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South Dakota 11th Best State for Business; Minnesota 8th

Last updated on 2013.09.27

Forbes releases another ranking of the Best States for Business. The good news: South Dakota is #11! The bad news: the People's Republic of Minnesota is 8th.

state ranks (Forbes, Sep 2013) ND NE MN SD IA WY MT
Business Costs 3 4 34 1 8 3 20
Labor
Supply
4 26 18 24 37 21 13
Regulatory Environment 17 8 22 28 10 36 42
Economic Climate 2 3 9 6 20 18 25
Growth Prospects 6 39 13 41 43 50 23
Quality of Life 19 16 5 27 12 29 37
Overall 2 6 8 11 12 23 26

South Dakota offers the cheapest business costs in the country, but Forbes says we offer weaker prospects for growth than any of our neighbors.

And check out the regulatory environment ranking. South Dakota touts its "very hospitable regulatory climate" in its business pitches, but by Forbes's reckoning, 27 states are more regulatorily hospitable... including supposedly liberal, oppressive Minnesota.

In related news, Archer Daniels Midland shopping for new corporate headquarters. Minnesota is in the running; South Dakota is not.

34 Comments

  1. Troy Jones 2013.09.28

    CAH,

    The simple thing holding us down is past success. Our tough labor supply and lack of growth prospects go together. We have "too many" employers having trouble finding employees.

    I put it in quotes because I think this is a good thing. Employers will raise wages, attract more workers to the economy and we will improve the lot of our citizens.

    You want to improve the lot of the poor? Give them a job. Improve the lot of the middle class? Create competition for their services.

  2. Jenny 2013.09.28

    Just when are these employers going to start raising wages, Troy? I doubt that'll happen anytime soon. SD has ranked one of the last in the nation in wages for decades. http://knsiradio.com/news/local/shutterfly-breaks-ground-shakopee-plant/
    The question is why do manufacturing jobs go to MN instead of SD? Could Sioux Falls or Rapid City have landed this facility in their state? Why is SD passed over?

  3. Rorschach 2013.09.28

    One of SD's problems is a lack of fresh ideas in state government. 34 years of one-party control of the governor's office results in a lot of career bureaucrats with arses growing roots in government chairs. Many of those people haven't had a new thought since the '80s. The party in power seems to be content just to stay in power and do what it always has done. Maybe we need to change the party of the governor and sweep out the career bureaucrats like we did in in the '70s when Kneip brought in so many positive changes to SD.

    Maybe we should import some folks from Minnesota to show us how to build an economy with growth prospects. This corporate welfare/crony capitalism program we have going doesn't seem to be working as well as what Minnesota is doing.

  4. jana 2013.09.28

    Troy, I think we need to define "having a problem finding workers" further by adding "for what they want to pay"

    if Trail King was really interested in finding workers, that free market driver of great wages and benefits wiuld have worked just fine. How much did taxpayers spend unsuccessfully to subsidize their hiring?

  5. caheidelberger Post author | 2013.09.28

    Related, from April: Wyoming, Minnesota, and Nebraska make the top ten in this ranking of best states in which to make a living. South Dakota ranks 41st. If we have "too many" employers/too few workers, why aren't market forces driving up wages?

  6. interested party 2013.09.28

    ADM is the Halliburton of frankenfood.

  7. Kal Lis 2013.09.28

    Income levels over every type have been flat since 2005.

    The rankings in Cory's original post, the ones that he adds later, and the ones in the link point to a systemic problem. If one were cynical, one might believe that policymakers and business leaders might be doing everything within their power to artificially depress wages

  8. Rorschach 2013.09.28

    Since Minnesota clearly has better people working on economic development, maybe Governor Daugaard should go to St. Paul and woo them to SD with promises of lower wages and all the amenities of Pierre.

  9. Troy 2013.09.28

    You guys love that little world you live in don't you.

  10. caheidelberger Post author | 2013.09.28

    No, Troy, I find my little world has various deficiencies I'd like to make better. Now what's up with the failure of market forces to raise wages in response to South Dakota's tight labor supply?

  11. Richard Schriever 2013.09.28

    From my direct personal experience in attempting to recruit businesses to move to SD, quality of life has more to do with it than anything - as far as the EXECUTIVES - who MAKE THE DECISIONS are concerned. They try to imagine themselves and their families living here - and it just doesn't make sense to them. All the other stuff (taxes, labor, etc.) just fades in comparison to that ONE factor/question - "Do I want to have to live there and go somewhere else to experience civilized culture?" The reason they work and invest is to be able to indulge in the "good things" in life. Why live and work where there are no "good things"?

  12. rollin potter 2013.09.28

    You are so right Richard!!! People!!!! look at the above print out! QUALITY of life. South Dakota #27---- minnesota #5 AMEN

  13. John Hess 2013.09.28

    That's very interesting Richard. Tell us more!

