Governor Daugaard's persistent denigration of the liberal arts as disciplines that don't pay off gets me thinking about his current profession. Permit me to rewrite Steve Young's Monday report on the Governor's advice to our best and brokest:

High school graduates considering a career in public service in South Dakota but looking at $25,000 in debt for a college degree should do the math first, Gov. Dennis Daugaard says.

What is more likely to pay off those loans, the governor asks: A good-paying job in state government in neighboring states — such as North Dakota, Minnesota, and Iowa — or a job in South Dakota government?

“I’m not trying to tell people what to do or where to live,” Daugaard said. “I just want them to have their eyes open about it. I know it’s a fact that it’s harder to pay the bills as governor or legislator in South Dakota than it is in most other states.”

To some, the governor’s ongoing push for workforce development in only those fields that pay top dollar seems to bring with it a blanket dismissal of public service in South Dakota.

Daugaard would argue that he’s simply making an economic observation about student debt at a time when evidence shows young people who want to be governors and legislators can make more money in 43 other states [Yves Stung, "High Salaries Key—Low-Paying Jobs Not Worth Doing," snark-universe edition of that Sioux Falls paper, 2014.09.15].

But we don't choose to run for office to make money, the responsible statesman says. We run for office to serve the public, to lead important conversations, to make a difference.

Exactly. It would be absurd to encourage young people to consider running for the Minnesota Legislature instead of the South Dakota Legislature just because they'd make a five-times-larger paycheck. It would be irresponsible to urge our Dusty Johnsons and Tony Venhuizens to move their aspirations to Pennsylvania, where they could make 87% more as governor.

It is just as irresponsible for our Governor, as it would be for a guidance counselor or a parent, to use his position of influence to celebrate one field of work based on the opportunity for financial gain and not affirm with equal passion the social value of all the other work—writing, painting, philosophizing, politicking, teaching, parenting—that may not put as many bucks in the bank but offers opportunities for service and fulfillment.

But if the Governor wants to persist in his money-über-alles college advice, then he should practice what he preaches, quit his current job, and seek more gainful employment governing another state... or take up welding.

We don't read and write poetry because it's cute. We read and write poetry because we are members of the human race. And the human race is filled with passion. And medicine, law, business, engineering, these are noble pursuits and necessary to sustain life. But poetry, beauty, romance, love, these are what we stay alive for [John Keating, written by Tom Schulman, Dead Poets Society, 1989].

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Faced with criticism of GOP Senate candidate Mike Rounds's failed Northern Beef Packers plan and his administration's use and abuse of the federal EB-5 visa investment program, the South Dakota Republican Party responded last week with the claim that "The EB-5 program has brought more than $600 million in private capital investment to South Dakota creating more than 5,000 jobs."

Let's look for those more than 5,000 jobs.

Governor Mike Rounds got South Dakota into EB-5 investor recruitment in 2004. Governor Dennis Daugaard put EB-5 recruitment on hold in South Dakota in 2013, when he canceled the state's contract with Rounds's pal Joop Bollen to run the program. so to get a sense of how many jobs our use of EB-5 may have created, it would seem logical to compare employment figures from 2003 and 2013.

According to the South Dakota Department of Labor, the number of jobs in South Dakota grew from a 2003 average of 408,090 to a 2013 average of 431,260. That's 23,170 more jobs, 5.7% more over 10 years. During that same period, South Dakota's population increased by 10.6%, with 81,148 more South Dakotans.

Of course, by no stretch of the imagination did all of those jobs come from the dairies and other projects funded by EB-5 money. So let's at least try to narrow down the new jobs by the location of EB-5 projects.

To identify businesses funded by EB-5 money, I turn to Emily Arthur-Richardt's seminal 2007 "Green Cards for Sale" article, which lists the big dairies that Rounds and his Governor's Office of Economic Development favored with EB-5 money during the first few years of the program, and GOED's own 2013 EB-5 report, which lists Northern Beef Packers, Dakota Provisions, the Basin Electric Deer Creek station, the NextEra wind farm, and the Deadwood Mountain Grand Casino as EB-5 projects. I'm leaving out the Vendrig Dairy, because that Kingsbury County project appears not to have launched, as well as Jersey Dairy of Union County, which does not appear to exist.

