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South Dakota e-Labor Bulletin

August 2018

South Dakota Industry Employment Trends to 2026

The Labor Market Information Center (LMIC) recently completed the 2016-2026 round of South Dakota employment projections by industry. To ensure consistency and comparability with national and other states’ employment projections, South Dakota utilizes a national projections system and follows a standard methodology approved by the U.S. Department of Labor.

A look at which types of industries are growing, and which are not, provides insight into general economic trends. Industry employment projections are also one valuable indicator of future workforce needs.

The general outlook for South Dakota is steady job growth in the coming decade. From 2016 to 2026, the total number of workers in South Dakota is projected to increase by 33,071 (or 6.8 percent or 0.7 percent annually) to a total of 520,526 workers.

South Dakota’s growth rate is trending at about the same pace as the national growth rate for this time period. On the national level, according to the U.S. Bureau of Labor Statistics (BLS), the total employment level is expected to reach about 167.6 million (0.7 percent annually). Nationally, 0.7 percent annual growth in the next ten years is more optimistic than the growth rate of 0.5 experienced from 2006 to 2016.

The South Dakota projections include three categories of workers:

• Non-agricultural self-employed and unpaid family workers
• Agriculture and related workers (farm employment)
• Nonfarm wage and salaried workers

The nonfarm wage and salaried workers category includes only those wage and salaried workers who are covered under the South Dakota unemployment insurance program and those who work for non-profit organizations, such as private colleges and religious organizations. Making up 88.2 percent of the workforce, this category is the major component in South Dakota. The nonfarm wage and salaried workers category is also projected to grow 7.0 percent by 2026 – the most for any category.

Employment in the agriculture and related workers (farm employment) category in South Dakota is expected to grow slightly from 30,765 to 32,014 by 2026 (4.1 percent). The agriculture, forestry, fishing and hunting sector’s employment level in South Dakota has been relatively unchanged in recent years and is projected to have an annual growth rate of 0.4 percent through 2026.

Nationally, total employment in agriculture, forestry, fishing and hunting is expected to decrease by 6,100 workers through 2026. Nationally and in South Dakota, the agricultural sector has been decreasing since the 1980s. Advancements in technology have allowed for greater efficiencies in farming production while requiring a smaller number of workers. In South Dakota, farms have trended long-term toward larger operations and the consolidation of smaller farms for greater production.

Employment in the non-agricultural self-employed and unpaid family workers category makes up the smallest portion (5.4 percent) of the workforce in South Dakota. According to the BLS (Current Population Survey and American Time Use Survey), self-employed persons are individuals who work for profit or fees in their own business, profession, trade or farm. Non-agricultural self-employed and unpaid family workers are expected to increase 5.9 percent over the next 10 years in South Dakota.

The South Dakota industries projected to grow the most over the next 10 years are trending quite consistently with the rest of the nation. In South Dakota, the service-providing industries are anticipated to employ 25,955 more workers (7.1 percent), while the goods-producing industries are expected to grow by 5,556 workers (5.8 percent). On the national level, the BLS is expecting an increase of 10.5 million in service-providing sectors to reach over 135.8 million jobs by 2026.

Businesses are grouped in industries based on the products they make or the services they provide, using the North American Industry Classification System (NAICS). NAICS uses a 6-digit coding taxonomy, with each increasing digit level identifying a greater level of specialization. For example, at the two-digit NAICS level, there are 20 broadly categorized sectors—such as Accommodation and Food Services (NAICS code 72). Businesses are then classified into more specific categories within a sector, represented by codes up to six digits.

Since South Dakota employment projections are published at the three-digit NAICS level, the table below and the remainder of this article explore the South Dakota employment growth projected to 2026 at that NAICS level (called subsectors). When noteworthy, we will mention occurrences within the more detailed four-digit NAICS having a substantial impact on employment levels at the subsector level. We will also focus on those industries projected to grow the fastest, in other words, those with the greatest percentage growth projected.

