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South Dakota e-Labor Bulletin

March 2019

South Dakota Nonfarm Worker Trends in 2018

Please note: Unless otherwise noted, the following highlights are based on a comparison of annual average data for 2017 and 2018.

South Dakota’s total nonfarm employment increased by 1.1 percent from 2017 to 2018 with the addition of 4,700 workers. The 2018 annual average number of workers was 438,900. Total private industry had an average annual gain of 4,100 workers (1.2 percent) over the year. Average annual nonfarm employment has been on an upward climb since 2010.

The total nonfarm annual average of workers is comprised of Goods Producing and Service Providing industries. Goods Producing industries, including the Mining, Logging and Construction sector and the Manufacturing sector in South Dakota, increased by 1,900 workers (2.9 percent) from 2017 to 2018. Service Providing industries (all other sectors) gained 2,800 workers (0.8 percent).

The Mining, Logging and Construction sector increased by 500 workers (2.1 percent) from 2017 to 2018. Construction paved the way to this growth, as Mining and Logging worker levels remained unchanged. The Construction sector includes three subsectors: Construction of Buildings, Heavy and Civil Engineering Construction, and Specialty Trade Contractors. Contributing the most growth during 2018 was the Specialty Trade Contractors subsector, adding 400 workers (3.1 percent). This subsector accounts for over half of all workers in the Construction sector, averaging 13,500 workers in 2018. Construction of Buildings had a gain of 200 workers (3.5 percent) from 2017 to 2018, while Heavy and Civil Engineering Construction remained unchanged. To some extent, business for specialty trade contractors is spurred by activity in Construction of Buildings (for specialty services such as building site preparation, pouring concrete, plumbing and electrical work in new structures), but there is broader demand for specialty trades work for repair and remodeling projects.

Manufacturing grew 1,300 workers (3.0 percent) over the year to an annual average of 44,400 workers in 2018. A majority of the increase (1,000 workers) took place outside the Sioux Falls and Rapid City Metropolitan Statistical Areas. Durable goods were the driving force behind this growth with the addition of 1,100 workers. Durable goods produced in South Dakota, such as trailers, furniture and electronic equipment, are not immediately consumed and can be kept for a longer time. Non-Durable Goods also contributed to this growth, just on a smaller scale. Non-durable goods are immediately consumed in one use or have a lifespan of less than three years. Examples of non-durable goods produced or processed in South Dakota include food and beverage products, paper products and fuel. South Dakota’s favorable business climate, combined with limited business taxes (no corporate income tax or business inventory tax), contribute to the growth of manufacturing throughout the state.

Wholesale Trade added 200 workers (1.0 percent) over the year, reaching a 2018 annual average of 21,000 workers in South Dakota. The Wholesale Trade sector consists of establishments engaged in wholesaling merchandise and rendering services incidental to merchandise. The wholesaling process is an intermediate step in product distribution. Wholesalers sell merchandise received from manufacturers to other establishments and normally operate from a warehouse or office. The growth of Wholesale Trade correlates with the growth of Manufacturing. The more product there is to sell, the greater need there is for wholesalers.

Retail Trade continued a downward trend with a 1.1 percent decrease over the year, losing 600 workers. Technology has substantially influenced this sector. Many retailers offer phone applications to make shopping easier. Some retailers offer customers the option to order online and avoid shipping costs by picking up the merchandise in the store. In some cases, customers can pick up orders without even leaving their vehicle. While some retailers continue to grow their online presence, others have completely left storefronts behind. As consumers continue to shop more online and out of the state, there may be a further decline of retail workers.

Transportation, Warehousing and Utilities gained 100 workers (0.8 percent) over the year, reaching an annual average of 13,400 workers in 2018. Transportation, Warehousing and Utilities has remained stable with minimal changes over the last couple of years. Local and long-distance trucking, rural bus services, water treatment plants, postal delivery services and refrigerated warehousing are examples of the types of establishments in this industry. As Manufacturing continues to grow, so does the demand for transportation and warehousing. Transportation and warehousing providers, however, have been able to efficiently keep up to the growing demand with modest worker growth thanks to advancements in technology, including mobile apps and improved tracking.