Let's look at the 2003 and 2013 job counts for the counties in which those projects are located. This comparison is far from perfect, because, as with the entire state, it seems unlikely that every new job in, say, Lake County, was created directly or indirectly by the Swier Dairy. But this comparison also leaves out indirect jobs that may have been created in neighboring counties, such as a gas station in Belle Fourche hiring more cashiers to take care of all the gamblers from North Dakota zooming down to Ron Wheeler's big new casino in Deadwood. So those two errors will cancel each other out to some extent.

County Business Jobs 2003 Jobs 2013 change
Beadle Dakota Provisions 8,690 9,580 890
Brookings Basin Electric—Deer Creek; Global Dairy 17,005 18,185 1,180
Brown NBP 19,800 20,700 900
Clark Winter Dairy 1,835 1,905 70
Day NextEra wind farm 2,920 2,660 -260
Hamlin Drumgoon Dairy 2,710 2,820 110
Kingsbury Wilma Farms 3,020 3,015 -5
Lake Swier Dairy 6,390 6,430 40
Lawrence Deadwood Mountain Grand 12,095 12,355 260
Marshall Veblen Dairies 2,010 2,125 115
McCook Van Winkle Dairy 2,865 2,635 -230
Moody Moody County Dairy 3,675 3,700 25
Turner K&K Dairy 4,470 4,130 -340
total 87,485 90,240 2,755

Wow: Brown County still came out ahead, despite Northern Beef Packers collapsing after just nine months and laying off around 400 people.

I readily acknowledge that I'm offering assumptions on stilts. But I'm still beating the SDGOP, which so far has offered no data to explain where it gets "more than 5,000 jobs" from EB-5 projects.

And if we get up on my stilts, which I say are being pretty generous to the effort to attribute job growth to places where the state used EB-5 to fund business growth, we find 2,755 more jobs after ten years of EB-5 activity. That job growth is 3.1%, less than the contemporaneous statewide job growth rate.

"More than 5,000 jobs"? I don't think so, Mike.

38 comments

Ignored along with low wages in Governor Dennis Daugaard's Workforce Summits: Indians. With thousands of Lakota, Dakota, and Nakota people on South Dakota's reservations shut out of South Dakota's workforce, the Governor held none of his six Workforce Summits in reservation towns, and the Workforce Summit report does not mention American Indians or reservations.

Enter Rep. Rev. Steve Hickey (R-9/Sioux Falls). The Republican legislator got brief mention at the bottom of one article about the Workforce Summit report, saying he thinks the Governor could do more to address workforce issues in the state's poorest areas. But the state's poorest areas don't vote or donate Republican, so don't expect much if any of the Governor's latest one million dollars of corporate welfare to go toward the reservations.

Into this glaring policy gap, Rep. Hickey throws the first draft of his SD TRADE plan, a proposal to include our Indian neighbors in the Governor's South Dakota WINS economic development program:

SD T.R.A.D.E.
South Dakota Tribal Resource and Development Exchange
Rep. Steve Hickey, SD-District 9.

SD TRADE is a proposed sub-initiative within the SD WINS workforce initiative.

As SD WINS seeks state “cross-collaboration” with communities and businesses, SD TRADE seeks state cross-collaboration with tribes and industry.

SD TRADE looks at the sober unemployment realities on our reservations not as a problem but as an opportunity.

SD TRADE seeks to create a perpetual jobs pipeline across South Dakota bring economic opportunity, development and prosperity to desperately impoverished areas in our state.

DEFINITIONS

Trade:

  1. The exchange of jobs and services
  2. A skilled job

SD TRADE employs both aspects of this definition exchanging land for skilled jobs.

Trade Center:

  1. A central location for commerce and industry
  2. A hub for job opportunity

REALITIES

South Dakota industries need workers to move into the state. South Dakota Indians need employment opportunities in the state.

South Dakota celebrates a low unemployment rate only because tribal unemployment statistics are excluded. The real unemployment rate in South Dakota which include tribal unemployment are much more dire.

How many potentially employable natives are on reservations without access to job opportunities? 10,000? Most certainly more.

Industries are not tapping into this available labor force on reservations for a variety of reasons, first and foremost of which are things like sovereignty issues and complication legal and tax uncertainties.

If our best minds can navigate through the complexities, obstacles and challenges to build a hundred clinics overseas, and if our industries can capitalize on exporting jobs overseas, and if our industries can get creative to import foreign labor into our state then surely our best minds can navigate the challenges of tapping into a challenging and remote labor force within our state.

WHAT IS SD TRADE?

