The Build Dakota Scholarship is now open to applicants! (Just be careful when you click: when I opened the new site, welding sparks flashed all over the place.) The scholarship board has decided to spend $25 million of T. Denny Sanford's money and $25 million of our money to subsidize vo-tech degrees in the following eight industry areas:

  1. automotive
  2. building trades/construction
  3. energy technicians
  4. engineering technicians
  5. licensed practical nursing
  6. medical lab technicians
  7. precision manufacturing
  8. welding

(Two points off for lack of parallelism... but that's one of those liberal arts concepts Governor Daugaard says aren't worth our time....)

The BSD Eligible Programs List breaks those critical job fields down to specific degree/diploma programs at Southeast, Lake Area, Mitchell, and Western Dakota. But wait, no counseling? I hear counseling is critical job skill for all sorts of workers:

When state Rep. Lynne DiSanto was attending Chadron State College in Nebraska years ago, eventually earning a bachelor’s degree in business and a master’s degree in counseling, she never knew how those studies would impact the rest of her life.

Today, just a few weeks into her first term as a state legislator, DiSanto now knows that her college preparation has proven invaluable.

“That type of degree in counseling is never wasted, especially in the business world,” said the 38-year-old mother of three from Rapid Valley. “The things you learn about relating to people and understanding people has definitely helped me in the Legislature. It’s critical to understand what’s important to people, including your constituents of course, but your other legislators as well,” DiSanto added. “You learn to talk to people in a way that they understand and that makes sense to them” [Tom Griffith, "DiSanto Jumps into Lawmaking with Vigor in First Term," Rapid City Journal, 2015.02.15].

Empathy, understanding, communication skills... I don't know, Lynne. That all sounds pretty liberal artsy-fartsy to me. Almost downright philosophical. It's a good thing South Dakota's focusing on making good solid practical education free for welders and car fixers, not folks who sit around talking about feelings. Help Build South Dakota with practical jobs—apply today!

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Menno Schukking, vice-president of the Northern State University Student Association, led off the Q&A at Saturday's Aberdeen crackerbarrel by asking legislators if they thought Senate Bill 181 was a good idea. SB 181 would appropriate $3.2 million to the Board of Regents and $736 thousand to the vo-tech schools to support a tuition freeze for the coming fiscal year. Schukking noted that SB 181 would be a good first step toward flipping the state support/student support ratio from the current 40/60 split to the 60/40 split it used to be.

None of the Republicans on the panel would bite. Both District 3 Novstrups, Senator David and Rep. Al, are sponsors of the bill but simpered about having to wait and see how the final budget came out. District Senator Brock Greenfield said the tuition freeze isn't a backburner item but then left it on the backburner by saying there are lots of interests to balance. Only District 1's Democratic Senator Jason Frerichs took a stab at setting priorities, suggesting that if the Governor can make a priority of spending $4 million on self-insuring state properties, we ought to be able to set a similar priority now on higher education.

Schukking is in Pierre with student leaders from campuses across the state today for the Student Federation Higher Education Days. They face a tough push on the tuition freeze, since the Governor opposes it and the Regents won't fight for it. Schukking and his young colleagues will try to get legislators to commit to the funding priorities in SB 181 and three other bills:

  • Senate Bill 91, which seeks to boost the undercapitalized needs-based scholarship created in 2013. Schukking tells me that the scholarship fund, from which Regents can only take interest, only has enough principal to generate $5,000 in interest for needs-based scholarships at Northern. SB 91 originally proposed a $200K boost; Senate Appropriations amended out that funding Friday to allow the bill to move through debate while we await budget data and legislators willing to actually set a priority.
  • Senate Bill 92 would do the same for the Critical Teaching Needs Scholarship. The commitophobic Senate Appropriations did the same thing to it Friday, knocking the appropriation from $200K to $1.
  • House Bill 1147 is Governor Dennis Daugaard's proposal to boost the merit-based Opportunity Scholarship. The Governor is willing to spend $1.274 million to cut costs for our best students by not quite three percentage points.

