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Manpower Inc Crapping Out; Daugaard Opens Recruiter Subsidy to Local Firms

As part of his South Dakota WINS workforce development program, Governor Dennis Daugaard hired ManpowerGroup Inc. last year to recruit 1,000 new workers over three years for high-pay, high-need jobs in South Dakota. One year in, "the world leader in innovative workforce solutions" has placed 83 new workers in South Dakota. That puts Manpower on pace to meet 25% of the Governor's stated goal.

South Dakota Democrats would like to know why we're getting such low return on a five-million-dollar exclusive deal with one Wisconsin company:

“Governor Daugaard dedicated $5 million to employee recruiter Manpower to fill 1000 open jobs within three years. One year later, they’ve filled 83 jobs that we know of,” says Sen. Billie Sutton (D-Burke), a member of the senate appropriations committee. “I hope Governor Daugaard’s administration will help us answer our questions about the program, so we can protect taxpayers and fill open jobs across South Dakota” [South Dakota Democratic Party, press release, 2013.05.29].

Governor Daugaard is responding to Manpower's poor performance by allowing employers to participate in SD WINS while using their own recruiters. In other words, instead of an exclusive deal with one recruiter, we're now subsidizing many recruiters. Whether we should be subsidizing this basic cost of doing business is an open question (isn't the free market supposed to allocate resources most efficiently without government interference?), but removing the favoritism to Manpower is promising:

To qualify for the program, employers must list the job in the state for 30 days. If no suitable candidates emerge, the business can use Manpower at a subsidized rate or hire another recruiter. If someone moves to South Dakota and accepts a job, the state will reimburse the employer $1,500 to $6,000, depending on the salary of the new employee.

Broadening the program is smart, said Ryan Good, co-owner of gpac, a recruiting firm that matched 60 hires in hard-to-fill jobs last month, including many in Sioux Falls [Jodi Schwan, "State Tweaks Recruiting Program," that Sioux Falls paper, 2013.05.22].

Did I read that right: Wisconsin-based Manpower places 83 recruits in one year, and Sioux Falls-based gpac matches 60 hires in one month? Yeah, if I were the guys who gave Manpower an exclusive state contract, I'd try to change the subject, too:

South Dakota Wins has meant increased and even new programs at state institutions like Mitchell Tech, where a welding program was started to deal with a shortage of welders in the state. In an email Thursday, Tony Venhuizen, Director of Policy and Communications for Daugaard’s Office said the plan has also opened up rural areas to medical professionals by creating more training opportunities, and is bringing back former South Dakotans as the administration focuses on the state's existing Dakota Roots program to woo workers back to the state they grew up in.

Governor Daugaard’s Chief of Staff, Dusty Johnson said the successes of the program are undisputed when it comes to South Dakota worker training.

“We have workers but we don't necessarily have them trained in the right things,” he said. “And that has been a big success of the Governor's Workforce Initiative is that it's focused on putting resources into places where we have and need workers trained with that set of skills and that type of education” [Kelly Bartnick, "Daugaard's Office: South Dakota WINS Is Successful,", 2013.05.30].

The Governor's office is right to focus on the workforce training side of their program. Fostering local talent is the surest route to creating jobs and boosting the local economy. Mary Medema, director of workforce development for the Sioux Falls Development Foundation, affirms a principle I've discussed previously: recruiting from out of state is a crap shoot in which we gamble on the folks least likely to remain committed to our community:

Deciding to hire from out of state should be an individual decision, she said, adding that it brings some risk.

“If it’s a high-demand job, people are going to keep coming after them,” Medema said. “Headhunters are going to keep calling them. And if someone is mobile enough to move to South Dakota and didn’t have any other ties to South Dakota, they’re probably willing to move again” [Schwan, 2013.05.22].

Keep "tweaking" South Dakota WINS, Governor Daugaard. Invest in local recruiters, local talent, and local training, and we Dems won't have to ride your case so hard.


  1. Owen Reitzel 2013.05.31

    "South Dakota Wins has meant increased and even new programs at state institutions like Mitchell Tech, where a welding program was started to deal with a shortage of welders in the state."

    And from what I've heard a lot of these new welders are headed to North Dakota where the pay is almost double what it is here.

  2. Rorschach 2013.05.31

    What's missing from the information just put out is how much SD has paid Manpower already to recruit those 83 workers they lay claim to. Is SD obligated to pay Manpower $5 million regardless of their performance? Can the contract be canceled early? And if so, how much money does Manpower walk away with?

