Who says I can't celebrate Christmas? I observe the holiday with a poem for South Dakota Magazine. Here's the first stanza of my meditation on the Build Dakota Scholarship:

Cory Allen Heidelberger, Christmas Eve poem on Build Dakota Scholarship, first stanza, 2014.12.24Check out the full poem at South Dakota Magazine. Merry Christmas, Joyeux Noël, God Jul, and С Рождествoм!

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The new Build Dakota vo-tech scholarship that Governor Dennis Daugaard and usury-billionaire T. Denny Sanford want to create is based on the argument that not enough South Dakota youngsters are going to vo-tech schools. The scholarship further assumes that if we wave money at students, they'll go to vo-tech and work in South Dakota for three years.

But if dollar signs are the deciders, young people will say no thank you to those two-year degrees and stick with college. Let's look at two charts from a Pew Research February 2014 report titled The Rising Cost of Not Going to College.

First, consider how young workers' median income by education level has changed over the last 50 years:

SDT-higher-education-02-11-2014-1-02

Whether young workers had four-year degrees, two-year degrees, or mere high school diplomas, they all enjoyed an increase in earning power from 1965 to 1979. Then the Reagan Revolution turned that curve downward for folks without a four-year degree. Between 1965 and 2013, folks with two-year degrees or "some college" gave up 11% of their earning power. So did workers who stopped with high school diplomas. Only four-year degree holders posted a gain (17%). Most of the college-degree holders' gain happened before 1986, but they're still far ahead of folks with two-year degrees or less. According to this chart, the two-year degree boosts median income only 7% over HS diploma levels; the four-year degree boosts median income 62% over HS diploma levels.

The $15,500 gap between median incomes for college grads and two-year/non-grads is more than the $15,000 value I assumed for the Build Dakota Scholarship in my state-vs-state payoff calculations. It's more than the $9K–$12K range for one-year degrees but less than the $16K–$20K range for two-year degrees provided by the state. That $15.5K gap every year is enough to allow a student who chooses college instead of vo-tech to pay off the average South Dakota student's debt in two years.

Contrary to Governor Daugaard's constant warnings of the unemployability of four-year degree holders, college grads still have an edge in landing jobs:

SDT-higher-education-02-11-2014-1-07

These numbers show that folks of all education levels are having a little harder time finding work. But in 2013, 89% of four-year degree holders had full-time gigs. Among the two-year/come college crowd, that success rate was 80%.

Of particular interest is the fact that Pew found mere high school grads enjoying a tick or two more full-time employment than their two-year/some college counterparts.

Now don't get too excited: that "two-year/some college" category includes both two-year degree completers and kids who major in beer before dropping out with no paper in hand. Break those subgroups apart, as David Leonhardt did for the NYT Upshot last May, and you find those two-year achievers outperforming the beer-flavored dropouts. But even the figures Leonhardt gets from the Bureau of Labor Statistics show higher employment among four-year degree holders than vocational two-year degree holders.

If the Build Dakota Scholarships are meant to encourage high school graduates who would otherwise forgo further education to get a vo-tech degree, then they are a good idea. But if these scholarships are targeted at students deciding between vo-tech and college degrees, they are enticing students toward significantly lower earning potential and slightly lower employment possibilities.

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South Dakotans making minimum wage, you get a raise in ten days. Happy New Year, and you're welcome!

The Chicken Littles who warn that we heartless liberals (apparently that's 55.05% of South Dakotans) are going to hurt the poor by killing their job opportunities. Once again, Minnesota says that's not so. Minnesota's Legislature raised its minimum wage August 1. According to the latest data from the state, Minnesota added 6,600 jobs in November. The hotel and restaurant sector, where one would find a higher proportion of minimum wage jobs, added 5,000 jobs in November. These job gains continue the post-minimum-wage-raise trend of decreasing unemployment in Minnesota that I reported last month.