Not on the Student Federation's happy list is House Bill 1206, whose sponsor list is almost entirely mutually exclusive of the sponsor list of SB 181. Almost none of HB 1206's sponsors are willing to sign on to a tuition freeze as a priority for higher education, but they will sign HB 1206 to make carrying concealed weapons on campus a priority, because (a) it sounds tough, and (b) it doesn't cost the state any money... well, at least not until we have to start spackling bullet holes and hauling away bodies.

The Student Federation opposes HB 1206. Evidently they believe students are better served by a discussion of real investment in the very real problems of college affordability and student debt instead of the fantasies of every student as his or her own John Wayne or Jason Statham. Let's hope they can spend Higher Education Days talking more about green than guns.

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Did you know Governor Dennis Daugaard and billionaire Denny Sanford aren't the only guys proposing a vo-tech scholarship? A month prior to the big announcement of the Build Dakota Scholarship, the Rapid City Economic Development Partnership and other interested Black Hills parties applied for one of those workforce development grants from the state. They asked for $220,000 from the state to support their $440,000 three-year plan; they got $70,000.

The Black Hills plan included all sorts of leveraging and marketing (after two years of top-secret prep, the Black Hills economic developers last year launched "a new economic development branding and marketing effort, unified as Rushmore Region"), career coaching at the K-12 level, metalwork training and certification, and more.

The Black Hills plan also included a scholarship proposal:

We are proposing to create a regional skills-based training scholarship fund, that when matched by the employers seeking the trained employees, would make possible the opportunity for many of these unemployed and often underemployed job candidates to round out their skills/certifications and thus qualify for these attractive job opportunities. This would supplement our recruitment strategy by helping our employers locate employees who are almost ready, but who lack one or two critical skills prerequisite to being hired [Rapid City Economic Development Partnership, Community Incentives Matching Program grant application, November 2014].

Great minds think alike, I guess.

Ben Snow, president of the RCEDP, tells me he and Blaise Emerson of the Black Hills Council of Local Governments are still working on details of the scholarship component of their plan:

We are... encouraged that coincidental to the day we were delivering our presentation to the workforce board, the announcement of the Sanford gift for skilled-trades scholarships was taking place in Sioux Falls and that it is very close in concept to what our proposal included, except on a statewide basis and at a much higher funding level [Ben Snow, e-mail to Madville Times, 2015.01.20].

The Build Dakota Scholarship workforce fields are to be determined within the next couple weeks. If they align with the needs our Black Hills boosters see in their workforce, the state and RCEDP should be able to pool resources and train even more workers for the Black Hills labor pool.

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Republicans most likely went looking for a constitutional excuse to can Kathy Tyler because of her outspoken criticism of the EB-5 scandal brought to us by the Rounds-Daugaard regime. But Republicans probably also don't like the former Milbank legislator's criticism of the current administration's only noteworthy education initiative, the Build Dakota Scholarship for vo-tech students:

Why should we as a state fund a student’s entire post-secondary education so that he or she can get a job for a private company? Yes, there is the three year, stay in South Dakota caveat, but is it a state’s job to train workers for private companies? I don’t think so. We don’t pay to train state employees and we certainly don’t offer scholarship programs to them. And I won’t even start on the teacher shortage [Kathy Tyler, "Build Dakota Scholarship," Kathy's Corner, 2015.01.05].

Tyler raises a good question for our legislators to debate: is this subsidy for workforce training really within the proper role of state government. The Build Dakota Scholarship serves to support the low-wage system that is the root cause of the workforce problem. It targets education that does not offer the highest chances for full-time employment. As Tyler suggests, it seems a bit drop-in-the-buckety compared to other pressing education and workforce needs in the state.

Tyler also catches a whiff of partisan selectivity in Republican support for this scholarship plan:

The Build Dakota Scholarship applies to certain programs at certain technical institutions. These programs train students in high-need workforce areas. There will be 300 full ride scholarships for five years and then 50 per year. The full ride scholarship is open to resident and non-resident students. I have to smile at that. Last year, I sponsored a bill to allow out-of-state students who attend South Dakota high schools to be eligible for the $1000 per year Opportunity Scholarship given to top high school seniors. It didn’t pass. It must have been the letter behind my name [Tyler, 2015.01.15].