    We have had many on line and in person discussions and basically that seemed to be the conclusion. Low taxes and business friendly environment only mean so much, and that while South Dakota has many good things, they are not the things people from other "more sophisticated" states expect. What do they want?

    Is South Dakota not marketing it's good things? Low crime, family friendly, lakes, hunting, slow pace, low stress...

  14. Kal Lis 2013.09.28

    Troy,

    We all live in bubbles.

    Mitt Romney showed how people in his bubble think when he suggested kids borrow money from their parents to start a business. The equivalent of the Jimmy John’s $20,000 start-up loan is about $50,000 today. I know I don't have $50,000 lying around to loan and possibly lose. I’ll leave the 47% comment to stand on its own merits as a revealer of bubbles. The point is we all live in our own bubbles.

    Human institutions do well for those who create and maintain them. Those institutions may not serve the rest of the population very well. In fact, most remind me of casinos. The house always comes out ahead.

    I’m glad the system works for you. My blogosphere encounters with you lead me to believe you are a decent human being; I’ll stipulate you’re a better human than I am. That said, every piece of evidence I’ve seen shows that people who depend on their labor to pay the bills have seen income stagnation since the 1980s. South Dakota is not an exception to that fact.

  15. Steve O'Brien 2013.09.28

    Looking at the comments, and thinking about our state's situation, has SD's culture of low wages overcome the "market forces" of demand to keep our wages suppressed artificially low? Have most of our state's employers dug in their heels to DEMAND low wages by their actions rather than respond to the market forces people like Troy allude to?

    If that is the case, how much"force" is really behind market forces? Does that force pale in comparison to the "permission" (minimum wage law) and the "culture" of low wages?

    I see a brilliant economic paper in someone's future on this issue.

  16. Douglas Wiken 2013.09.28

    When the best and brightest mostly leave South Dakota, what is left is mostly depressed people who see little good in their future. Enthusiastic builders do not see this as a fertile field. Winner, SD has trouble getting doctors. Not because the doctors wouldn't like to be here, but because their wives can't imagine vegetating here. I suspect that may be somewhat of a problem all over. We get used to driving 150 or 220 miles just to see a smiling clerk and some interesting merchandise or other attraction and can't understand why people who might come here don't.

    There are a lot of good things in South Dakota, but the good old boys network is not one of them.

  17. Jerry 2013.09.28

    What should be obvious to most is that there is really no reason for business to come to South Dakota. We have no infrastructure to get to isolated locations in our state and our state government thinks that is just fine. So, how to create jobs and infrastructure? Here is an idea, simply get rid of republicans as they cannot govern, for starters. Start to develop grids that will send our most abundant supply of energy to ourselves and the rest of America. When wind farms and solar farms are built in the rural areas, there will be jobs and there will be a strong economy for a tax base increase. In other words, the increase of wealth to draw people to our state. In order to have growth, we must free ourselves from the republican yoke that stifles freedom and kills jobs.

  18. Deb Geelsdottir 2013.09.28

    There is an openness in MN that SD lacks. SD welcomes people, as long as they quickly learn how to "fit in." It's a Conditional Welcome. MN, and other growing states, offer a welcome newcomers with the condition that they do their best to positively contribute to the community.

    Those states include a "what do you need, how can we help, teach us about you," kind of welcome that SD dearly lacks. MN does not require newcomers to speak only English to be viable citizens. It is encouraged and ESL classes are offered for free. Government publications are given in several languages. The state pays a fee to a service that provides translators via telephone in dozens of languages at no cost to the non-English speaker.

    All those things are real welcomes, real investments in the state. They are a powerfully effective marketing tool to lure businesses and jobs. Cory's post illustrates that bottom of the barrel treatment of workers is not a sufficient tool to raise the economy.

    Cargill has a huge investment in Colombia. How comfortable would short, darker skinned, black haired, Spanish speaking business executives feel coming to Cargill corporate offices in SD? What about a Medtronic office? With a female CEO who is a practicing Muslim wearing her hijab? They all get the local newspapers online and read the insulting, demeaning letters to the editor and comment sections. They are aware of the political bent against education, rights for women, and openness to differences.

    SD needs to make big changes to enhance the future. Doing the same thing for the past 30+ years, only harder, has proven ineffective.

  19. Deb Geelsdottir 2013.09.28

    By the way, I'm aware that ND does not offer many of the services MN does, yet ND ranks higher. When SD has an economic explosion like ND has, other things probably won't matter much either. It's not likely a viable strategy to wait until then. (Note ND's quality of life ranking.)

  20. Steve O'Brien 2013.09.28

    One line in Deb's post resinated with me, ". . . bottom of the barrel treatment of workers is not a sufficient tool to raise the economy."

    Maybe seeing you labor force as only a "business cost" - not just in business but in government policy as well - is not the way to create excellence in a society - or a state.

    It really is that same disdain that Pierre has shown for education - a burden, a cost, that must be minimized.