SD TRADE encourages strategic land swaps between the state and the tribes. Tribes indefinitely release and legally assign (one hundred) acres to the state for the establishment of TRADE CENTERS (commercial and industrial) in exchange for (one thousand acres) of land the state deeds back to the tribes.

Imagine several TRADE CENTERS, one on Rosebud and others on Pine Ridge and Lower Brule. These are commercial and industrial work centers with various industries in one location, given tax and other incentives.

Industries at each TRADE CENTER contribute toward shift shuttles commuting workers back and forth to their communities each work day.

Pharmacies, clinics and support agencies can be encouraged to offer services adjacent to or within a TRADE CENTER complex.

South Dakota Tech Schools can be encouraged to develop onsite training for new recruits. State funds can be allocated to tech-ed schools for use in developing on-site skill training. Perhaps Federal funds are available and can be acquired for a TRADE CENTER pilot project.

South Dakota can ensure good roads from the Interstate to the various TRADE CENTER complex [Rep. Steve Hickey, draft proposal, 2014.09.04].

Land swaps to create economic development zones where we could plunk factories, offices, and training centers—fascinating! Our industry leaders find ways to make profits on production done thousands of miles away in Malaysia; what stands in the way of their using Hickey's SD TRADE plan to make Jeeps, jackets, and jerky just hundreds of miles away in Manderson and Mission?

Economic development on the reservations may be complicated, but Rep. Hickey reminds me that our "best minds" have plumbed all sorts of complexities for past economic development plans. Recall the wildly complicated financing of Northern Beef Packers.

And while we're recalling Northern Beef Packers, let us ask why NBP and other EB-5-backed projects weren't directed toward employing South Dakota's Indian workforce. EB-5 investors get their green cards for half price when they invest in "Targeted Employment Areas"—i.e., rural areas or areas with high unemployment. Every project funded by EB-5 dollars in South Dakota was in a rural area, but none targeted an area of high unemployment.

If EB-5 is wonderful (and Mike Rounds desperately needs us to believe to the exclusion of everything else), imagine how much more wonderful it would be if we combined it with Rep. Hickey's thinking and used it to join workers and jobs on South Dakota's reservations. Traditional markets don't gamble on reservation projects. Directing EB-5 investments toward SD TRADE work centers would fill exactly the capital gap that government intrusion in the economy like EB-5 ought to fill.

We may do better implementing Hickey's SD TRADE plan on its own, without entangling it in the questionable morality and economics of EB-5. But couple SD TRADE with EB-5 financing, and we may have a recipe for tackling the Indian workforce problem that the state and the free market are ignoring.

129 comments

Marketwatch looks at some data from job-search site Indeed.com and declares South Dakota one of the states workers hate:

States Workers Want to Escape 2014

Marketwatch misleads with that heading. Indeed.com's data simply show the percentage of job seekers in each state who search for jobs on Indeed.com in other states. Indeed.com has no metrics on worker animus toward their current states. I can attest that it is entirely possible to love one's home state yet be obliged by personal and economic conditions to seek employment in another state.

But out of all states and D.C., South Dakota has the seventh-highest percentage of in-state job seekers who search out-of-state listings for job opportunities. Using Marketwatch's terminology, let's compare how many workers want to escape from other states in our region, as well as how many from elsewhere would like to come to our state:

State % in-state seeking
work out-state
% of job seekers
from out-state
Iowa 34.0% 31.0%
Minnesota 26.5% 22.1%
Montana 36.0% 54.7%
Nebraska 32.9% 29.0%
North Dakota 46.5% 58.9%
South Dakota 42.4% 37.1%
Wyoming 47.8% 63.5%

Indeed's 42.4% is probably inflated by a skewed sample. Small-town folks (and that's pretty much everyone in South Dakota, even you Phillips Avenue loftsters) with no thought of leaving town aren't looking at national job-search engines for jobs; they're asking their sister-in-law if the elevator is hiring. But Indeed likely misses similar samples of forever-hometowners in every state. Subtract 5 or 10 points from everybody, and the relative scores stay the same.

That said, note that Minnesota has significantly lower percentages than South Dakota of locals looking for jobs elsewhere and elsewherians seeking jobs in-state. Those difference suggest that Minnesotans see more job opportunities in Minnesota than South Dakotans see in South Dakota.

Minnesotans do make up the largest portion of out-state job seekers looking at the South Dakota want ads, but far more Minnesotans search in Wisconsin (the most popular choice among Minnesotan seekers), California, Texas, Florida, and North Dakota. When South Dakotans look abroad for work, they look first to Minnesota, Iowa, Colorado, Nebraska, and North Dakota. We look out-state more often, but we don't look as far away as wanderlusting Minnesotans.