Tyler refers to her 2014 House Bill 1078. This partial scholarship would have had to have recruited several hundred high-achieving non-resident students to cost as much as the full-ride Build Dakota Scholarship. Tyler pushed her bill through three votes before the full Senate finally killed it. Every vote against the bill was Republican.

Reaching for my lemonade squeezer, I notice that, in this blog post written before session started, Tyler noted that she would have to stay mum on political issues once she took her position as a state employee. The good side, then, of Speaker Wink kicking Tyler out of the House Dems' caucus secretary job is that we can hear more of her observations and analysis on Legislative matters like the Build Dakota Scholarship. Keep speaking up, Kathy!

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Governor Dennis Daugaard's new Build Dakota Scholarship for vocational-school students is a corporate welfare program whose primary aim is addressing a workforce shortage and providing select South Dakota industries with a captive labor pool. It will provide 300 scholarships over five years out of a total current vo-tech enrollment of about 6,100.

Democrats in Minnesota's Legislature are proposing free tuition for everyone who wants to attend Minnesota's two-year colleges and technical schools. That proposal mirrors the Tennessee Promise, in which Tennessee is using lottery money to cover tuition to its associate-degree programs:

It will provide students a last-dollar scholarship, meaning the scholarship will cover tuition and fees not covered by the Pell grant, the HOPE scholarship, or TSAA funds. Students may use the scholarship at any of the state’s 13 community colleges, 27 colleges of applied technology, or other eligible institution offering an associate’s degree program. While removing the financial burden is key, a critical component of Tennessee Promise is the individual guidance each participant will receive from a mentor who will assist the student as he or she navigates the college admissions process. In addition, Tennessee Promise participants must complete eight hours of community service per term enrolled, as well as maintain satisfactory academic progress (2.0 GPA) at their institution [Tennessee Promise, "About," downloaded 2015.01.09].

Instead of tying graduates to in-state employers and introducing grit in the labor market, Tennessee will ask its scholarship recipients to pay their communities back while they are in school with a simple service requirement.

President Obama likes the Tennessee Promise. He's advocating a national version of the plan, which could serve nine million Americans.

Minnesota Republicans' initial response: class warfare!

Senate Minority Leader David Hann, R-Eden Prairie, was similarly critical of the Democrats’ proposal for free tuition.

“At this point, we have a lot of questions,” Hann said. In particular, he said the programs lack a means-testing mechanism to ensure they are not abused by higher-income Minnesotans [Richard Lopez and J. Patrick Coolican, "Free College vs. Tax Cuts as Visions Contrast at Capitol," Minneapolis Star Tribune, 2015.01.08].

Republicans are hilarious: hand out general scholarships, and the rich are untrustworthy, abuse-minded miscreants! Hand out tax breaks, and the higher-income citizens who run businesses can be trusted to pass on great benefits to the trickled-upon masses (tax breaks are a highlight of the MN GOP plan for the state surplus).

And South Dakota Republicans bat not one eyelash at the possibility that higher-income South Dakotans might take advantage of vo-tech scholarship recipients who are required to work in South Dakota for three years by paying them lower wages than market forces would otherwise demand.

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Who says I can't celebrate Christmas? I observe the holiday with a poem for South Dakota Magazine. Here's the first stanza of my meditation on the Build Dakota Scholarship:

Cory Allen Heidelberger, Christmas Eve poem on Build Dakota Scholarship, first stanza, 2014.12.24Check out the full poem at South Dakota Magazine. Merry Christmas, Joyeux Noël, God Jul, and С Рождествoм!

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My eager readers have numerous questions about the new Build Dakota Scholarship, the $50-million joint venture between the state and usury-baron-cum-philanthropist T. Denny Sanford to offer 300 full-ride scholarships to get vo-tech students to stay and work in South Dakota. Who's eligible? For how much? In which job fields? And can the state hammer out the details in time for high school seniors to apply this spring?

