South Dakota has less than one person available for every job, national chamber study shows

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — South Dakota has more jobs than available workers, according to the U.S. Chamber of Commerce.

The U.S. Chamber said in its recent America Works report that the state has .6 people for every job opening. That’s less than one person available per job.

South Dakota ranks first in the nation in terms of too few available workers for job openings, according to the report.

The state has a 2.8% unemployment rate with 12,900 people unemployed as of May, according to the South Dakota Department of Labor and Regulation.

The state had 457,100 people employed in May, the DLR said.

The state has nearly three times as many job openings as the number of unemployed persons, said Reynold Nesiba, an Augustana University economics professor. South Dakota had about 41,300 job openings in May.

But employers should also consider the number of employed people who are willing to consider a different job, Nesiba said.

“That’s another 25,000 (potential employees),” Nesiba said.

The number of people who may be willing to change jobs is part of the labor supply. The labor supply also includes the unemployed and the number of discouraged workers.

How do the numbers from other years add up?

The 2020 COVID-19 pandemic significantly impacted employment numbers.

The unemployment rate in May of 2020 was 7%. Numbers from 2019 and prior years may provide a more realistic comparison. The unemployment rate in May 2019 was 2.9%.

Numbers from years prior to 2019 show that a struggle to fill some job openings in South Dakota aren’t new.

The labor supply in May of 2019 was 48,590.

The number of unemployed people in May 2019 and May 2018 was higher than in 2021, according to the DLR. There were 14,000 people unemployed in May 2018 and 13,300 in May 2019.

The unemployment rate is an indication of how many people are working but the labor participation rate indicates how many people age 16 and older are working in the state.

The DLR said 68% of the state’s population 16 and older were employed or looking for work in May. In all of 2019, the rate was about 70%, according to the DLR’s 2019 annual report. The 2019 national average was 63.1%, according to the DLR.

This labor situation isn’t new

While some employers, state officials and analysts say the extra COVID-19 pandemic unemployment benefit is to blame at least in part, workforce shortages in South Dakota are nothing new.

Seven years ago, South Dakota Governor Dennis Daugaard released a plan to help recruit workers. He also set aside $1 million in state future funds to help finance initiatives to train and attract workers. Daugaard said in 2018 that he has spent time each year since 2012 addressing the state’s workforce shortage.

In 2019, the state grew jobs at a faster rate than any time since 2010, the state’s former economist Mark Quasney told the Federal Reserve in Minneapolis in January of 2020.

The growth was another factor squeezing an already tight workforce availability, according to the Federal Reserve.

So, even before the COVID-19 pandemic, South Dakota was projecting a worker shortage.

“South Dakota is not an island,” Nesiba said. The state is competing for potential employees in jobs that pay better in other states. For example, nurses, he said.

The average wage for a nurse in South Dakota is about $27.41 per hour, he said. It’s $37.28 per hour in Minnesota, Nesiba said.

While South Dakota does not have a state income tax that is not enough to make up the difference in pay between the state and neighboring states, Nesiba said.

South Dakota has a sales tax on nearly every sold item, the cost of housing has increased and so have other costs, he said.

The Minneapolis Federal Reserve reported on May 7 said a survey indicated that for some businesses in the Ninth District, the extra pandemic unemployment benefit made it difficult to hire workers.

But others pointed to labor shortages and other factors. The Federal Reserve said that 58% of the businesses surveyed in the Ninth District said they had raised wages as of April and 78% planned to raise them between April and the end of the year.

When Nesiba hears that some businesses are struggling to find workers, his question is, “Are you paying above the regional wage?”

“As an economist, I’m thinking of this in terms of supply and demand,” Nesiba said. “If you aren’t paying above the regional average wage…” someone else will get the employee, he said.

Another challenge to hiring employees may be that some women have not yet returned to the workforce. The pandemic hit female workers hard because childcare centers had closed, kids were home from school doing electronic learning and other because of other factors, Nesiba said.

Those women may be gradually returning back to the workforce, for example, as childcare conditions improve, he said.

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