24 comments

Governor Dennis Daugaard is all about science, technology, engineering, and math (STEM) education. STEM education is the key to getting our young people ready for all those high-paying jobs.

A recent Census report cast some doubt on that assumption, finding that 74% of STEM graduates don't have STEM jobs. However, Mike Maciag of Governing says the Census data doesn't damn STEM promotion efforts. Among other issues...

...the estimate doesn’t include what the Census Bureau considers “STEM-related” occupations. This large segment of the workforce, which includes health care, comprises roughly the same number of jobs as STEM employment. While these workers don’t hold traditional STEM positions, their jobs often require similar skills.

It’s also important to note that the Census data reflects not just recent grads, but all employed workers age 25 to 64. Many of those surveyed earned STEM degrees decades ago, opting to change fields at a later point in their careers. For some, the decision may have been unrelated to any difficulties in finding a job in the field [Mike Maciag, "Are STEM Graduates Really Having Trouble Finding Jobs?" Governing, 2014.07.28].

Maciag points to other data finding that only 18.8% of 2008 STEM graduates report holding jobs outside their majors, compared with 27.5% of all bachelor's degree holders and 52.8% of us with humanities degrees. (Ah, but only 11.6% of education grads report out-major employment.)

The data reported here only look at bachelor's degrees, not STEM jobs with lower education requirements like vo-tech certificates.

None of these data suggest that going into STEM will be bad for your job prospects. But they don't support the Governor's contention that Girls' Staters should drop philosophy and take up welding, either. The Census data showing all that job shifting suggests that the specific field a student enters may be less important than pursuing an education of some sort. Whatever the reasons, a large majority of STEM graduates find themselves moving to other fields, much like graduates of other programs. It is less important that we shunt students into any particular field in a futile attempt to respond to the ephemeral whms of the market and more important that we give every student a solid K-12 education and make all higher education opportunities affordable.

Comments Off on Census Figures Don’t Indict STEM Focus; All Higher Education Still Useful

The Senate Energy and Natural Resources Committee holds another show vote tomorrow to boost the Keystone XL pipeline. Big Oil and friends are thus cranking out a little extra Keystone XL baloney.

Prairie Business offers up the American Petroleum Institute's laughable claim that building TransCanada's pipeline across the Great Plains will create 42,100 jobs. This claim is old news, based on fuzzy math that assumes those construction workers spending a month or two in each county along the construction route will create a booming demand for ballet dancers and speech therapists at the man camps.

Alas, Big Labor is on board with Big Oil's Keystone XL snake oil:

[President of AFL-CIO’s building and construction trades department Steve] McGarvey said the project also would bring $3.1 billion in construction contracts, support and materials to his industry.

“I think there comes a time when as a country you circle wagons and get behind what’s gonna be in our best long-term interest,” he said [Katherine Lymn, "American Petroleum Institute: Approve Keystone XL for the Jobs," Prairie Business, 2014.06.17].

Long-term interest? Let's see, when Keystone XL clears the glut at Cushing, closes the price gap between North American and offshore oil, and raises our gasoline prices 20 to 40 cents per gallon, it will shackle our economy with an ongoing drag. Just a 20-cent rise knocks $22 billion out of the economy, swamping the $3.1-billion temporary pipeline infusion McGarvey cites. More expensive gasoline reduces the amount consumers can spend on other goods and services.

A $20 increase in the price of a barrel of oil increases unemployment by 0.1% in one year. One tenth of one percentage point of the current U.S. workforce is about 150,000 jobs. If Keystone XL raised the price of oil on this continent just $6, we'd lose about 50,000 jobs, more than enough to wipe out even the indirect, induced, magic-math jobs the API and other pipeline dreamers want you to think Keystone XL will bring. So even if API were telling the truth, we'd see 42,100 jobs come and go for the few months it takes to build the pipeline, then sandbag ourselves thousands more jobs long-term.

North Dakota Senator John Hoeven and Canadian Ambassador Gary Doer now say TransCanada will get the green light to build Keystone XL by next spring. Even if that happens, we should thank Keystone XL opponents for getting the President to at least delay the pipeline's long-term economic damage for another year.