We should watch South Dakota's job numbers (as well as consumer spending!) closely over the coming year to see if we can discern any impact from raising the minimum wage. If Minnesota's example holds, we should see better economic outcomes... and we should make sure the voters and not the Governor get the credit.

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Governor Dennis Daugaard is proposing a juvenile corrections reform package that will impose net new costs on the state of about $2.9 million. The proposal doesn't seem like a bad idea.

But may I suggest a policy alternative... or better yet, if we don't want to play false dilemma, a policy complement? Let's do as Chicago did and give low-income kids summer jobs:

A couple of years ago, the city of Chicago started a summer jobs program for teenagers attending high schools in some of the city's high-crime, low-income neighborhoods. The program was meant, of course, to connect students to work. But officials also hoped that it might curb the kinds of problems — like higher crime — that arise when there's no work to be found.

Research on the program conducted by the University of Chicago Crime Lab and just published in the journal Science suggests that these summer jobs have actually had such an effect: Students who were randomly assigned to participate in the program had 43 percent fewer violent-crime arrests over 16 months, compared to students in a control group.

That number is striking for a couple of reasons: It implies that a relatively short (and inexpensive) intervention like an eight-week summer jobs program can have a lasting effect on teenage behavior. And it lends empirical support to a popular refrain by advocates: "Nothing stops a bullet like a job" [Emily Badger, "Chicago Gave Hundreds of High-Risk Kids a Summer Job. Violent Crime Arrest Plummeted," Washington post: Wonkblog, 2014.12.08].

Hmmm... 25 hours a week for 8 weeks at minimum wage... $2.9 million would pay 1,700 kids for their work. That's nearly three times the number of juveniles currently in JDC's custody.

The evidence says that if you put kids to work, they commit fewer crimes. Legislators, are you willing to put some money where the research is? Are you willing to include a jobs program in the Governor's juvenile justice reform initiative?

Tangential Reading: In other policy amendments, perhaps the Governor could put young people to work building bicycles. A new study finds the cycling industry is creating more jobs in Europe than Ford, GM, and Chrysler are creating in America.

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Kevin Drum produces a remarkable chart that shows President Barack Obama's clear superiority to his predecessor in helping the economy recover from recession:

Chart: Obama vs. Bush Employment Recovery

Source: Kevin Drum, "The Obama Recovery Has Been Miles Better Than the Bush Recovery," Mother Jones, 2014.12.06

Count private employment as a percentage of the labor force, and you see that in five and a half years, President Bush never got private employment back to a larger percentage of the workforce than it was when he took office. Under President Obama, that percentage has climbed steadily higher. President Obama achieved this recovery from a far worse recession than President Bush faced. President Obama has also achieved this recovery without the housing boom that fueled much of President Bush's recovery but which, as Drum reminds us, ended in "an epic global crash."

Drum spots President Bush a few points with a second graph that includes government employment:

Obama vs. Bush, Total Jobs Recovery

Source: Kevin Drum, "The Obama Recovery Has Been Miles Better Than the Bush Recovery," Mother Jones, 2014.12.06

We raise President Bush's numbers and lower President Obama's if we include government payrolls.

Bush got a nice tailwind from increased hiring at the state and federal level. Obama, conversely, was sailing into heavy headwinds because he inherited a worse recession. States cut employment sharply—partly because they had to and partly because Republican governors saw the recession as an opportunity to slash the size of government—and Congress was unwilling to help them out in any kind of serious way [Kevin Drum, "The Obama Recovery Has Been Miles Better Than the Bush Recovery," Mother Jones, 2014.12.06].

I've said it before, and I'll say it again: President Barack Obama is beating his predecessor George W. Bush on economic performance. The difference would be even greater if President Obama had grown government the way President Bush did.

Related Reading: Discussing British politics, Simon Wren-Lewis says that ideologues who adopt a "small state" as a matter of principle miss lots of points:

...they are not prepared to look at these items on their merits. Instead they have a blanket ideological distaste for all things to do with government. The evidence that government is ‘always the problem’ is just not there. The idea that private sector activity is always welfare enhancing and is best left alone was blown out of the water by the financial crisis.

