Tuesday, May 3, 2016

Seeing Stars In South Dakota

RC Central Cobblers
Please Stay In SD .  Pleeease.
(photo from googleimages.com)
    South Dakota Governor Dennis Daugaard's pro forma message congratulating this year's high school class, published a few days ago in the Rapid City Journal, had an unusual fillip to it.  The governor included an exhortation to the grads to remain in South Dakota, telling them that he hopes "you'll ultimately consider a future here in our state," because "there are a number of reasons to consider living and working here."  Having chosen to relocate here to the Black Hills after a lifetime in L.A. and Chicago, I get the governor's bits about the charms of life in South Dakota, where I happily raised my family.  Disheartened as I was to see my offspring and so many of their peers immediately split this verdant scene upon graduating from high school, I nevertheless harbor no regrets about watching them grow up here.  That they're all doing not merely well, but spectacularly well (my wife's Girl Scout troop now has enough doctors--both Ph.D.s and M.D.s--to staff a mini-university), says as much about their upbringing as it does the shortage of challenges and opportunities for them in their home state.
     Daugaard tries to make an economic case refuting that reality, but he fails. Using an uncited Department of Commerce report, Daugaard claims that South Dakota has a "very low cost of living," which I think is bunk.  I'd love to see the report, because it contradicts virtually every other conclusion that's widely disseminated and available.  For example, using Bureau of Labor Statistics data, last summer USA Today concluded that  South Dakota is the 8th worst state in America to make a living.  Specifically, the listing notes that South Dakota's cost of living index is at 101.3, slightly higher than the national average.  Meantime, USA Today concludes that South Dakota's average income is second lowest in the United States.  Governor Daugaard's pollyanish view notwithstanding,
101.3 Of COL In U.S.
It Isn't That Cheap To Live In SD
(graphic from ACCRA)
South Dakota has an awful reputation in this country when it comes to income opportunities relative to living costs.  

     Even more misleading about Daugaard's stay-at-home pitch is his incomplete picture of our state's tax situation.  The governor claims that because South Dakota has no income tax, workers here "can keep more of the money you earn."  That is actually quite laughable when you consider the unfairness of South Dakota's tax system, so heavily weighted to sales and excise taxes. Workers here pay a much higher share of their incomes in taxes than their bosses because of the essentially regressive nature of sales taxes.  The Institute of Taxation and Economic Policy ranks South Dakota among the 10 most regressive tax systems in the United States.  And what do our workers get for their disproportionately higher tax rates? Stuff that I love, actually:  a state where, as Daugaard puts it, recent grads can see "the stars at night," enjoy "the wide open spaces," and "have the company of friendly, down-to-earth people."  Happily, I could afford to indulge these yearnings when I moved here.  For recent high school graduates more focused on economic--as opposed to lifestyle--opportunities, it's probably a much different story.  They can see stars elsewhere and make much better money while doing so.  

1 comment:

  1. Well said, John, and it is good to see a blogger who understands the ridiculousness of funding teacher pay increase with sales tax, to be paid by folks who are making even less than the teachers. But then to add insult to injury, give a portion of that sales tax increase, which is incidentally also on food, to property tax relief.