    Now Cory, despite Manpower's dismal performance it does seem like you are comparing apples to oranges between Manpower and gpac. I don't see anywhere that gpac recruited workers from out of state as Manpower is required to do.

  3. Rorschach 2013.05.31

    Also, I would want to see some verification on the 83 hires the state credits Manpower with. Were there really 83? Who are they and where are they working? How much did the state itself (i.e. Daugaard to Mall of America, and other state employees) participate in the recruiting of those folks - meaning was it Manpower's doing or is the state carrying the load for Manpower to save face? How many of those claimed 83 people have already left the job they were recruited into? How many have left SD?

  4. caheidelberger Post author | 2013.05.31

    You're right, R, the article makes only that glancing mention of gpac's efforts, and doesn't clarify where those recruits came from or whether those recruits all qualify for reimbursement under the loosened conditions of SDWINS. The article names one of those 83; I too would love to hear the stories of the other 82. Schwan names these companies as those that have worked with Manpower under SDWINS:

    • Adams Thermal Systems
    • Bell Inc.
    • Clark Engineering
    • MetaPayment Systems
    • Midland National
    • Peppermint Energy
    • Poet
    • Raven Industries Inc.
    • Sioux Steel

  5. caheidelberger Post author | 2013.05.31

    Good article, Bob! The state seems to be responding reasonably to a contractor failing to deliver the promised goods. Manpower seems to be blaming their underperformance on employers who are being too picky.

    So by Bob's count, we're out $633K, with some invoices still coming for jobs recruited but not yet started. The tough question here: how many of those jobs would Sioux Steel, Raven, Poet, et al. have filled without the state's subsidy?

  6. Jessie 2013.05.31

    Does the Department of Labor and Regulation have anything to do with this effort, this contract, with any of this? Or is it all Office of Economic Development? Anybody know?

  7. Rorschach 2013.05.31

    Good article by Bob Mercer. Answers many of my questions. So we know the number of actual recruits who commenced working in SD appears to be 64 - rather than the 83 the state claims. The other 19 haven't actually moved here yet, and may never come. We know that 55 of the 64 actual recruits are making under $40,000.00. But we don't know how many of the 64 have already left the positions they were recruited into.

  8. Stace Nelson 2013.05.31

    I challenge anyone to show where this program was legally passed. First read this:

    Even though it was brand new spending, and not for ordinary state expenses, it was illegally placed into an adjustment bill to the General Appropriations bill.

    When you think of this "program," remember! SD is a fiscally conservative state with a "super majority Republican" governor & legislature! Republicans who believe in cutting spending, cutting government, and doing only that for the people which they cannot do themselves!

    This program is the ugly crony-capitalism opposite of fiscal conservative Republicanism. Happy to be on record as one of the few who opposed the brazen violation of SD's Constitution and this misuse of South Dakotan's tax dollars.

  9. Bree S. 2013.05.31

    Is there a way to get rid of it, since it's illegal?

  10. Jana 2013.05.31

    Nice job on the research and reporting Mr. Mercer. Will this story get picked up by the other media in the state?

    Your account seems to be different from what everyone else was told...

    Did it cost you any Qdoba? ;-)

  11. TonyAmert 2013.05.31

    It seems that the only conclusions can be:

    1. There were only 83 positions that needed to be filled. Program was success!

    2. Only 83 positions offered competitive pay that could attract.

  12. Donald Pay 2013.05.31

    One thing you have to understand about Manpower is that most of their experience is in Europe, not in the US. They are headquartered in Milwaukee, and maybe they do some work there, but they have most of their resources and get most of their revenue outside the US. For example, they hardly have a presence in Madison, which has both a big university and a big tech school. They should be able to get recruits out of Wisconsin, given Wisconsin lags nearly everyone in job creation, thanks to Governor Scott Walker.

  13. Bob Mercer 2013.06.01

    I've been pondering this matter, and my guess is that the overlooked and very real barrier is the national housing market. If you live in a depressed area it's probably harder to sell your house. The people being targeted are professionals and craftsmen, who probably have families and own houses. If you can't sell your house there, you probably can't afford to move here, unless the salary being offered is tremendously high. If you can't sell your house there, a lender is less likely to offer you a loan for house here, unless the salary being offered is tremendously high. I also would guess that a lot of people don't want to move from urban areas to rural areas. Just yesterday I read about a New York City agency that spent about $2.5 million to purchase and restore a century-old carousel (where people sit on the wooden horses and go around in circles) for Coney Island. And no, Mayor Huether, I'm not suggesting you need a carousel too in Falls Park.

