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South Dakota e-Labor Bulletin

August 2020

South Dakota Industry Trends to 2028

The 2018-2028 round of South Dakota industry employment projections was recently completed by the Labor Market Information Center (LMIC). State and national economic trends, along with a historical time-series employment data set, were incorporated in various statistical models to project employment levels. (A general assumption is made that no major catastrophic events, natural disasters or pandemics that would significantly affect economic activities of these industries will occur during the projection period.)

A look at which types of industries are growing, and which are not, provides great insights on the economy. The outlook for South Dakota can be categorized by healthy job growth in the next 10 years. Some factors playing a role in certain industries’ growth or decline are an aging and growing population, technological improvements, tourism and an ever-increasing demand driven by consumers for information and goods via computer or mobile device.

South Dakota’s growth rate is projected to slightly outpace national growth. The total number of workers in South Dakota is projected to increase by 34,663 (7.1%, or 0.7% annually) to a total of 526,251 workers from 2018 to 2028. On the national level, according to the U.S. Bureau of Labor Statistics (BLS), the total employment level is expected to reach about 169.4 million (growth of 0.5% annually). Nationally, 0.5% annual growth in the next 10 years is less optimistic than the 0.8% growth rate experienced from 2008 to 2018. The slower growth rate is attributed to slower population growth and changing demographics.

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 consists of only those wage and salaried workers who are covered under the South Dakota Reemployment Assistance (unemployment insurance) program and those who work for non-profit organizations, such as private colleges and religious organizations. Overall, nonfarm wage and salaried workers are the major element of South Dakota’s labor force, making up 88.7%. This group is also projected to have the highest growth, with a 7.4% rise projected by 2028.

Another important element of South Dakota’s labor force is agriculture and related workers (farm employment). This category is expected to grow slightly, from 31,955 to 33,077 by 2028 (3.5%). The agriculture, forestry, fishing and hunting sector in South Dakota is projected to have an annual growth rate of 0.35% in the next decade, remaining relatively stationary. Nationally, total employment in agriculture, forestry, fishing and hunting is expected to increase slightly by 10,600 jobs through 2028. The slow growth can be attributed to the sluggish employment growth in the crop production industry, mainly due to increased productivity. In South Dakota, farms have been trending toward larger operations for years, with consolidation of smaller farms and greater production continuing.

The final component of South Dakota’s labor force is the non-agricultural self-employed and unpaid family worker category. According to BLS and based on Current Population Survey and American Time Use Survey data, self-employed persons are individuals who work for profit or fees in their own business, profession, trade or farm. The smallest portion (4.8%) of South Dakota’s labor force is expected to have a growth rate of 5.4% (0.5% annually) in the coming decade. On a national level, this category is expected to have annual growth of 0.6%.

Goods Producing and Service Providing

Based on their primary business activity (the products they produce or the services they provide), industries are categorized at several different levels of detail using the North American Industry Classification System (NAICS). Learn more about the NAICS. At the broadest level, sectors can be combined and categorized into one of two groups: goods-producing or service-providing.

Goods-producing industry sectors:

• Natural Resources and Mining
• Construction
• Manufacturing

Service-providing industry sectors:

• Trade, Transportation and Utilities
• Information
• Financial Activities
• Professional and Business Services
• Education and Health Services
• Leisure and Hospitality
• Other Services
• Public Administration

In 2018 service-providing industries accounted for 74.8% of total employment in South Dakota. The service-providing industries are anticipated to have 26,977 more workers by 2028 (7.3%), while the goods-producing industries are expected to increase by 6,416 workers (6.4%). On the national level, BLS is expecting an increase of 7.6 million to reach over 136.8 million jobs by 2028 in the services-providing industry sector. Nationally, the Healthcare and Social Assistance, Education and Construction sectors are projected to have the highest annual employment growth between 2018 and 2028.

In South Dakota, three industry sectors (all service-providing) are projected to have double-digit employment growth to 2028:

• Management of Companies and Enterprises (15.5%)
• Professional and Technical Services (13.1%)
• Health Care and Social Assistance (10.7%).