The state is trying to answer those questions. The South Dakota Department of Education sent me the following FAQ sheet yesterday afternoon:

  1. WHAT IS THE BUILD DAKOTA SCHOLARSHIP PROGRAM?
    A new scholarship program created through a $50 million dollar investment funded by a $25 million donation from T. Denny Sanford and a $25 million contribution from the South Dakota Future Fund.
  2. WHAT PROGRAMS OF STUDY QUALIFY FOR THE SCHOLARSHIP?
    The scholarship administration board will determine the eligible technical institute programs each year. For the 2015-16, information will be released with the scholarship application in February 2015.
  3. WHAT COSTS ARE COVERED BY THE SCHOLARSHIP?
    The scholarships will support tuition, fees, books and other required program expenses in the eligible, South Dakota technical institute programs.
  4. IS THERE A CAP ON THE AMOUNT OF THE SCHOLARSHIP AWARD?
    The scholarship covers tuition, fees and other required program expenses for Build Dakota scholars. For the 2014-15 school year, full-time students make the following investments for a technical institute education:

    • AAS Programs: Full program expenses range from approximately $16,000 to $19,750 (median $17,875) over the 2-year program. Included in the estimated expenses are tuition and fees, technology, tools and books required to complete the program.
    • Diploma Programs: Full program expenses range from approximately $9,000 to $12,000 (median $10,500) for the 1-year program.
  5. CAN OUT-OF-STATE STUDENTS APPLY?
    Yes, they can. Both South Dakota students and out-of-state students are eligible for the scholarships.
  6. WHO IS ELIGIBLE FOR THE SCHOLARSHIP?
    The Build Dakota Scholarship program will begin with newly enrolled students in Fall 2015.
  7. WHAT IS THE FUTURE FUND?
    The state’s investment in Build Dakota comes from the Future Fund. Following the recession of the early 1980s, the Future Fund was developed by Governor Mickelson to invest in South Dakota’s workforce and build its economy. The Future Fund supports the workforce development and technical assistance programs which help train employees, retrain employees during layoffs and support business recruitment, economic development initiatives, and research and entrepreneurial activities.
  8. WHAT HAPPENS TO THE CRITICAL NEEDS WORKFORCE SCHOLARSHIP?
    The Critical Needs Workforce Scholarship will be phased out as funds are allocated to the Build Dakota scholarship program [South Dakota Department of Education, FAQ sheet, e-mailed to Madville Times, 2014.12.18].

Item 4 confounds my calculations on the scholarship/purchasing-power payoffs. I based my calculations on the high end of a KELO report pegging vo-tech costs at $12K to $15K. DOE is saying the Build Dakota Scholarships could pay $9K to $12K for one-year programs and $16K to nearly $20K for two-year programs. Plus, a friend in government suggests revising my calculations to regional price parity data, which this friend contends are more accurate than my long-preferred C2ER cost-of-living data. Looks like a weekend of more spreadsheets....

Item 2 says the details on eligible programs will be hammered out by February, when the state will release the scholarship application form. Item 8 may provide a clue as to which job fields Build Dakota will target. The current Critical Needs Workforce Scholarship puts a measly $500K toward vo-tech scholarships of up to $5K. Build Dakota will replace that program with scholarships worth, in the case of two-year programs, up to four times that amount. The Critical Needs Workforce Scholarship currently targets these degrees and job fields:

LAKE AREA TECHNICAL INSTITUTE MITCHELL TECHNICAL INSTITUTE
• Energy Operations – AAS
• Energy Technology – AAS
• Precision Machining – AAS
• Precision Machining eDegree – AAS
• Robotics eDegree – AAS
• Architectural Design & Building Construction – AAS
• Automation Controls/SCADA – AAS
• Electrical Utilities and Substation Technology – AAS
• Electrical Construction & Maintenance – AAS/Diploma
• Farm Power Technology – AAS
• Heating & Cooling Technology – AAS/Diploma
• Industrial Controls – Certificate
• Industrial Maintenance Technology – Diploma
• Information Systems Technology – AAS/Diploma
• Precision Technology Specialist – AAS/Diploma
• Telecommunications – AAS
• Welding & Manufacturing Technology – AAS/Diploma
SOUTHEAST TECHNICAL INSTITUTE WESTERN DAKOTA TECH
• Automotive Technician – AAS/Diploma
• CIS/Systems Administration – AAS
• Civil Engineering Technology – AAS
• Computer Network Security – AAS
• Computer Programming – AAS
• Computer Science – AAS/Diploma
• Diesel Technology – AAS/Diploma
• Electronics Technology – AAS/Diploma
• Land Surveying Science Technology – AAS
• Mechanical Engineering Technology – AAS
• Mechatronics – AAS
• Plumbing – Diploma
• Welding – Diploma
• Computer Aided Drafting – AAS/Diploma
• Computer Science – AAS/Diploma
• Electrical Trades – AAS
• HVAC Technology – Diploma
• HVAC/R Technology – AAS
• Network Administration & Security – AAS/Diploma
• Precision Machining – AAS/Diploma
• Transportation Technology – AAS
• Welding – AAS/Diploma

Expect Build Dakota to target a very similar list of degrees and jobs.

DOE's original Build Dakota info sheet offers eligibility criteria, and financial need is included:

  • Interest in the high-need workforce areas
  • U.S. citizen or U.S. national
  • Applicants need not be South Dakota residents
  • Financial need
  • Demonstrated aptitude through one or more of the following:
    • The National Career Readiness Certificate (NCRC) or other industry-recognized certifications in the career area
    • Technical, dual or concurrent credit courses taken in the career interest area
    • Career & Technical Education coursework completed in the career interest area
    • Work-based learning experiences, internships or work experience in the career interest area [Department of Education, Build Dakota Scholarship information sheet, downloaded 2014.12.18]

Low-income students may get some preference, but I wonder how high we will or should prioritize financial need? If this is a workforce-building plan, should we choose recipients based on talent first, then break ties on financial need? Or is this an opportunity to build skills among low-income students who may not otherwise have the chance to get a good technical education?

Again, this is all a work in progress. The Legislature will likely want to get its hand on the tiller, too... although with the money all coming from Sanford's private fortune and the Governor's own Future Fund, is any Legislative action needed? Whoever gets involved, watch for the final details by February.

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The Build Dakota Scholarship program created by Governor Dennis Daugaard and billionaire T. Denny Sanford promises 300 vo-tech students a year a free two-year education in return for three years of work in South Dakota.

KELO says vo-tech programs in South Dakota run between $12,000 and $15,000. The top end of that range puts the up-front dollar value of the Build Dakota scholarship on par with the Critical Teaching Needs Scholarship, created in 2013, which pays the last two years of tuition and fees for willing teacher candidates. However, the vo-tech students are getting a better deal: the teachers must promise to work in South Dakota for five years.

As we know, students accepting the Critical Needs Teaching Scholarship are trading $15K in tuition costs for $65K in sacrificed purchasing power available for working outside of South Dakota. Will Build Dakota Scholarship takers come out any better financially?

That math is uncertain: Governor Dennis Daugaard has not announced yet which job fields he will target with the new scholarship, so we don't know which wage data to compare. But let's take some guesses.

We'll focus on wages in South Dakota and the six adjoining states. Let's look first at median wages, the halfway point for wages in various fields. Here are the median wages for all occupations:

All Occupations
State Annual Median Salary Per-capita state taxation Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $32,380 $3,740 $28,640 92.8 $30,862 $4,884
MN $37,390 $4,858 $32,532 101.2 $32,146 $6,168
MT $30,770 $3,137 $27,633 102.1 $27,065 $1,086
ND $35,640 $4,057 $31,583 101.7 $31,055 $5,077
NE $31,840 $3,991 $27,849 97.7 $28,505 $2,526
SD $29,420 $3,052 $26,368 101.5 $25,978 $0
WY $36,990 $3,500 $33,490 94.4 $35,477 $9,498

South Dakota has the lowest median wage in the region. We have the lowest state and local tax burden, but our cost of living (by the most recent available data, 2014 Q3) is higher than the national average and even three ticks higher than Minnesota's. Our median adjusted post-tax purchasing power is four digits less than our neighbors'—4% less than Montana's, 24% less than Minnesota's, and 37% less than Wyoming's.