...reducing government spending during a liquidity trap recession does real harm. It wastes resources on a huge scale.

...a final problem I have with small state people... is their disregard for the evidence. It is true that most people are bad at acknowledging counter evidence, but those with an ideological conviction are worse than most [Simon Wren-Lewis, "The Imaginary World of Small State People," Mainly Macro, 2014.12.07].

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Rep. Kristi Noem voted today to support the House's unconstitutional effort to violate the separation of powers and tell TransCanada it can build the Keystone XL pipeline without the approval of the President of the United States. Rep. Noem is on automatic pilot for Big Oil, so there's no news there.

Offering us something slightly more interesting is Rep. Justin Amash, the only Republican not to vote in favor of HR 5682. Rep. Amash didn't vote against HR 5682, either; he voted present, just as he did in May. Rep. Amash says he supports Keystone XL, but he has issues with a bill that targeting a specific company. Hmm... the Constitution (Article 1, Section 9) prohibits bills of attainder, Congressional acts that single out a person or group for punishment without trial; so what do we call a bill that singles out a person or company for a special favor?

Our scholarly President could likely expound on that Constitutional point to justify a veto, but he's sticking with more practical matters. He seems a bit put off by the fact that, of all the useful legislation Congress could have taken up right away after the election, the House and Senate are concentrating on a piddly little bill that doesn't seem to do much good for anyone but a Canadian company and the Chinese:

In some of his strongest language yet, Obama pushed back against the Republican argument that the pipeline is a “massive jobs bill for the United States.”

“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. It doesn't have an impact on US gas prices,” he said, growing visibly frustrated.

“If my Republican friends really want to focus on what's good for the American people in terms of job creation and lower energy costs, we should be engaging in a conversation about what are we doing to produce even more homegrown energy? I'm happy to have that conversation,” he continued [Jim Avila, Chris Good, and Mary Bruce, "Obama Doubles Down on Immigration, Keystone Pipeline," ABC News, 2014.11.14].

Correction, Mr. President: Keystone XL does have an impact on U.S. gas prices. Keystone XL raises our gas prices.

Our own Senator John Thune helps peddle the lie about Keystone XL creating 42,000 jobs. (Come January, South Dakota will no longer have anyone in Congress capable of telling the truth.) No, the State Department report doesn't say that:

Over the course of up to two years of construction, the State Department estimates a total of 42,100 jobs "would be supported by construction of the proposed project." Some jobs are directly tied to the pipeline and construction. Other jobs are simply a nature of how spending $8 billion ripples out into the economy. And more than 99 percent are temporary.

...The State Department estimates that 26,100 indirect and induced jobs "would be supported by construction of the proposed project" during the construction phase. The jobs would be in providing the supply chain to Keystone as well as employee spending on lodging, food, entertainment, health care, etc.

The State Department calls these jobs "supported" and not created because it includes jobs that already exist [Katie Sanders, "Fox News Host: Keystone Pipeline Would Create 'Tens of Thousands of Jobs'," Politifact.com, 2014.11.13].

Keystone XL will create at most a couple thousand temporary jobs, most to be filled by out-of-state contractors who will follow the pipeline down the route, just as happened with Keystone 1 through eastern South Dakota. Any jobs Keystone XL creates will be swamped by the jobs it kills by raising energy costs.

Republicans keep lying about Keystone XL. The proper response to such lies is not the Democratic surrenderism of Senators Mary Landrieu and Michael Bennet; the proper response is to tell the truth (Senator Johnson! Swing harder!) and put the interest of the American people before the profits of a Canadian pipeline company.