Top Ten Fastest Growing Industries to 2028

From this point on in this article, we will be focusing mainly on subsector level industries, which are at the three-digit NAICS level. We will also be concentrating on the subsectors in which employment is projected to grow or decline the fastest, meaning we will be considering projected percent change.

The three South Dakota sectors mentioned above also contain three of the 10 fastest growing industries at the more detailed, three-digit subsector level.

Museums, Historical Sites, and Similar Institution

The number of workers employed in South Dakota’s Museums, Historical Sites and Similar Institutions subsector is projected to increase by 131 workers (or 20.6%). 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, The Children’s Museum of South Dakota, Reptile Gardens and other zoos and museums around the state. The demand in this subsector is driven by tourism and visitor spending.
Visitor spending increased statewide by $272.72 million (7.4%) from 2014 to 2018 in South Dakota, according to the South Dakota Department of Tourism. In particular, the Black Hills and Badlands Region made up almost 40% of total statewide visitor spending, increasing $101.96 million or 7% since 2014. Sightseeing in the Black Hills and Badlands and the Sturgis Bike Rally and similar events generate visitor spending, positively impacting this industry and driving the need for more workers on a seasonal basis.

Management of Companies and Enterprises

The Management of Companies and Enterprises subsector is projected to add 815 workers in South Dakota (15.5% increase) over the projections cycle. This subsector is comprised of establishments that administer, oversee and manage the strategic or organizational planning and decision-making role of a company or enterprise. South Dakota experienced a 23.2% increase in the number of companies in this subsector from 2008 to 2018. The favorable business and tax environment and central geographic location has played a role in attracting businesses to headquarter their corporate offices and establishments in South Dakota. According to the South Dakota Governor’s Office of Economic Development, South Dakota’s private business sector has seen 136.6% growth in Gross Domestic Product since 2000, the sixth highest growth in the nation.

Couriers and Messengers

The number of workers in South Dakota’s Couriers and Messengers subsector is projected to increase by 260 workers (or 15.4%) over the next 10 years. This subsector is comprised of entities that provide intercity, local and/or international delivery of parcels and documents (including express delivery services) without operating under a universal service obligation. Since 2008 the number of workers has dramatically risen from 1,287 to 1,684 in 2018. The increasing demand from consumers shopping online has a direct relationship with the increase in demand for workers to deliver those goods. Retail is trending more toward online services rather than the brick and mortar stores of the past. Shoppers tend to prefer the convenience of shopping online via mobile devices or computers rather than having to make a trip to a store to obtain goods.

Warehousing and Storage

Establishments in this industry group are engaged in operating warehousing and storage facilities for general merchandise, refrigerated goods and other warehouse products. Establishments in Warehousing and Storage may also provide a range of services, often referred to as logistics, related to the distribution of goods. The number of workers employed in the Warehousing and Storage subsector is projected to rise by 124 workers (or 14.9%) over the next 10 years in South Dakota. As companies try to get their products to their final destinations in the most cost effective, convenient and organized way, the demand grows for workers to help accomplish this goal. This subsector is not driven by the goods they are selling or retailing, but rather by sales from other companies for which this subsector stores and arranges the distribution of those goods.

Waste Management and Remediation Service

The Waste Management and Remediation Services industry in South Dakota is expected to increase by 133 workers (or 14.3%) by 2028. This subsector is engaged in the collection, treatment and disposal of waste materials. Waste collection and remediation are expected to be driving forces. The U.S. Census Bureau estimates South Dakota’s population rose from 816,166 to 878,698 from 2010 to 2018, an increase of 62,532 (7.7%) people. An increasing population generates more waste and an increased need for workers to pick up and properly dispose of that waste.