But hold on: that's all jobs, from bailiff and dishwasher up to nurse anaesthetist and CEO. Our vo-tech grads are aiming for a specific subset of jobs.

Let's look at the general category BLS calls "Production Occupations," where we should find a higher proportion of vo-tech grads:

Production Occupations
State Annual Median Salary Per-capita state taxation Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $31,550 $3,740 $27,810 92.8 $29,968 $4,186
MN $33,730 $4,858 $28,872 101.2 $28,530 $2,748
MT $30,970 $3,137 $27,833 102.1 $27,261 $1,479
ND $33,830 $4,057 $29,773 101.7 $29,275 $3,494
NE $30,230 $3,991 $26,239 97.7 $26,857 $1,075
SD $29,220 $3,052 $26,168 101.5 $25,781 $0
WY $44,270 $3,500 $40,770 94.4 $43,189 $17,407

Oops! Median pay is actually a little worse in this field, except in Wyoming, where median pay and post-tax adjusted purchasing power jumps to a $17K advantage over South Dakota'

Let's get specific. Within "Production Occupations," our governor talks a lot about welders:

Welders, Cutters, Solderers, and Brazers
State Annual Median Salary Per-capita state taxation Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $34,570 $3,740 $30,830 92.8 $33,222 $4,820
MN $38,760 $4,858 $33,902 101.2 $33,500 $5,098
MT $33,750 $3,137 $30,613 102.1 $29,983 $1,581
ND $43,010 $4,057 $38,953 101.7 $38,302 $9,900
NE $34,340 $3,991 $30,349 97.7 $31,063 $2,661
SD $31,880 $3,052 $28,828 101.5 $28,402 $0
WY $46,120 $3,500 $42,620 94.4 $45,148 $16,746
Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders
State Annual Median Salary Per-capita state taxation Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $36,890 $3,740 $33,150 92.8 $35,722 $4,729
MN $36,000 $4,858 $31,142 101.2 $30,773 -$220
MT $36,140 $3,137 $33,003 102.1 $32,324 $1,331
ND $37,760 $4,057 $33,703 101.7 $33,140 $2,147
NE $37,960 $3,991 $33,969 97.7 $34,769 $3,776
SD $34,510 $3,052 $31,458 101.5 $30,993 $0
WY $50,360 $3,500 $46,860 94.4 $49,640 $18,647

In these two job areas, the only place South Dakota beats on post-tax purchasing power is Minnesota, for welding, soldering, and brazing machine setters, operators, and tenders, and there our advantage is just $220, about 0.7%, or the cost of gas and a motel room to go see the Vikings play. Welders, cutters, solderers, and brazers come out over $5K better a year in Minnesota than in South Dakota.

But hold on again: these figures are median figures, the 50th-percential salary. Half the welders make more, half make less. We're trying to calculate the outlook for fresh-faced vo-tech grads. Welders probably need to work a while before they can prove they deserve more pay than half of their colleagues. We should thus look at salaries in the lower end of each field.

The Bureau of Labor Statistics has data on the certain percentile salaries in each occupation and each state (and you think your daily math is hard?). So let's try this: assume a new vo-tech grad jumps into a new job and, for a starting wage, gets the 10th-percentile salary (10% of workers make less, 90% make more). This kid's from South Dakota, and she would have qualified for a Build Dakota free-ride, so she's smart and good at her job. Second year, the boss raises her pay to the 25th-percentile. Third year, she gets another raise, to the median salary. On that pay trajectory, how do things look for our prospective welders?