Related Reading: TransCanada's permit to build Keystone XL in South Dakota expires June 29. When they resubmit their application, we could boost the economy by bringing a thousand Keystone XL opponents to Pierre to testify, protest, and buy sandwiches.

But don't wait for the hearing—protest now! Dakota Rural Action is among the participants in a Day of Unity and Action against Keystone XL on Saturday at the Pte Ospaye Spiritual Camp in Bridger, the Wiconi Un Tipi Camp in Lower Brule, and the Oyate Wahacanka Woecun Camp in Ideal.

20 comments

Before the 2014 Legislative session, the South Dakota Association of Healthcare Organizations had two University of Nebraska–Kearney profs study the potential impacts of Medicaid expansion in South Dakota. Today the South Dakota Budget and Policy Project finally posted that December 15, 2013 study online.

Professors Allan Jenkins and Ron Konecny estimate it would cost South Dakota $157 million over ten years to expand Medicaid under the terms of the Affordable Care Act. In return, Jenkins and Konecny estimate South Dakota would receive the following direct economic benefits:

Jenkins & Konecny, SDAHO, 2013.12.15, p. iv

Jenkins & Konecny, SDAHO, 2013.12.15, p. iv

For every dollar we'd spend expanding Medicaid, we'd get $9.81 back. Our state economy would net $1.383 billion.

Someone, anyone, tell me why we say no to $1.383 billion.

Plus we help sick and injured neighbors get well.

Jenkins and Konecny calculate that for every $100 million of federal funds injected into our economy, we get 2,131 jobs, $75 million more in labor income, and $5.7 million more in local tax revenue. Multiply all of that by 14. 29,500 jobs. Holy cow: Mike Rounds brags about creating more than 28,000 jobs during his eight years as Governor through all of his policies combined. Dennis Daugaard could beat that job number with one policy decision that costs South Dakota pennies on the dollar. Dennis Daugaard could be a job-creating hero.

Plus we help sick and injured neighbors get well.

Jenkins and Konecny note that the Affordable Care Act funds the Medicaid expansion in part via "the national reduction in Medicare reimbursement for healthcare providers." South Dakota doctors already eat that cut, regardless of what we do on Medicaid. As Larry Pressler said yesterday, the ACA is not going away. Therefore, it only makes economic sense to recoup some of those reductions by expanding Medicaid.

Plus we help sick and injured neighbors get well.

Read the report. Look at the experience of North Dakota and other states expanding Medicaid under the Affordable Care Act. Then tell me why you vote for anyone other than Rick Weiland, Joe Lowe, and Democrats who recognize that the Affordable Care Act is good policy that's good for our economy... and helps sick and injured neighbors get well.

25 comments

Lynne Hix DiSanto and other red-meat Republican candidates call for "no deficit spending." Rep. Kristi Noem makes the deficit the centerpiece of her public slideshows. Yet that budget absolutism hamstrings Republicans' ability to focus on solving more urgent problems, like unemployment.

Texas economics professor John T. Harvey points out the irrefutable accounting fact that a public sector deficit is a private sector surplus:

...when the public sector spends in deficit, it is by definition a surplus for the private sector. If the government spends $500 more than it taxes, then it must be true that the private sector earned $500 more than it was taxed. Period. This is an inescapable accounting identity [John T. Harvey, "Four Reason's You Should Consider Washington's Deficit as Your Surplus," Forbes.com, 2014.02.24].

I know, it sounds like magic money, but as we've discussed before, macroeconomics doesn't follow the rules of kitchen-table bookkeeping.

Harvey refutes deficit-hawk inflation fears by pointing out that the two biggest post-World War II deficit binges, under Reagan and Obama, were accompanied by low to mild inflation, not wild price explosions. He says that deficit reduction should be a much lower priority than job creation:

...there is absolutely no reason to be discussing deficit/private sector income reduction with unemployment at 6.6%. We are a long way from full employment and firms and consumers remain rightly hesitant to increase their spending sufficiently to address this problem. Yet, while the government is in a perfect position to do so, both parties’ ignorance of economics and accounting has served as a major roadblock in generating jobs and income in the private sector. This is not to say that all deficits are created equal. There are most certainly good and bad ways to spend, just as there are good and bad ways to administer first aid to an accident victim. But, that the victim needs first aid is not an open question [Harvey, 2014.02.24].

Lynne Hix DiSanto hasn't floated a jobs plan yet. Rep. Kristi Noem has yet to pass a jobs bill in Congress. They should read Harvey and realign their priorities.

7 comments

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