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The South Dakota Budget and Policy Project has just issued a report analyzing the impact of Initiated Measure 18, the ballot proposal to increase South Dakota's minimum wage. The highlights that should inform your vote:

  • 64,000 South Dakotans will get a raise.
  • 34,000 of those workers currently make under $8.50. Bringing them all up to the proposed minimum will translate into an average yearly raise of $1,125.
  • The other 28,000 currently make between $8.50 and $9.75. SDBPP estimates that those workers will get an average annual raise of $300 as employers adjust their pay scales.
  • 78% of those getting raises will be adults.
  • 76% of those getting raises have finished high school.
  • 45% of those affected workers are working full-time.
  • 21% work less than 19 hours a week.
  • The wage hike could kill 357 jobs, if the change has the same impact that the CBO calculates would come from a hike to $9.00. We're fifty cents shy of that, so I say scale that back a snudge: 300 jobs? Heck, let Mike Rounds recruit some more EB-5 investors, and we'll make up for that in no time, right?

Let's see: nearly $47 million in new wages for folks to spend at Hy-Vee and Schoeneman's, versus maybe 300 fewer jobs worth a fraction of that income. Put those figures in the scales, voters, and tell me which way you tilt.

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A couple weeks ago, I mashed together some population and jobs numbers and calculated that South Dakota may undercount unemployment on our American Indian reservations by 57,000, or more than ten percentage points. Today I turn to some locally processed data for a much lower estimate the difference between white and Indian unemployment in South Dakota.

The Black Hills Knowledge Network provides a pile of great data showing the total Indian reservation population, youth percentage of the Indian population, the retirement-age population, and the percentage of working adults aged 16–64 on the reservations.

These data are not perfect; the charts don't provide the age breakdowns for the Lake Traverse and Standing Rock areas, so I've had to extrapolate based on averages from the other reservations. The numbers based on extrapolations are marked yellow below. Plus, the youth population numbers count all under age 18; the working adult counts include kids age 16 and 17.

But here's what I figure: subtract the kids and grannies and grampies from the total population. Multiply that by the given percentage of working adults for each locality to get the number of working adults.

Notice that the working-adult percentage for all of South Dakota is 76.3%. Across all reservations, the average percentage of working adults is 52.1%. So suppose the reservation populations were finding jobs at the same rate as the rest of us. Apply that 76.3% to the working-age reservation population, and we get the number of people who would be on the job if all things were equal. The difference between the actual working-adult numbers and that quasi-ideal state-mirroring number offers another estimate of how many Indians could be working but aren't because of disparities between the reservations and the rest of South Dakota.

%16-64 working # 18-64 working # 18-64 working
if SD rate app'd
IndDiff Guess Indian
unemp
Cheyenne River 54.8% 2,460 3,426 965 28.2%
Crow Creek 48.1% 523 830 307 37.0%
Flandreau 66.0% 169 196 26 13.5%
Lower Brule 54.9% 449 624 175 28.0%
Pine Ridge 42.6% 4,373 7,832 3,459 44.2%
Rosebud 46.8% 2,732 4,453 1,722 38.7%
Yankton 64.3% 2,133 2,531 398 15.7%
Lake Traverse 68.5% 4,113 4,581 468 10.2%
Standing Rock 46.6% 2,105 3,446 1,342 38.9%
Indian Totals 52.1% 19,056 27,918 8,862 31.7%
South Dakota 76.3% 377,584 377,584

My math finds 8,862 Indians on the reservations who could be working if job opportunities were uniform across the state. Add those 8,862 to the 16,555 whom state Department of Labor says are out of work across the state (and do add them, because I still don't think South Dakota is counting the reservations in unemployment data), and South Dakota's unemployment rate would rise from 3.7% to 5.7% at the snap of our statistical fingers.

A lazy morning hypothesis would suggest that the 57,000 I calculated earlier this month is an upper bound, while the 8,862 calculated here is a lower bound. Whichever number of mine you accept, if any, I will point to one more chart from the Black Hills Knowledge Network that should inform our economic development policy. According to their count, the difference between the percentage of white South Dakotan adults working and the percentage of our American Indian adult subpopulation working is 36.1% (higher than I calculate!), the highest white-Indian gap in the nation.

Any number you pick says South Dakota policymakers need to do more to bring employment parity to our reservation communities.

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