Welders, Cutters, Solderers, and Brazers
State Annual 10th-percentile salary Annual 25th-percentile salary Annual 50th-percentile (median) salary Sum
IA $25,670 $29,460 $34,570 $89,700
MN $26,970 $32,410 $38,760 $98,140
MT $23,350 $27,510 $33,750 $84,610
ND $30,820 $35,240 $43,010 $109,070
NE $25,110 $28,870 $34,340 $88,320
SD $25,290 $27,750 $31,880 $84,920
WY $30,720 $37,530 $46,120 $114,370
Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders
State Annual 10th-percentile salary Annual 25th-percentile salary Annual 50th-percentile (median) salary Sum
IA $27,400 $32,370 $36,890 $96,660
MN $25,290 $29,260 $36,000 $90,550
MT $24,790 $31,460 $36,140 $92,390
ND $26,830 $31,910 $37,760 $96,500
NE $24,050 $31,280 $37,960 $93,290
SD $27,220 $31,240 $34,510 $92,970
WY $33,990 $41,400 $50,360 $125,750

With that fourth column, adding a year at the 10th percentile, a year at the 25th, and a year at the 50th (the median), we're getting closer to the real picture our vo-tech prospects face as they try to figure out whether taking the Build Dakota Scholarship is worth committing to work in South Dakota for three years. Let's plug those three-year income sums into our spreadsheet, subtract three years' tax burden, factor in cost of living, and see what happens:

Welders, Cutters, Solderers, and Brazers
State 3-yr income 10th-25th-50th 3-yr state/local tax burden Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $89,700 $11,220 $78,480 92.8 $84,569 $9,925
MN $98,140 $14,574 $83,566 101.2 $82,575 $7,931
MT $84,610 $9,411 $75,199 102.1 $73,652 -$992
ND $109,070 $12,171 $96,899 101.7 $95,279 $20,635
NE $88,320 $11,973 $76,347 97.7 $78,144 $3,500
SD $84,920 $9,156 $75,764 101.5 $74,644 $0
WY $114,370 $10,500 $103,870 94.4 $110,032 $35,387
Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders
State 3-yr income 10th-25th-50th 3-yr state/local tax burden Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $96,660 $11,220 $85,440 92.8 $92,069 $9,494
MN $90,550 $14,574 $75,976 101.2 $75,075 -$7,500
MT $92,390 $9,411 $82,979 102.1 $81,272 -$1,303
ND $96,500 $12,171 $84,329 101.7 $82,919 $344
NE $93,290 $11,973 $81,317 97.7 $83,231 $656
SD $92,970 $9,156 $83,814 101.5 $82,575 $0
WY $125,750 $10,500 $115,250 94.4 $122,087 $39,511

Clearly, Wyoming beats us all for welding wages. A welder who stays in South Dakota instead of moving to Wyoming gives up over $35,000 in purchasing power over three years. A welding machine operator making the same choice gives up over $39,000. Choose South Dakota over Minnesota, and the welder loses over $7,900, but the welding machine operator gains $7,500.

But where the rubber hits the road—or where the vo-tech student doesn't!—is the scholarship question. Denny D. and Denny S. are offering you sharp welders (come on, after all this talk, you're going to include welders in the scholarship, right, guys?) $15,000 in tuition savings. If those welders don't take the scholarship because they want to work out of state, they have to earn back the $15,000 they spent on school.

Only the Wyoming and North Dakota welders and the Wyoming welding machine operators make more than $15,000 above the typical wages in South Dakota. The Build Dakota Scholarship will be worth it for a lot of welding candidates.

Let's try another job field. Our benefactor Mr. Sanford is all about health care, so let's assume we'll promote some health tech jobs. How will radiologic technologists do?

Radiologic Technologists
State 3-yr income 10th-25th-50th 3-yr state/local tax burden Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $116,610 $11,220 $105,390 92.8 $113,567 $14,184
MN $143,620 $14,574 $129,046 101.2 $127,516 $28,133
MT $121,360 $9,411 $111,949 102.1 $109,646 $10,263
ND $112,720 $12,171 $100,549 101.7 $98,868 -$515
NE $118,630 $11,973 $106,657 97.7 $109,168 $9,785
SD $110,030 $9,156 $100,874 101.5 $99,383 $0
WY $132,090 $10,500 $121,590 94.4 $128,803 $29,420

Again, assuming a $15,000 scholarship value, the potential Build Dakota Scholarship recipient thinking about leaving South Dakota to work in radiology for Montana, North Dakota, or Nebraska will want to think again. Future radiologists eying Minnesota or Wyoming will tell Dennis, "No deal!" Radiological aspirants looking at Iowa will have a tougher choice: for them, Build South Dakota and three years locked into South Dakota offers them less than a thousand-dollar net advantage.