Transportation Equipment Manufacturing

The Transportation Equipment Manufacturing subsector is projected to add 505 workers in South Dakota (a 14.1% increase) over the next decade. This subsector is comprised of businesses that produce equipment for transporting people and goods. An entire subsector is devoted to this activity because of the significance of its economic size. Driving the growth within this subsector are three four-digit NAICS industries expected to have double digit employment growth in the coming decade:

• Motor Vehicle Body and Trailer Manufacturing (NAICS 3362)
• Motor Vehicle Manufacturing (NAICS 3361)
• Motor Vehicle Parts Manufacturing (NAICS 3363)

The growth can be attributed to the needs of consumers purchasing the products this subsector manufactures as well as a growth in disposable income. According to the U.S. Bureau of Economic Analysis (BEA), South Dakota’s per capita disposable personal income increased from $37,513 in 2008 to $47,947 in 2018.

Support Activities for Transportation

The Support Activities for Transportation subsector is projected to increase by 134 workers (or 13.6%) over the next 10 years in South Dakota. The Support Activities for Transportation industry group is comprised of entities that provide services which support transportation. Services such as motor vehicle towing or railroad switching are examples of the support provided. There is a direct relationship to the growth of manufacturing of transportation equipment, sale and the services providing support for the end users of that equipment. The continued need for workers to support the transportation subsector can be traced back to an increase in consumer demand for transportation equipment. From 2008 to 2018, the number of companies in this subsector increased 25.9%, and the number of workers employed in these companies increased 19.3% to keep up with the demand in South Dakota.

Professional, Scientific and Technical Services

The Professional, Scientific and Technical Services subsector is projected to add 1,841 workers (13.1% increase) over the next decade in the state. This industry is one of the largest and most diverse industries in South Dakota, and workers are selling knowledge and expertise rather than a good. 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 services provider. At the four-digit NAICS level, there are four industries projected to have substantial growth:

• Computer System Design and Related Services (NAICS 5415)
• Management, Scientific and Technical Consulting Services (NAICS 5416)
• Scientific Research and Development Services (NAICS 5417)
• Architectural, Engineering, and Related Services (NAICS 5413)

The increasing demand in this subsector can be attributed to efficiencies gained by advancements in science and technology. An establishment that manufactures a good could contact an expert in this subsector to automate a process or get technical advice to gain a competitive edge, for example. As long as businesses continue to strive for reduced costs through technology and greater productivity to produce the best products at the lowest prices, the demand for experts and consultants in this industry will remain high.

Ambulatory Health Care Services

The number of workers in South Dakota’s Ambulatory Health Care Services subsector is projected to increase by 2,243 workers (or 12.8%) over the next 10 years. Based on employment size, this subsector was the sixth largest of South Dakota’s three-digit subsectors in 2018, with 17,468 workers. This subsector is comprised of entities providing health care services directly or indirectly to ambulatory patients and which do not usually provide inpatient services. The ongoing healthcare needs and preferences of an aging population will continue to drive the need for employment in this industry in South Dakota.

According to the U.S. Census Bureau, from 2010 to 2018, South Dakota’s population 65 years and older rose 25.2%. At the four-digit NAICS level it’s expected six of the eight categories under Ambulatory Health Care Services will have double digit growth in the coming decade. Leading the way is Home Health Care Services, due to a continued increasing demand for outpatient care rather than inpatient care. Treatments such as physical therapy and certain medications can be administered by a healthcare professional at home rather than a clinical environment. According to BLS, the aging of the population correlates with an expected rise in chronic conditions such as diabetes, helping increase the demand for all types of healthcare services and social services geared toward older people.

Food Manufacturing

The Food Manufacturing subsector is projected to add 1,313 workers in South Dakota (12.8% increase) over the next decade. This subsector consists of entities that transform livestock and agricultural products into products for intermediate or final consumption. The industry groups are distinguished by the raw materials (generally of animal or vegetable origin) processed into food products. Five out of nine categories under this three-digit industry are expected to have substantial growth in South Dakota. The largest category at the four-digit NAICS level, Animal Slaughtering and Processing, is expected to add just under 1,000 workers over the next decade, pushing the growth at the three-digit industry level. Consumer demand for agricultural products and an increasing population are large factors driving the need for workers within the food manufacturing industry. According to the U.S. Census Bureau, estimates show South Dakota’s population has risen from 842,316 in 2013 to 878,698 people in 2018 (4.3%).

