SIOUX FALLS, S.D. (KELO) — This story has been updated with information provided by the South Dakota Board of Regents.
The average annual pay for South Dakotans in 2020 was $44,960, 49th in the nation (including D.C.), ahead of only Arkansas and Mississippi, the South Dakota Board of Regents reports.
This statistic is one factor in the continuing trend of ‘brain drain’ in South Dakota. Brain drain, simply put, is the phenomenon of a state’s young, college educated population leaving the state, usually for better opportunity and higher wages elsewhere.
The US Congress Joint Economic Committee (JEC) issued a report in April 2019 showing the extent of South Dakota’s problem. The report includes an interactive map giving a ‘brain-drain-score’ based on the share of highly educated people born in the state 31-40 years earlier who no longer lived there. By 2017, the most recent year available, South Dakota held a score 23.99, 2nd to last in the nation behind only Vermont (26.29).
“We’re continuing to lose one of our most valuable assets, which is educated people,” says Reynold Nesiba, a South Dakota State Senator and Professor of Economics at Augustana University in Sioux Falls.
Nesiba points to the issue of low wages a major factor in this trend. “You want to create high wage jobs, and you want educated people to have those jobs — and South Dakota’s been doing a great job of creating graduates,” he says. “We create an awful lot of teachers, an awful lot of nurses, and what we’re starting to see and realize is that many of them go somewhere else to work.”
“We do have a mismatch between the graduates coming out of our universities and the jobs that are available,” says Nesiba. “We are creating people who could do high-wage jobs, they just aren’t able to find those in South Dakota.”
The idea of having trouble finding a job in South Dakota, a state where help wanted signs are currently plastered everywhere, may seem strange, but the reason for this problem is the type of jobs that are (and are not) available.
“There are so many job openings right now, but they’re, for the most part, lower wage job openings,” says Nesiba. “What we have are college students who are looking for jobs that are going to pay 40 or 50 grand, which is above the South Dakota average, so they find themselves seeking employment somewhere else.”
Nesiba got a first-hand insight into this struggle recently while speaking to an Augustana student.
“I had a student that was graduating from Augustana that I was visiting with a few weeks ago,” he says. “She was graduating with a nursing degree from Augustana and she said she was taking a job in Minnesota.”
Nesiba says he asked the student if she had look at jobs in South Dakota.
“She looked me right in the face and she laughed,” he says. “She said ‘you know in Minnesota the average pay for nurses is $37/hour. In South Dakota it’s $27/hour.’ There’s a gap of $10/hour. That’s $20,000 per year — it didn’t take her very long to realize that the environment in Minnesota was far more supportive of nurses.”
Student load debt is another factor Nesiba cites for why many young professionals flee the state’s boarders.
This problem extends to those who work for the state, says Nesiba.
“Our healthcare — we just imposed much higher premiums on our workers and that was supposed to be used to help lift some wages for those at the bottom, and I think that built an anticipation that workers thought ‘oh maybe I’ll finally get that extra dollar or two or three per hour that I was hoping for’ and in some cases, they got 11 cents.”
Nesiba is putting a lot of hope in the results of a report from Senate Bill 55, which is expected next month.
“I’m hoping that the Senate Bill 55 report — starts to lead to a conversation — that we need to have the Governors Office of Economic Development, the Board of Regents, the Chamber of Commerce — how do we create a high wage economy that is going to be attractive to our university graduates so we can retain a larger share?”Sen. Reynold Nesiba
Brain drain is more than a South Dakota problem though. Nesiba points out that it is also a rural problem.
“I grew up in St. Paul, Nebraska. It’s a town of about two thousand people just north of Grand Island. As I was growing up there, my dad ran a shop — he was mostly fixing radiators by the time I was born — and my mom ran a little restaurant, Nesiba’s Cafe on highway 281 and 92, and based on my limited experience growing up in that town, I thought my mom had the best job so I actually went to the University of Denver to study hotel/restaurant management — and then learned that the world is a big place,” Sen. Reynold Nesiba said.
Nesiba says that upon this realization he wound up studying economics and went to graduate school at Notre Dame.
“Once I had a college degree, there was no way to find employment back in my hometown of St. Paul, NE that would pay enough [to pay off my student loan debts].”
In terms of solutions for brain drain, Nesiba says this is an ongoing dynamic. “The question is, how do we create a South Dakota that really works for everybody, including working people?”
“Part of that could be… Do we have entrepreneurs locally that are creating businesses? Even if it’s Fernson or Remedy Brewing, that those are people that have long-term ties to South Dakota, that they’re creating businesses… They have long-term commitments to this place and want to see this community prosper.”
‘Economic Gardening’ is the term Nesiba brings up in discussing this. “How do you create the conditions; how do you create places where you can basically have an incubator where somebody can have an idea and be entrepreneurial?”
Nesiba mentions SDSU’s research park in Brookings as an example of the things that make him hopeful. “What’s the next big thing in South Dakota,” he asks “and how can we create those new products — new processes — that are going to also, in the process, create higher wage jobs?”
South Dakota’s politics make this difficult, says Nesiba. “What we’ve been trying for 40-years is to be a low-tax, low-regulation, low-government intervention state, and what it’s yielded us is a low-wage economy with few union jobs and our young people are leaving to take and pursue opportunities somewhere else.”
“I would say that 40-years of supermajority Republican policy has failed working people in South Dakota,” says Nesiba. “We haven’t seen a Fortune 500 company relocate here other than having CitiBank and Wells Fargo having a presence. If this strategy was so great at being able to attract outside firms, we’d see a lot stronger job growth and we’d be seeing higher wages.”
“I think that we need a strategy,” Nesiba says. “What we often see in South Dakota is saying that this isn’t an issue at all — we need a taskforce. The Governor should take the lead on this appoint legislators and business leaders and a bunch of young people to that committee to try and figure out what is it about South Dakota that young people are finding unattractive, and how do we make South Dakota more attractive to our children?”
“Right now, one of our biggest exports is our children — and that’s hurting us.”Sen. Reynold Nesiba
You can view the full 37 minute interview with Sen. Nesiba at the bottom of this story.
KELOLAND News reached out to the SDBOR with questions regarding brain drain.
In requesting trend data showing individuals who attain a bachelor’s degrees or higher at SDBOR institutions and then leave the state following graduation, the BOR referred us to their Graduate Placement Dashboard.
This dashboard shows that among BOR graduates in 2019 (the most recent year available) 47.2% are not employed in South Dakota one-year after graduation. When asked about data showing employment 5-10 years out from graduation, the BOR said they are not currently generating any long-term placement rates for all graduates. The BOR did however provide data showing in-state retention of education graduates over a 5-year period which shows that from 2002 – 2014, nearly 75% of education graduates were still employed in-state.
The dashboard also provides some clarity to the question of how many out-of-state students come to South Dakota for their degrees, and then leave the state after graduation. Between the years of 2015-2019, 75% of out-of-state students were not working in South Dakota one-year after graduation.
Nursing students make up 8.7% of BOR graduates according to the BOR Graduate Production Dashboard, the largest single group by field. According to the Graduate Placement Dashboard, 70.1% of nursing graduates between 2015 and 2019 were not working is South Dakota one year after graduation.
When it comes to where South Dakota graduates go the BOR referred to the JEC report which showed the top 5 destinations for highly educated South Dakotans leaving the state. This most popular destination was Minnesota, followed by California, Colorado, Nebraska and Iowa.