How about bus and truck mechanics and diesel engine specialists?

Bus and Truck Mechanics and Diesel Engine Specialists
State 3-yr income 10th-25th-50th 3-yr state/local tax burden Salary in pocket after state tax Cost of living (2014 Q3) Adjusted post-tax salary power Additional purchasing power from working here instead of SD
IA $87,200 $11,220 $75,980 92.8 $81,875 -$5,311
MN $106,830 $14,574 $92,256 101.2 $91,162 $3,976
MT $90,440 $9,411 $81,029 102.1 $79,362 -$7,824
ND $110,530 $12,171 $98,359 101.7 $96,715 $9,529
NE $83,210 $11,973 $71,237 97.7 $72,914 -$14,272
SD $97,650 $9,156 $88,494 101.5 $87,186 $0
WY $120,030 $10,500 $109,530 94.4 $116,028 $28,841

Even without Build Dakota, if you're into diesel engines, you lose money leaving South Dakota for Iowa, Montana, or Nebraska. The four-figure puchasing-power gains promised by Minnesota and North Dakota don't beat the $15,000 value of our new vo-tech scholarship. But once again, Wyoming is the land of opportunity. Skip the scholarship, head for Sheridan, and in three years, you'll have earned back your tuition and cleared another nearly $14,000 over what you would have made back in Aberdeen.

I'd compare wind turbine service technicians, but South Dakota apparently doesn't have enough jobs in that field for BLS to count. (Hmm.... Governor Daugaard, you and the PUC could do something about that, couldn't you?) Job opportunities in that field are numerous enough to count in Wyoming, Iowa, Minnesota, and North Dakota, where the median annual salary for fixing wind turbines is $55,550.

Whatever the exact numbers above, the Build Dakota Scholarship makes working in South Dakota for the first three years of one's technical career more appealing. Possible future earnings in welding or radiology or diesel mechanicry in another state don't matter to the young person who can't get those jobs because she doesn't have the cash right now to go to vo-tech. Plus, with their "stay in South Dakota" requirements, our scholarship plans "get our hooks" into young workers early: in those first three years, they'll accumulate connections and obligations that will incline some fraction of them to stay, despite the greater earning potential available in many fields in most other states.

And therein lies the sneaky and arguably irresponsible part of these scholarship plans. The state is not investing in a long-term plan to raise wages (which would raise economic activity, which would raise tax revenues, which would raise the amount and quality of public goods...). The state is using its resources and Denny Sanford's resources to rope young people into working for less competitive wages. The state and Sanford are going to great lengths (and putting up real money is the greatest length our state government can go to) to keep their business pals from solving their own workforce shortages with the obvious free-market solution of offering bigger paychecks.

Vo-tech students, do your own math for your own field, and tell us whether the Build Dakota Scholarship will sway your decision to stay and work in South Dakota. Fellow South Dakotans, let's ask ourselves whether we do more to address a workforce shortage by lowering workers' entry costs or raising workers' ongoing wages.

Main data sources:

  1. Cost of living: 2014 Q3 C2ER data from MERIC: http://www.missourieconomy.org/indicators/cost_of_living/index.stm
  2. State + local tax burden: SD GOED: http://sdreadytowork.com/Site-Selection-Data/50-State-Comparison.aspx
  3. Wages: Bureau of Labor Statistics State Occupational Employment and Wage Estimates, May 2013: http://www.bls.gov/oes/current/oessrcst.htm

Final Thought: The state has an obligation to educate citizens. Business has an obligation to train workers. Would Adam Smith agree?

Update 2014.12.23 16:07 CST: Rasmussen College, a for-profit business school based in Minnesota, mashes average salaries and cost of living together to produce this fun interactive bar chart comparing adjusted purchasing power for BLS job categories in all 50 states. Whatever you do, don't take up welding in New York or California!

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