South Dakota’s Information sector continued a downward trend with the loss of 100 workers (1.8 percent) from 2017 to 2018. Establishments in this sector are engaged in publishing, internet publishing, motion picture and sound recording, broadcasting, telecommunications, internet service providers, data processing and all other information services. Over the last 10 years, the Information sector has been on a downward trend. Advancements in technology have changed the way people access information, with a shift away from traditional formats like print to various electronically-based formats. For example, event invitations shared through social media or other smart phone apps have replaced traditional print invitations in many cases. Although this supersector also includes the providers of such electronic media, the shift from traditional to electronic formats for sharing information has resulted in a small net drop. As technology and society’s comfort with it continues to grow, shifts within this industry will likely continue.

Financial Activities decreased 100 workers (0.3 percent) over the over the year with a 2018 annual average of 29,200 workers in South Dakota. The Financial Activities supersector consists of the Finance and Insurance sector and the Real Estate and Rental and Leasing sector. A little over half of the workers in the Financial Activities supersector are located in the Sioux Falls Metropolitan Statistical Area (MSA), averaging 15,800 workers during 2018. While South Dakota’s Financial Activities decreased over the year, the Sioux Falls MSA had a gain of 100 workers (0.6 percent). Nationally, this supersector showed a growth of 129,000 jobs over the past 12 months according to the U.S. Bureau of Labor Statistics. Changes in technology have changed how consumers engage in financial transactions. With mobile banking and electronic signatures, people can now make transactions from the comfort of their home. Some South Dakota companies have restructured to adapt to these changes, leading to a modest worker decline.

Professional and Business Services had a strong year with a 3.5 percent increase from 2017 to 2018, adding 1,100 workers. The Professional and Business Services supersector is broken down into the following sectors: Professional, Scientific, and Technical Services; Management of Companies and Enterprises; and Administrative and Support and Waste Management and Remediation Services. This growth is a good indication other industries are expanding to the point additional help from professional and business services is needed. Temporary staffing services, payroll processing services, consulting services, corporate offices primarily engaged in overseeing a company and security guard services are examples of establishments in this supersector.

Over the year, Education and Health Services had a 1.8 percent growth with the addition of 1,300 workers, reaching a 2018 annual average of 72,800 workers. This supersector accounts for a little over 16 percent of South Dakota nonfarm workers. Educational Services remained unchanged over the year with 7,400 workers. This number includes private educational services, as public educational services are included in government worker levels. Health Care and Social Assistance had the biggest impact on this supersector, adding 1,300 workers (2.0 percent) from 2017 to 2018. Population influences the growth of this industry, because a growing population creates more demand for workers to accommodate their needs. The U.S. Census Bureau estimated South Dakota’s population at 882,235 in July 2018 compared to 873,286 in July 2017. Over the last 20 years, Education and Health Services has been on an upward trend. This trend has continued for several reasons, including population growth, advances in technology and scientific research, and an increase in specialized medical procedures.

Leisure and Hospitality continued to climb upward with an increase of 300 workers (0.6 percent) to an annual average of 47,300 workers in 2018. This supersector includes the Arts, Entertainment and Recreation sector and the Accommodation and Food Services sector. Establishments included in this supersector include performing arts, museums, parks, hotels and restaurants. Tourism plays a huge role in the growth of this supersector, and South Dakota offers many different events throughout the year to attract visitors to the state. According to the South Dakota Department of Tourism, 14.1 million visitors traveled to South Dakota in 2018, which is a 1.4 percent increase from 2017.

Other Services had an increase of 100 workers (0.6 percent) over the year, with a 2018 annual average of 16,800 workers in South Dakota. Examples of establishments in this sector include beauty salons, car washes, small engine repair, funeral homes, wedding planning services, nannies and business associations. As the population in South Dakota continues to grow, so does the demand for workers who provide this wide variety of services.

Government gained 500 workers (0.6 percent) from 2017 to 2018. Local Government accounted for most of this gain, adding 500 workers (1.0 percent). Tribal, city and county governments, along with public and tribal school districts, are included in Local Government. Growth in Local Government can be attributed to population increases, as city programs and services expand to meet the needs of the communities. State Government added 100 workers (0.5 percent), while Federal Government had a loss of 100 workers (0.9 percent).

Rapid City Metropolitan Statistical Area (MSA) Nonfarm Worker Trends

The Rapid City MSA’s total nonfarm worker level had a 1.0 percent growth from 2017 to 2018 with an increase of 700 workers. The Rapid City MSA consists of Custer, Pennington and Meade counties. Since 2010, the worker levels in the Rapid City MSA have been on an upward trend.

Professional and Business Services had the largest growth for the Rapid City MSA from 2017 to 2018 with a gain of 400 workers (7.5 percent). This industry provides a wide range of services usually obtained by other businesses, sometimes provided to households. Growth in this supersector indicates other types of establishments are growing at a rate where professional services are required.