  14. Stace Nelson 2013.06.01

    @Owen is correct. I have talked with some business folks and they indicate they have a huge problem retaining employees they recruit into SD from other states. So much so that they have concentrated much of their recruitment at South Dakotans.

    I was against the way they illegally appropriated the money for this contract and the idea itself. How is it right to use South Dakotans' tax dollars to recruit people from out of state to compete against them for jobs in SD?

  15. John 2013.06.01

    Perhaps we should fund research on how North Dakota gets people to work in the oil fields? Hmm..........

  16. Owen Reitzel 2013.06.01

    "How is it right to use South Dakotans' tax dollars to recruit people from out of state to compete against them for jobs in SD?"

    Tottally agree Stace. One step further, shouldn't bsuinesses spend their OWN money to recruit anybody? In or out of state.

  17. Stace Nelson 2013.06.01

    @Bree It would take a lawsuit being filed and followed up through our court system.

    @Owen They did since the founding of our country. Interesting to note, they excluded SD owned manpower recruiting companies from the on sent & the state was sued over it. "Ironically," the same people who proposed/voted for this, who are for the Governor's Economic Development Program where the state picks winners & losers (crony-capitalism), will still emphatically say how wrong President Obama's stimulus & bail outs were..

  18. caheidelberger Post author | 2013.06.01

    Stace, as you recall, three companies with the clearest standing to file such a lawsuit did so... and had it thrown out by Judge Mark Barnett. "Plaintiffs failed to state any facts which would support a plausible claim that the State’s execution of the Manpower Contract exceeds its legislatively delegated authority," said Judge Barnett.

    So it would seem that filing a legal challenge against the good old boys club in any South Dakota court over which a member of the good old boys' club presides is doomed.

  19. Bree S. 2013.06.01

    That's probably what he meant about it being "followed up through our court system." lol

    So Judge Barnett doesn't care about the State Constitution. Nice.

  20. Owen Reitzel 2013.06.01

    ""Ironically," the same people who proposed/voted for this, who are for the Governor's Economic Development Program where the state picks winners & losers (crony-capitalism), will still emphatically say how wrong President Obama's stimulus & bail outs were.."

    I'll give you credit Stace you are consistant. Your fellow Republicans can be 2-faced-I agree. But the stimulus and bailouts were needed and were not a failure. Take GM. They've paid back the loan and the government made money. The stimulus saved us from going into a depression and now our economy is starting to grow. Not fast enough but growing. It'd have been helpful if the the Republicans could have help. Some Republicans did help and they're paying the price from the Tea Party.

  21. Stace Nelson 2013.06.01

    @CAH Correct me if I am wrong, that contract was let before the governor got the funding approved by the legislature... Additionally, I challenge anyone to show me a separate bill (as required by constitution article link posted) where that expenditure of your tax dollars was approved by 2/3rds vote.. I am not the one to blame if the fox is guarding the chicken coop. Remember, I am the ugly broken down old farm dog barking at the coop trying to let you folks know that there's a skunk in there getting your eggs.

    @Owen Glad you get the point. Sad you miss the bigger one though. Crony-capitalism is bad for the country no matter which (D/R) is behind it. Your happy ending comes with a massive price tag & dubious claims of success that are very debatable.

  22. Jana 2013.06.01

    The SD GOP works for business above the average citizen. Their rationale is that if it's good for business (read campaign donors) then it's good for all of South Dakota. Classic trickle down economics. We know how well that works.

    Mr. Mercer may be on to something, but let me add a little to his thinking.

    Is it possible that before a skilled craftsman decides to uproot his family he looks for job security and a state that supports labor?

    Then he sees that a company like Trail King, on an economic whim, decides that those people they so strongly desire were really just expendable expenses and not assets to their business? How many did they toss to the curb recently because they weren't good at business? Would you trust them enough to stake your future?

    Or maybe they looked at how much the state values the labor market. Hey GOP, tell us again how much you love labor...specifically organized labor. Do you really want to make the move to a state where the odds are stacked against you when it comes to labor and management?

    Tell us again about the thugs and freedom and liberty and stuff.

    Then again, maybe they are not coming because it is just about the money. Same as politics and business.

    South Dakota prides itself on being a good state for business. How do we rank on being a good state for workers? Should we base it on labor laws? The strength of organized labor? Teacher salaries? Awesome call center and retail opportunities paying enough to be a part of the GOP despised and mocked 47%?