Declining and Slowest Growth Industries to 2028

Several factors can contribute to the declining or slow growth of an industry not only in South Dakota but also nationally. According to BLS, the labor force and changing demographics of the population affect employment growth, just as they affect Gross Domestic Product (GDP) and other macroeconomic measures. Since the base year (2018) occurs after a long economic expansion, growth rates can be expected to be somewhat lower than in the previous projections cycles. In addition, an aging population leads to a declining labor force participation rate, limiting the number of workers available for employment.

Nationally, the largest employment declines are expected to be in Manufacturing, Agriculture and the Federal Government sectors to 2028. In South Dakota, the only sector expected to decline overall is the Information sector. Two of the top 10 declining or slowest growing South Dakota subsectors at the three-digit NAICS level are within the Information sector. The industry declines in South Dakota are projected to be very minimal at the subsector level. Since many South Dakota industries are considered small, even a small employment loss in the projected 2028 level can substantially impact a subsector. Technological improvements, content displayed via internet, business classifications changes (NAICS code), and consumer shopping preferences are some of the factors which have played a role in the declines in some industries in South Dakota.

Publishing Industries (except Internet)

The Publishing Industries (except Internet) subsector is projected to decrease by 155 workers (or 12.8%) through 2028 in South Dakota. This subsector is found in the Information sector, mentioned above as South Dakota’s only sector expected to show an overall decline. This subsector contains establishments engaged in the publishing of newspapers, magazines, periodicals and books, as well directory and mailing lists and software publishing. The availability of information online has had a huge influence on this subsector. Consumers favor the convenience of getting information such as news, sports and other content in the convenience of their own home using computers or streaming television services, or on their smart phones and other mobile devices while on the go, wherever they are. According to the U.S. Census Bureau, an estimated 86.8% of South Dakota households had a computer from 2014-2018, and an estimated 78.0% had a broadband internet subscription. The pervasiveness of smart phones in today’s society is evident.

Electronics and Appliance Stores

The Electronics and Appliance Stores subsector in South Dakota is projected to decline 93 workers (6.5%) by 2028. Industries in the Electronics and Appliance Stores subsector retail new electronics and appliances from point-of sale locations. Establishments in this subsector often operate from locations with special provisions for floor displays requiring special electrical capacity to accommodate the proper demonstration of the products. The growth of e-commerce and rapidly evolving technology have had a negative impact on this industry. In South Dakota, the number of companies in this subsector declined 12.6% over the last 10 years, and employment has declined 11.8%.

Printing and Related Support Activities

The number of workers employed in the Printing and Related Support Activities subsector is expected to decrease by 83 (or 6.3%) in South Dakota by 2028. The Printing and Related Support Activities industry 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. Consumer preferences have changed over the last few decades, and with information such as books, magazines and newspapers available online, the demand has decreased for physically printed information. South Dakota worker levels in this subsector showed a double-digit percent decline from 2008 to2018.

Broadcasting (except Internet)

Worker levels in the Broadcasting (except Internet) subsector are projected to decrease by 38 workers (or 3.9%) by 2028 in South Dakota. This subsector includes establishments that create content or acquire the right to distribute content and subsequently broadcast the content. An expected decrease of 38 workers is small; however, it represents a larger impact in percent change due to very little employment within this industry statewide. This subsector is contained within the Information Sector, which, as mentioned above, is expected to have an overall decline in the next decade in South Dakota. From 2008 to 2018, South Dakota noted decreases in both the number of companies and employment in this subsector, at 17.2% and 15.6%, respectively.

