. In my 20+ years of actively watching State government I have lost track of the number of times our leadership has had "Workplace Summits", it's a constant topic of discussion and hand wringing. Instead of wasting time on summits and staff effort drafting reports that will be ignored and filed away someplace the Governor should give a speech and repeat it at every opportunity that if businesses can't find the employees they need they should increase the wages they pay and widely advertise the wages they are willing to pay for people with the skills they want. The free market will easily take care of any worker shortages if we are willing to let it work.

    Nick Nemec

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  2. My guess job growth is a lower rate because we didn't have significant job losses as did other states. We've been at a very low unemployment rate for years. As far as brain drain this is just not an attractive state for educated people seeking opportunities. And educated people are usually more liberal than this state.

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    1. Point taken on job growth. I believe your analysis is valid. On the other hand, if we have the labor shortage that Governor Daugaard has been urgently addressing this year it means that jobs are going unfilled. My guess is that new hires for those jobs would have made a significant upside improvement on SD's anemic job growth numbers, which brings us back to the question of why we can't train or import enough people to fill those slots. I believe there is something systemic that's responsible for slow job growth numbers in SD.

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    2. Systemically low pay.

      Nick Nemec

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  3. I don't think it's systematic but just a product of what we have to offer (or not offer). The unfilled jobs are skilled and technical and those people can pick and choose and they prefer other places more. Less skilled just wants a decent job, a step up from what they have now. I've met and talked to those people who are happy to improve their lives by coming here. Companies used to train people, retain them, workers stay for a lifetime. It just isn't that way anymore. jh

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  4. The State of South Dakota, through it's taxing and education funding policies, is the leader in this glut of employers not willing to pay what it takes to get the employees needed. That is how we got a shortage of and inability to keep quality teachers. We have lost them to other states and to jobs within the state that pay more.

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  5. I really think it has more to do with opportunities. I met someone who moved the customer service part of his company to SD. The incentives were so great. I suggested he move his technical area too since Madison has a great computer school but he said when they need to replace someone they get a stack of qualified applicants in California but here just 2 or 3 and that would impact their business too much so only the low level operations would they bring here. I talked to a young man who's working at Dollar General from Texas. He came here to go to college because even with out of state tuition it's so much cheaper. People today have security from having cutting edge marketable skills. Both the employer and employees think short term so wise talent stays in the larger employment markets. Just lost my tenant and Madison tech graduate to Omaha, a more solid company and better opportunity than what he had here. jh

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  6. Daugaard didn't run on even one new idea in 2014. 'He skydived because he said he would" was about it - earned him the best results of all the statewide candidates. And that's how you can be sure that something is really wrong here.

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