    If it is not the labor force that Sd looks out for, then whom? Are the corporate overlords we seek to appease even in South Dakota?

  21. Donald Pay 2013.09.28

    I don't look at economic development as attracting existing businesses. At best you poach a few hundred jobs that pay middling wages. It provides for community survival for a few years (till the subsidies run out), but not for real and dependable decade-after-decade growth.

    Job growth depends on start ups that start small, catch the wave and get big, or at least medium sized. Start ups depend on people with a good idea, a population willing to buy the idea and capital input along each step of the growth curve.

    South Dakota has a problem keeping many of the young people who might generate the startup companies that catch the wave. The kids are likely to go out-of-state for higher ed, and never return. Say, bye-bye to the job growth they might have provided

    But let's say you stay or come back as a college grad with a good idea. You immediately face the problem of marketing your startup's product or service to make the company profitable. It's very difficult in South Dakota, because of the lack of customers. Initial marketing for start ups is much easier in a larger city/state.

    Third, there is a lack of capital for taking a start up or small business to the next stage.

    Still, I wouldn't give up. I remember a South Dakota company with mostly younger folks that developed and marketed a book called "College Survival." I'm not sure where they printed and put the book together, but that would have been quite a lot of jobs. They sold this book to colleges all over the US. They were highly successful for a while.

  22. Deb Geelsdottir 2013.09.28

    Don, I remember College Survival too. I knew someone who worked there. Early 1990s, I believe. It says a lot that we must go back more than 20 years for a SD grown business.

    Whatever happened to CS?

  23. John 2013.09.29

    South Dakota's ranking should plummet now that Noem and Thune voted to shut down the state's second largest economic driver - tourism. Effective Tuesday all the federal will close until further notice. The tourism shoulder season is dead - thank Noem and Thune. Motels, restaurants, etc., dead. The only high quality sites remaining open are non-profits - Crazy Horse and the Mammoth Site.

  24. Stan Gibilisco 2013.09.29

    Quality of life comes from within a person.

  25. Deb Geelsdottir 2013.09.29

    Interesting quip Stan, and much too simplistic. Thousands of people don't have time to think about quality of life. All their focus and energy are devoted to food, clothing, and shelter for themselves and their family.

    Studies have proven that people under great stress are unable to think at their peak. In fact, folks who are working a couple jobs while trying to decide which bills they can put off till next month - actually Lose IQ Points.

    Helpful info for when we wonder why poor people sometimes make counterproductive decisions.

  26. grudznick 2013.09.29

    I have heard, Ms. G, that is called the death spiral of stupidity.

  27. Deb Geelsdottir 2013.09.29

    Nah, Grud. I wouldn't call people fighting for their family's survival 'stupid.' I'd call them desperate.

    Actually, I've never heard "Death spiral of stupidity." Is that real, or did you just make that up?

  28. grudznick 2013.09.29

    You said they lose IQ points by working two jobs and trying to decide what bills to pay. You said there are studies. If these studies don't call it that then they should. What do the studies call it when poor people are bleeding IQ points out their ears?

  29. grudznick 2013.09.29

    Actually, I think what Mr. Gibilisco is saying, in his wise and wonderful ways, is that "quality of life" as a measurement of 5 to 27, for example, is very subjective. Mr. G and I might find it much higher quality of life if we were not in the hubbub of Minnesota, while others might find the quality of life better in the hubbub. That is why people should migrate to where they think, in their own minds, the are happiest. I'm just sayin...

  30. Deb Geelsdottir 2013.09.29

    Wow Grudz, you completely blew past the point. Any people in great stress or crisis lose IQ points. That's why Army Rangers undergo such extensive training. Without it, in a crisis, they'd forget what to do. It happens to anyone.

    Losing IQ points is not the same as stupid. Average IQ is about 100. 115 is the first deviation. Those people are above average. People above 130 are eligible for Mensa, the society for geniuses. IQs down to 90 are low average.

    So maybe a 105 IQ drops 10 points when her child develops leukemia and there is no insurance - that's a lot of points in IQ land - she's still not stupid.

  31. Deb Geelsdottir 2013.09.29

    The thing is Grudz, the brain can only do so many things at a time. Neuro scientists have proven again and again that multitasking is a myth. So when a brain is in crisis/high stress mode, that pretty much overwhelms any other tasks for it. Stupid has nothing to do with it.

  32. Mike 2013.09.29

    To many employers with to few employees; what fricking world do you live in Troy? SooFoo has an unemployment rate of roughly 3%. But the under employment rates are quite high. There are not middle class jobs to be had, unless you consider 11.25 an hour middle class. I do not. If one extrapolates that to other parts of the state, plus lack of "quality of life" enticements (theater, live music, thriving downtowns, large college centers, etc) and of course Sd get shellacked by NE and MN. I am disappointed you represented SD as an Econ development official for so long. Wrap your brain around the new normal; the two working parents working low paying, entry level jobs with little mobility. That is SD work force at its core.

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