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South Dakotans Get Big Bang for Buck where's the sugar for schools?

Feeling rich, fellow South Dakotans? New data on regional price parities from the Bureau of Economic Analysis says you should. The May 2011 report says that, from 2005 to 2009, stuff cost less in South Dakota than anywhere else in America. Goods and services here on our fair prairie cost 83.8% of the national average.

Divide our middling per capita personal income by that regional price parity ratio, and you get South Dakota per capita purchasing power that beats everyone by D.C., Connecticut, and Wyoming. As USD econ prof emeritus Ralph Brown tells that Sioux Falls paper, "That indicates to me that though many people think of South Dakota as a poor state, in fact, when you adjust for living costs, that just isn't the case."

Mr. Ehrisman shouts poppycock at the same report and cites Augie econ prof Reynold Nesiba's skepticism of the data. Nesiba notes that per capita data allow a few very wealthy earners to skew the data and that basing comparisons on median income would be more useful.

Our biggest purchasing power advantage comes in housing: rents, including homeowner costs, are 67.1% of the national average (let's hear it for low property values!). The only category (out of nine) in which we pay more than the national average is medical services, where we pay 103.4% (Hey, Sanford Health! Where's our discount?).

Even the sanguine Professor Brown expresses some surprise at these numbers. He says our cost of living is usually figured at 92% of the national average. Recently our cost of living has spiked above the national average. In 2010 Q4, South Dakota's cost of living was 98.5% of the national average. (See MERIC for the most recent data.)

These BEA numbers certainly challenge some of my arguments that wages for South Dakota teachers and other workers are too low. But they also challenge the Daugaard-Olson narrative that South Dakota just doesn't have the money to to raise our funding for education and other public services. If we really do have more purchasing power, then we ought to have more room in our personal budgets to pay for public services without our feeling the pinch any more than our neighbors in North Dakota (RPP = 84.5), Minnesota (95.6), or New York (116.4).

According to the education funding report I looked at Saturday, South Dakota's per-student spending on education is 81% of the national level. Out of those per-student dollars, we spend only 75% as much on wages and benefits for our teachers and other school staff as the national level. Even against South Dakota's education services RPP of 85.1%, those numbers suggest we're still not investing as much in education as citizens in other states.


  1. Guy 2011.05.31

    Well, I would like to see us maintain and slightly increase our funding for education and other vital public services to include emergency services, transportation, state infrastructure, parks and recreation, etc. while cutting these "economic incentive programs." Frankly, I'm tired of corporations and big businesses looking for government handouts when they make huge profits that make them self-sufficient enterprises that can fund their own expansion and development into South Dakota.

  2. Eve Fisher 2011.05.31

    Goods and services might be 83% of the national average, but you should hear the comments from Minneapolis residents on how high groceries are in Madison! And gasoline is no cheaper.

  3. Wayne Pauli 2011.05.31

    I know a great deal changes in a decade, but in 2001 my wife and I received contract offers from DSU for fulltime work. I had been on campus for 3 years while my wife lived and worked fulltime for an educational service cooperative headquartered in Marshall, MN. Montevideo, MN was home. As we were comparing the job offers at DSU with the offer I had from Minnesota West Community College (teaching in Marshall) and my wife's position we laid out everything and compared dollar for dollar the costs associated with living in Minnesota vs. South Dakota. Income tax there, sales tax here, higher wages there, uhhh...there must be something here???? and on and on it went. When we finally completed our evaluation, it was a push. What won out was the fact that we had frail elderly parents in South Dakota and Madison put us 150 miles closer to them. It was a good choice, one we have never regretted as the time we got to spend with them was priceless. But I still wonder about Montevideo, (the river town) ten years later. It is a great town and only 100 miles from the Metro. I don't think I saved any money by once again becoming a SD resident. But I did probably lose the ability to see a Democrat be my Governor.

  4. Guy 2011.06.02

    Many have discussed the possiblity of Brendan Johnson running for a Congressional office, but, I wonder if Brendan is thinking of running for Governor in 2014 instead?

  5. Wayne Pauli 2011.06.02

    I met Brendan at Rotary and i was impressed with his ability to communicate. Governor would make sense given the young family that he has.

  6. caheidelberger Post author | 2011.06.02

    Well obviously, given the post above, Johnson would want to pursue the governor's job: his money goes farther in South Dakota than in DC! (But I'm curious: which job would be easier to get: House in 2012 against Noem, Gov in 2014 against Daugaard, or Senate in 2014 against TBA?)

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