Warehousing and Storage

The Warehousing and Storage subsector is projected to be the fastest growing industry in South Dakota over the next 10 years, increasing 21.4 percent (157 workers). Establishments in this industry group are engaged in operating warehousing and storage facilities for general merchandise, refrigerated goods and other warehouse products such as grain. A large demand exists for companies to get their products in the end users’ hands in the most efficient and cost-effective way, known as “logistics.” As demand for logistics continues to increase, so will the need for workers within this subsector.

Waste Management and Remediation Service

The Waste Management and Remediation Services industry is projected to increase by 14.8 percent (131 workers) by 2026. This subsector is engaged in the collection, treatment and disposal of waste materials. The driving force behind the Waste Management and Remediation Services growth is waste collection. With population growth there is more waste generated, which increases the workers needed for the Waste Management and Remediation Service subsector. According to the U.S. Census Bureau Population Estimates Program, from 2011 to 2016 the total population increased from 824,398 to 865,454 (5.0 percent) in South Dakota.

Museums, Historical Sites, and Similar Institutions

The number of workers employed in the Museums, Historical Sites and Similar Institutions subsector is projected to increase by 14.8 percent (86 workers). Industries in this subsector engage in the preservation and exhibition of objects, sites and natural wonders of historical, cultural and/or educational value. Some examples of South Dakota entities in this industry are the Crazy Horse Memorial, Reptile Gardens, and other zoos and museums around the state. A look back shows the number of establishments and the number of workers within this subsector grew from 2006 to 2016. Tourism has a substantial impact and drives the demand. According to the South Dakota Department of Tourism, from 2014 to 2017 visitor spending statewide increased 175.65 million (4.7 percent).

Hospitals

The Hospitals subsector is expected to increase 13.6 percent (3,503 workers) over the next 10 years in South Dakota. Industries in the Hospitals subsector provide medical, diagnostic and treatment services, including physicians, nursing and other health services, to inpatients and the specialized accommodation services required by inpatients. A driving force in the Hospitals subsector is an increasing elderly population and overall increasing population in South Dakota. According to the U.S. Census Bureau Population Estimates Program, from 2011 to 2016 the population age 65 and over increased by 20,336 (or 17.2 percent) in South Dakota. Also, over those same years the population of age 85 and over increased by 8.8 percent.

Support Activities for Transportation

The number of workers employed in the Support Activities for Transportation subsector is projected to increase by 13.2 percent (130 workers) over the next 10 years. Services such as air traffic control and motor vehicle towing are examples of the type of support provided. All four of the four-digit NAICS categories within this subsector are expected to show substantial gains. The expected gains can be traced to demand for services including airport operation, routine railroad repair/servicing, emergency roadside repair, truck weighing operations, etc.

Chemical Manufacturing

The Chemical Manufacturing subsector is expected to increase 12.8 percent (139 workers) by 2026. This subsector is based on the transformation of organic and inorganic raw materials using chemical processes to formulate products. Growth in the Chemical Manufacturing subsector is fueled by consumer demand and expectations plus our South Dakota ingenuity in developing value-added consumables from raw materials raised here. This subsector supplies a variety of products to the market, ranging from ethanol fuel, agricultural fertilizers and pesticides to pharmaceuticals and medicines.

Professional, Scientific and Technical Services

The Professional, Scientific and Technical Services subsector is projected to grow 12.1 percent (1,555 workers) over the next decade. This subsector is comprised of establishments that make available the knowledge and skills of their employees, often on an assignment basis, where an individual or team is responsible for the delivery of services to the client. The individual industries of this subsector are defined by the particular expertise and training of the service provider. Continued advancements in science and technology have been a contributing factor in this subsector’s growth. An example of demand in this subsector is an establishment working toward lower costs of producing a good. The establishment may hire an expert from the Professional, Scientific and Technical Services industry to create software to automate the process, saving time and resources. Four of the nine categories at the four-digit NAICS level within this subsector are expected to have double digit growth. Some of these categories include consulting services like legal, accounting, engineering, management, computer design and scientific research.