  23. caheidelberger Post author | 2013.06.02

    Stace, I'm not counting on the courts run by judges appointed by the same political machine to fix this political machine. We have a better chance of stopping crony capitalism and abuse of executive power by getting 36 Representatives to vote no on the budget... or at least 24 to dig in their heels, play Mason's Rules, and bring the Legislative monkeyshines to a halt, no matter what the Speaker or the clock says.

    And the surest way to make that happen is to elect more Democrats.

  24. James Snyder 2013.06.02

    Wow all of you are really pathetic. At least that makes this story laughable but Mr. Mercer, come on. So your article states that Dusty Johnson states Manpower wasn't doing its job? Because later in your article it seems to contradict that? And did you not talk to anyone at Manpower? Seems like a story pushed by the Democrats. I worked as a headhunter for 25 years and it is not an easy business, let alone relocating candidates. I would highly recommend easing the tone a bit.

  25. caheidelberger Post author | 2013.06.02

    So, James, what does the free market need your services for, anyway? And why do your services require a government subsidy? That seems like a story true conservatives could push even better than Democrats.

  26. James Snyder 2013.06.02

    I'm not saying that recruiting deserves a subsidy but don't be fooled. There is no such thing as complete free market. Govt "assistance" happens all the time. From what I read the businesses told the Governor and others that they needed people so hats off for trying something. The fact that articles like this and Mercer's come out just seem to be attack journalism. Not that anyone really wants to know the facts of anything.

    Here's a question, how many jobs are there that Manpower is recruiting for?

    Or, how many companies offer relocation? How much? What is the salary? What are the positions?

    Why does Mercer's article claim that Dusty Johnson says Manpower wasn't bringing enough recruits in and then down below it says the agreement was together? Do we know the details? I know a fellow firm in town that met with Manpower as they had offered anyone locally and some regional firms to participate and get 100% of each fee the place. Only one company took up the offer from what he said. Too low of fees for placements so he didn't participate.

    Like I said, the actual whole story is necessary.

  27. caheidelberger Post author | 2013.06.02

    Back up, James. The story seems pretty simple: the state gave Manpower an exclusive contract to recruit 1,000 new workers in three years. One year in, they've recruited 83. The Governor stops payment, changes the contract, and opens the program to other firms because Manpower failed to meet program goals. Not that I need to defend Dusty or Bob, but isn't that the obvious story here? What other facts do we need to understand that Manpower didn't do what they were hired to do?

  28. James Snyder 2013.06.03

    The number 1000. To place 1000 people in jobs in our industry you would need roughly 2000-2500 job orders. The article mentions nothing of that and the Governor didn't stop payment. Bob's article starts with Dusty's quote but then read further in his article where it states a different fact. Just seems fishy based on knowing the industry. Plus they signed a contract again for year 2. And there is NO way that gpac places 60 people a month with their office in Sioux Falls. That places churns and burns recruiters. I said it like some others did, the whole story isn't there.

  29. caheidelberger Post author | 2013.06.03

    The state stopped paying the monthly $49K fee after December. The state renewed the contract for one year. "Under the deal," Mercer writes, "Manpower continues to receive a bounty payment for each new worker hired. Those payments are based on the worker’s salary." The monthly fee is not written into the contract, although Dusty Johnson says the state could restore that fee if performance improves. That last part sounds shady on Pierre's part (if I were Manpower, I'd want that prospect in writing), but Mercer's story does not contradict itself.

    gpac's 60: sure, as I said above, that fact could use some fleshing out. Schwan blipped that in her story, without explaining further.

    1000: That number was the Governor's stated goal. Is your point that the Governor set an unrealistic goal?

    You're saying, James, that there's much more to the story to be learned. South Dakota Democrats are pushing for answers to those questions, yet you grumble about how this just sounds like a story pushed by Democrats. What are you really after, James: more information, or a chance to call Democrats names?

  30. James Snyder 2013.06.03

    Here is what I'm saying. 1) None of you understand the business and there is no way that a company like Manpower would've had a contract in place that allowed for the governor to go back on like the $49k without something in writing. 2) I don't believe Bob Mercer is being truthful in the quotes. I am calling out his lie. 3) Manpower offered any company to work on the project before. 4) The Democrats voted for this also, most from what I saw. 5) This article above is fluff and attack. No journalism. 6) Any person hired out of state for a role here that has not been filled for a while is a plus. A goal is just that. A goal. NOTHING in recruiting is an exact science. Take your anger on Daugaard and Republicans on something else that is feasible. I don't believe for a second that a company like Manpower had enough job orders to do 1000 when after a year they are at 83 no matter the situation.

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