Miscellaneous Store Retailers

In South Dakota, the Miscellaneous Store Retailers subsector is projected to decrease by 82 workers (or 3.2%) over the next 10 years. This retail trade subsector is a catch-all subsector for retailers who sell specific products not otherwise categorized in a specified retail code. Examples of these unique retailers are florists, used merchandise stores, gift stores, office supply stores, and pet and pet supply stores. From 2008 to 2018, the number of companies and employment in this subsector in South Dakota showed double-digit percentage loss. The losses can be attributed to several factors such as: competition from large retailers, the rise of online shopping and NAICS coding changes of particular establishments. Large box store retailers usually offer the same types of goods and have less overhead, therefore offering lower prices and taking demand away from specialty stores.

Wholesale Electronic Markets and Agents and Brokers

The level of workers employed in the Wholesale Electronic Markets and Agents and Brokers subsector is projected to decrease by 12 (or 2.2%) in South Dakota by 2028. Businesses in this subsector arrange for the sale of goods owned by others, generally on a fee or commission basis. They act on behalf of the buyers and sellers of goods. This subsector contains agents and brokers as well as business to business electronic markets that facilitate wholesale trade. The decline in this subsector can be traced primarily to a national industry coding change. Most of the businesses once coded as Wholesale Electronic Markets and Agents and Brokers are now instead classified as Merchant Wholesalers for Durable or Nondurable Goods.

General Merchandise Stores

General Merchandise Stores are expected to decrease by 105 workers (or 1.1%) over the next 10 years. Businesses contained in this subsector retail new general merchandise from fixed point-of-sale locations. Establishments are unique in that they have the equipment and staff capable of retailing a large variety of goods from a single location. This includes a variety of display equipment and staff trained to provide information on many lines of products. From 2008 to 2018, the number of South Dakota companies increased; however, the employment level decreased by 5.9%. The expected continued decrease in the number of workers is in correlation with the advancements in technology. Large retailers are embracing technology and saving money by replacing workers with machines that can accomplish the same task but costing the retailer less overhead. An illustrative example is the implementation of self-checkouts at larger retailers like Walmart and Target, lowering the number of cashiers needed.

Paper Manufacturing

Worker levels in the Paper Manufacturing subsector are projected to decrease by two workers (or 0.3%). 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. Several factors, such as the transition from print to online information, consumer demand and improved manufacturing and automation processes, can be pointed to for declining employment in this industry. Paper manufacturers have tried to reduce costs though automation processes and logistics, reducing the need for workers to accomplish the same tasks.

Nonstore Retailers

Worker levels in South Dakota’s Nonstore Retailers subsector are projected to increase by just six  workers (or 0.6%) over the next decade. These establishments retail merchandise using methods such as the broadcasting of infomercials, the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic catalogs, door-to-door solicitation, in-home demonstrations, selling from portable stalls and distribution through vending machines. The availability of goods and convenience of shopping online has had a negative impact on employment levels in this subsector. Since 2008 in South Dakota, this subsector has shown an overall employment decline as consumer preference has trended away from this industry.

Utilities

The Utilities subsector is projected to slightly increase by 12 workers (or 0.6%) over the next 10 years. Industries in the Utilities subsector provide electric power, natural gas, steam supply, water supply and sewage removal through a permanent infrastructure of lines, mains and pipes. Establishments are grouped together based on the utility service provided and the system or facilities required to perform the service. In South Dakota over the last decade, the Utilities industry saw a slight decline in employment levels as well as companies.

The driving factor in modest projected growth can be seen at the four-digit NAICS level. In the base year (2018), the Electric Power Generation, Transmission and Distribution industry made up 77.7% of the Utilities subsector and is expected to generate a slight increase in the number of workers employed in the next ten years. Technology has been a contributing factor in the stagnant trend in employment levels. Energy companies used to employ more people; however, now jobs such as a meter reading and bill paying can be done online.

Employment projections data for 2018 to 2028 is available for all three-digit NAICS industries in Microsoft Excel format on our website, and will be added to our virtual labor market data system as soon as possible. Please see our Industry Employment Projections menu page for the latest options and data at any point in time.