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South Dakota Q3 2011 Cost of Living 28th Lowest in U.S.

Neighbor, scribe, and legislator Bernie Hunhoff spent his holiday dinner picking up on a theme I've addressed often on these pages: the myth of South Dakota's amazingly lower cost of living. Hunhoff looks at my favorite cost-of-living summary page and finds that in the third quarter of 2011, the cost of living in South Dakota was just 1.62% below the national average, ranking us 28th, meaning 27 states have lower costs of living.

Coincidentally, our state median household income (based on a three-year average from 2008 to 2010) also ranks 28th in the nation. South Dakota's median household income of $48,168 is statistically indistinguishable from the median household income in 18 other states, including Nebraska, North Dakota, Iowa, Florida, Texas, and New York.

(But don't forget: even if we factor in some generous counter-estimates of regional price parities, South Dakota teachers have 22% to 31% less purchasing power than their counterparts in neighboring states. But our state legislators bear absolutely no responsibility for and mean absolutely no disrespect by perpetuating that ridiculous financial status.)

One survey suggests that cost of living falls below numerous other quality of life concerns motivating folks to move to rural areas. But as Governor Daugaard packs his bags to bribe California CEOs to relocate to South Dakota, he can mention that the California's Q3 2011 cost-of-living index was 131.18 compared to South Dakota's 98.38. (I was going to suggest our California friends could move here and enjoy big savings on earthquake insurance, but that's not so!) Governor Daugaard may wish to forego mentioning that Nebraska's cost-of-living index was 91.55.


  1. Stan Gibilisco 2011.11.25

    "MERIC [Cory's "favorite cost-of-living summary page"] derives the cost of living index for each state by averaging the indices of participating cities and metropolitan areas in that state."

    Which cities in South Dakota figure into the calculation?

    Does MERIC include state and local taxes in their figures?

    The real cost of living can prove immensely hard to express in real life. It depends on what a particular person wants, and how his/her income compares with the cost-of-living figure.

    When I lived in Hawaii, for example, the taxes and costs of goods were horrendous, but the utility bills and auto costs essentially nonexistent. (No heat, no air conditioning, no car needed).

    Here in South Dakota, we have no state income tax, but the property taxes, heating expenses, and transportation costs hit me pretty hard. Moreover, the sales tax strikes at food, and when it comes to nutrition, I don't scrimp.

    One can find figures to support just about any theory. For example, awhile ago I scrutinized Wyoming with some tax-burden-related Web searches. One site put them at the very lowest (50th or 51st) and another site put them at 15th highest.

    So really, Cory, this MERIC thing is just more statistical mumbo-jumbo, IMHO, and probably contains some bias that would tend to favor Missouri (where it originates); so I will pretty much dismiss it except for one glaring fact that rises above all statistics, and about which you're absolutely right: In this state, teachers don't get paid enough.

  2. caheidelberger Post author | 2011.11.26

    MERIC gets its data from C2ER, the Council for Community and Economic Research. The state of South Dakota cites the same data on its economic development page for comparing itself to other states. Its cost-of-living index is more substantiable than the slogans of local politicians. Even if it has shortcomings (and I'm looking those up now), the C2ER ACCRA Cost of Living Index is one of the better metrics I've found. If someone can show me a better metric and show me why it's better, I'll use it.

    Ah, there's the list of which towns are on the list! Pierre, Rapid City, Sioux Falls. The ACCRA index covers over 40% of South Dakota's population. It includes some rural places (small towns in Turner, McCook, Meade, Stanley, etc.). Including more small towns might bring down the average via housing prices, but it might increase the average by food and transportation costs.

    C2ER's methodology does not include taxes! So we do need a supplemental metric!

    One additional metric that goes below state-level comparisons: Groceries cost me a little less here in Spearfish thanks to vigorous competition between three grocery stores compared to one grocery store in Madison. Additionally, food here costs me a five-minute walk instead of a ten-minute drive.

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