Ambulatory Health Care Services

The number of workers employed in South Dakota’s Ambulatory Health Care Services subsector is projected to increase by 11.7 percent (1,908 workers) to 2026. This subsector is comprised of entities that provide health care services directly or indirectly to ambulatory patients (those able to walk) and do not usually provide inpatient services. Several factors have attributed to the continued high growth expected in the next decade. The demand for workers in this subsector can be placed on the continuing needs of an aging baby boomer population, growing rates of chronic conditions, and longer life expectancies. Advancements in medical technology allow elective procedures such as corrective eye surgery or plastic surgery to be more readily available and attainable.

In South Dakota, Home Health Care Services (NAICS 6216) is continuing to show a high demand for workers due to a continuing shift from inpatient care to outpatient treatments. Specifically, individuals are more comfortable with hiring a skilled nursing or personal care service to come to their home and offer treatments such as, physical therapy, medical social service and medications. Nationally, according to the BLS, Home Health Care Services is expected to have rapid growth due to patient preference and shifts in federal funding toward in-home or community-based care.

Sporting Goods, Hobby, Book and Music Stores

The Sporting Goods, Hobby Book and Music Stores subsector is expected to increase by 11.6 percent (278 workers) by 2026. Establishments and individuals in this subsector are engaged in retailing and providing expertise on the use of sporting equipment or other specific leisure activities. Book stores are also included in this subsector. At the four-digit NAICS level all the growth is attributed to Sporting Goods and Musical Instrument Stores (NAICS 4511), which makes up more than 90 percent of employment in this subsector. Book Stores and News Dealers (NAICS 4512) are expected to decline by 2026, but since these types of establishments accord for less than 10 percent of the subsector’s employment, they have little impact. Consumer demand for sporting goods, games, toys and musical instruments plays a pivotal role in the expected uptick in employment levels in this subsector.

Transportation Equipment Manufacturing

The level of workers employed in the Transportation Equipment Manufacturing subsector is projected to increase by 11.3 percent (332 workers) over the projection period. Establishments in this subsector utilize production processes similar to those of other machinery manufacturing establishments--bending, forming, welding, machining and assembling metal or plastic parts into components and finished products. Four of the five categories at the four-digit NAICS level are expected to have double digit growth. Consumer demand for motor vehicle parts, vehicle bodies, trailers and other transportation equipment is driving this growth.

Several factors can contribute to the declining or slow growth of an industry. According to the BLS, several macroeconomic factors, such as labor force trends, gross domestic product (GDP) and its components, and labor productivity affect growth in total employment.

Publishing Industries (except Internet)

South Dakota’s Publishing Industries (except Internet) subsector is projected to be the fastest declining through 2026 at 9.6 percent (134 workers). This subsector contains establishments engaged in publishing newspapers, magazines, periodicals, books, directories and mailing lists as well as software publishing. The expected decline is due to advancements in technology. The demand for physical newspapers, magazines and books will continue to decline due to the availability of the same content through electronic means.

Textile Product Mills

Worker levels in the Textile Product Mills subsector are projected to decrease by 5.7 percent (28 workers) in the next decade. The Textile Product Mills industry is made up of establishments that produce textile products other than apparel. This subsector’s decline can be attributed to more automation and technological advances. Innovative machines are increasingly replacing workers it once took to manufacture most textile goods.  This subsector is projected to be one of the most rapidly declining industries nationally as well. According to the BLS, factors that contribute to these declines include automation and outsourcing to overseas production for cheaper labor.

Printing and Related Support Activities

The level of workers in the Printing and Related Support Activities subsector is projected to decrease by 5.4 percent (71 workers) This subsector is comprised of establishments that print products such as newspapers, books, labels, business cards, stationery, business forms and other materials, and perform support activities, such as data imaging, platemaking services and bookbinding. The decline in the Printing and Related Support Activities subsector is due to a continuing shift toward digital information and advertising.

Broadcasting (except Internet)

Worker levels in the Broadcasting (except Internet) subsector are projected to decrease a slight 1.9 percent (20 workers) by 2026. This subsector includes establishments that create content or acquire the right to distribute content and subsequently broadcast the content. Much of this trend, too, is attributed to the continual availability of information on the internet and in social media channels, etc.