Leisure and Hospitality continued an upward trend, adding 300 workers (2.9 percent). The Rapid City MSA offers plenty of tourist attractions and events in the Black Hills area, including Custer State Park, Mount Rushmore and the Sturgis Motorcycle Rally. Visitor spending climbed 10.9 percent from 2017 to 2018 in Meade County according to the South Dakota Department of Tourism. More visitors increase the demand for workers.

Gains also occurred in Mining, Logging and Construction (200 workers or 4.0 percent), Wholesale Trade (100 workers or 4.2 percent) and Education and Health Services (100 workers or 0.8 percent).

Government (11,200 workers), Other Services (3,400 workers), Manufacturing (2,800 workers), Transportation, Warehousing and Utilities (1,800 workers) and Information (800 workers) remained unchanged over the year.

Losses occurred in Retail Trade (200 workers or 2.1 percent) and Financial Activities (100 workers or 2.5 percent).

Sioux Falls Metropolitan Statistical Area (MSA) Nonfarm Worker Trends

The Sioux Falls MSA’s total nonfarm worker level gained 2,400 workers (1.5 percent) from 2017 to 2018. The following counties are included in the Sioux Falls MSA: Lincoln, McCook, Minnehaha and Turner. Over the last five years, the Sioux Falls MSA total nonfarm worker levels have produced strong gains, increasing from an annual average of 143,900 in 2013 to 158,100 in 2018. The rate of worker growth for the Sioux Falls MSA outpaced statewide, Rapid City MSA and the balance of state area.

Many of Sioux Falls MSA industries showed worker level gains over the year, with one sector remaining unchanged. Education and Health Services had an increase of 600 workers (1.9 percent). Education and Health Service has trended upward over the last twenty years in the Sioux Falls MSA, with over 40 percent of the workers in this sector located in the Sioux Falls MSA. Advancement in technology, specialized medical procedures and population growth have all played a part in the growth of health care professionals in this area. The Sioux Falls MSA has become a widely recognized regional center for health care.

Professional and Business Services added 500 workers (3.4 percent) from 2017 to 2018 in the Sioux Falls MSA. Professional and Business Services has shown an annual increase in worker levels each year since the last drop in 2009. With a 2018 annual average of 15,400 workers, almost half of the workers in this supersector are in the Sioux Falls MSA.

Gains also occurred Manufacturing (300 workers or 2.2 percent), Mining, Logging and Construction (200 workers or 2.4 percent), Government (200 workers or 1.4 percent), Leisure and Hospitality (100 workers or 0.6 percent), Other Services (100 workers or 1.7 percent), Wholesale Trade (100 workers or 1.2 percent), Retail Trade (100 workers or 0.5 percent), Transportation, Warehousing and Utilities (100 workers or 1.8 percent) and Financial Activities (100 workers or 0.6 percent).

The Information sector remained unchanged over the year with a 2018 annual average of 2,600 workers. Over the last five years, this sector has remained steady with minimal changes.

Balance of State Nonfarm Worker Trends

The Balance of State is comprised of all counties not defined as part of an MSA including all counties except Pennington, Meade, Custer, Lincoln, Minnehaha, McCook and Turner. The Balance of State data allows one to see how industries are doing in the more rural areas of South Dakota. Total nonfarm employment in this area increased 1,600 workers (0.8 percent) from 2017 to 2018.

Manufacturing had the largest increase in the balance of state with a gain of 1,000 workers (3.8 percent) over the year. Manufacturing accounts for a little under 13 percent of the workers in the balance of state. A majority of the worker level increase in Manufacturing took place in the balance of state area, a positive sign for manufacturing in South Dakota’s more rural areas.

Education and Health Services had a 2.2 percent growth with the addition of 600 workers. Education and Health Services went from an annual average of 27,600 in 2017 to 28,200 in 2018. As the population continues to grow, so does the demand for both education and health care services.

Gains were also shown in Government (300 workers or 0.6 percent), Professional and Business Services (200 workers or 1.8 percent) and Mining, Logging and Construction (100 workers or 1.0 percent).

Wholesale Trade (10,200 workers), Other Services (7,400 workers) and Transportation, Warehousing and Utilities (6,000 workers) remained unchanged from 2017 to 2018.

Losses occurred in Retail Trade (500 workers or 2.0 percent), Information (100 workers or 4.3 percent), Financial Activities (100 workers or 1.0 percent) and Leisure and Hospitality (100 workers or 0.5 percent).