Paper Manufacturing

Worker levels in the Paper Manufacturing subsector are projected to decrease by 1.7 percent (12 workers). This subsector includes establishments that make pulp, paper or converted paper products. The manufacturing of pulp involves separating the cellulose fibers from other impurities in wood or used paper. The manufacturing of paper involves matting these fibers into a sheet. Converted paper products are made from paper and other materials by various cutting and shaping techniques. Improved manufacturing processes and automation have contributed to the reduced need for workers. The Paper Manufacturing and Publishing Industries (except internet) subsectors have a direct relationship. Therefore, the less demand for products publishing establishments produce a reduced demand for paper manufacturing establishments.   

Nonstore Retailers

Worker levels in the Nonstore Retailers subsector are projected hold steady at 1,292 workers over the next ten years. These “non-brick and mortar based retailers” use methods like door-to-door solicitation, in-home demonstrations, selling from portable stalls and distribution through vending machines to make sales to customers. This subsector is consumer driven. Consumers continue to experience the convenience of online shopping, while decreasing their needs for mail-order houses and vending machine goods.

Telecommunications

South Dakota’s most slowly growing industry through 2026 is projected to be the Telecommunications subsector, increasing by 0.4 percent (nine workers). This subsector is primarily engaged in operating and/or providing access to facilities for the transmission of voice, data, text, sound and video. Transmission facilities may be based on a single technology or a combination of technologies. According to the BLS, this industry is expected to have rapidly declining employment nationally over the decade. Output will continue to grow, but fewer worker will be needed because of new technology, which increases productivity.

Miscellaneous Store Retailers

The Miscellaneous Store Retailers subsector is projected to increase by just 0.8 percent (21 workers) over the next 10 years in South Dakota. This retail trade subsector is a catch-all category for retailers who sell specific, unique products not otherwise categorized in a specified retail code. These retailers include as florists, used merchandise stores, and pet and pet supply stores. Part of the slowing growth in this subsector is what we consider “non-economic” and is actually the result of NAICS improvements which allow better, more specific and descript categories for establishments formerly had to be included in this catch all subsector. The hampered growth can also be attributed to competition from large retailers. For example, large box stores offer office supplies and floral products at more competitive prices, attracting consumers who once purchased directly from a florist or office supply store.        

Furniture and Home Furnishing Stores

Worker levels in the Furniture and Home Furnishing Stores subsector are projected to increase by 0.9 percent (13 workers) over the next decade. Furniture and Home Furnishings Stores subsector retail their merchandise from fixed point-of-sale locations. The rise of e-commerce has also affected this subsector. While e-commerce poses a threat to the traditional brick-and-mortar furniture store, consumer expectations and preferences to help tip the scales back in favor of these stores. Many consumers want to see the quality and color of furniture and home furnishings in person, and want to receive them fully assembled or even delivered and set in place in their homes.

Amusement, Gambling, and Recreation Industries

Worker levels in the Amusement, Gambling and Recreation Industries subsector are projected to increase a modest 1.0 percent (47 workers) through 2026. Establishments in this subsector operate facilities where patrons can engage in sports, recreation, amusement or gambling activities. Other establishments in this subsector supply and service amusement devices in places of business operated by others. Still other establishments operate sports teams, clubs or leagues for patrons’ entertainment. Others provide guided tours without using transportation equipment. Slower growth in this subsector can be attributed to modest progress in disposable personal income in South Dakota the past five years. Per capita disposable personal income is disposable personal income of a given area divided by the resident population of the area. According to the Bureau of Economic Analysis (BEA), South Dakota’s per capita disposable personal income was $41,321 in 2011 and grew to $43,613 in 2016, an increase of $2,292 (or 5.5 percent). Nationally, per capital disposable personal income increased by $5,343 (or 14.1 percent) from 2011-2016. Consumers are less likely to partake in activities in this subsector with a slowly growing disposable income trend.

The 2016-2026 South Dakota industry employment projections are available in the virtual labor market data system from the LMIC's Employment Projections by Industry web page. Also available on the LMIC website are Technical Notes about the Employment Projections. Please contact LMIC at 605.626.2314 if you need assistance using the virtual system, would like the industry projections data in an alternate format or have any questions.