Marcia Hultman

Cabinet Secretary

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Labor Market Information Center

Pandemic Picture Through a Wider Lens: Complete Overview of Key Workforce Indicators

Since COVID-19 Hit the State


Labor Force

South Dakota’s not seasonally adjusted labor force had been increasing gradually since the recession ended in 2009. This came to an unexpected end in April of 2020, when the COVID-19 pandemic began affecting South Dakota. Total labor force has not dipped below 2019 levels, but there is definite uncertainty in the labor market because of the pandemic. South Dakota was one of seven states that did not issue stay-at-home orders and the only one that did not require any businesses to close during the pandemic, therefore, our labor market has not seen the severe impacts of the pandemic that other states and nation have seen up to this point.

Not seasonally adjusted employment in South Dakota continued to increase until April 2020, when the effects of the pandemic began to impact the labor market. Between March 2020 and April 2020 South Dakota’s employment decreased by 33,600 (7.5%), while during this same time period the U.S. employment decreased by 14.1%. Since the initial drop in April, the number of employed had been steadily rising and was close to pre-pandemic levels, but began decreasing in November and continued to decline in December. Employment from November 2020 to December 2020 decreased by 1,500 workers or 0.3%. Because this is not seasonally adjusted data, it is normal for employment to drop over the winter months, beginning in November, as seasonal employees like construction workers cannot work. In terms of recovery from COVID’s initial blow to employment, there is still positive news. The December 2020 employment estimates show South Dakota has gained back roughly 83.3% (28,000) of the employment lost in April.

South Dakota’s not seasonally adjusted unemployment rose dramatically in April 2020 once the effects of the pandemic began to set in. The number of unemployed increased by 35,600 (226.5%) between March and April, and the unemployment rate went from 3.4% to 11.0%. Over that same time period, national unemployment increased 205.3%, and the unemployment rate went from 4.5% to 14.4%. The effects of the pandemic began distressing the national labor market before South Dakota felt the effects. Between February 2020 and March 2020, unemployment had already increased by 18.5%, and the unemployment rate increased from 3.8% to 4.5%. The number of unemployed has continued to decline since the initial surge in April. Between November 2020 and December 2020, unemployed workers decreased by 5.4%. The number of unemployed in South Dakota was back to pre-pandemic levels six months following the initial shock but will likely begin to tick upward over the winter months due to seasonal unemployment.

Nonfarm Workers

South Dakota nonfarm worker levels always fluctuate throughout the year; however, when the coronavirus hit the state, worker levels declined sharply. From January to February, the number of nonfarm workers increased 3,300 workers. March brought just a small drop of 1,900 workers. Please keep in mind, this data series is based on a reference week including the 12th of the month. Even though establishments began altering their processes or closing temporarily in March 2020, April brought by far more pronounced worker declines. South Dakota establishments quickly altered their plans to help lower the spread of the virus. Many establishments held off on hiring because of all the unknowns surrounding the virus.

The nonfarm wage and salaried worker level decreased 34,900 workers (8.1%) from March to April, dropping to 398,100. By May, establishments started to slowly increase worker levels, with some opening after temporary closures. Worker levels climbed 3.2%, up 12,900 workers. In June, worker levels continued an upward trend with the addition of 15,600 workers (3.8%).

In July 2020, the nonfarm worker level dropped 2,100 workers (0.5%). There is typically a decline from June to July though, with the loss over the last 10 years averaging 4,720. Many nonfarm establishments throughout South Dakota have adopted new procedures in order to combat the spread while trying to get back on track with their business operations.

Worker levels increased 1.0% in August 2020, with 4,400 added. The month of August is full of happenings that have a positive influence on industries throughout the state. This includes an increase in visitors attending the Sturgis Motorcycle Rally and schools increasing workers to prepare for the school year. This August, the hiring of workers for the 2020 Census also contributed to the growth.

In September, worker levels continued on an upward trend with the addition of 3,100 workers (0.7%).  A majority of the growth was due to over-the-month increases in Government, specifically State Government Educational Services and Local Government Educational Services. Gains in educational services are common in September as establishments in educational service increase worker levels for the start of a new school year.

Worker levels remained unchanged in October with 432,000 workers. In November and December, worker levels began a downward trend, dropping to 429,100 workers in December 2020. Worker level drops are common this time of year as many seasonal establishments (Construction and Leisure and Hospitality) reduce their workforce when the weather turns cold.

Leisure and Hospitality

The COVID-19 pandemic has had a huge impact on the Leisure and Hospitality supersector. This supersector started 2020 the same as in previous years. In March, many establishments started to prepare for an increase of COVID-19 cases, dropping worker levels 1,900 (4.3%). During this time many seasonal establishments delayed opening and ramping up their workforce in order to slow the spread of COVID-19.

The largest decline in Leisure and Hospitality came in April 2020. Worker levels declined 15,800 workers (37.4%), dropping to 26,500 workers in April 2020. Some establishments in this supersector temporarily closed while others changed their processes to continue to serve their customers. In May, many establishments in Leisure and Hospitality began to increase worker levels, with some reopening after being temporarily closed. Leisure and Hospitality jumped up 8,300 workers (31.3%) in May 2020. Establishments adjusted their services to include additional cleaning, with some moving tables and chairs to promote social distancing.

Worker levels continued an upward trend from May to August, climbing to 46,400 workers in August 2020. This was largely due to many establishments increasing worker levels to prepare for the inflow of visitors. The summer is full of events that have a positive influence in this supersector. Establishments increased their workforce as business picked up, with some adjusting hours and others opening up areas that were temporarily closed, including restaurants opening dining areas.

From September to December, worker levels in Leisure and Hospitality took a downward trend, dropping to 38,400 workers in December 2020. This type of decline is typical, as seasonal establishments in tourist destinations reduce staff relative to the decrease in visitors as the weather turns cold. Declines can also be related to lower demand due to a decline in both business and leisure travel, as many events are canceled or limited due to the spread of COVID-19.

Education and Health Services

Education and Health Services started 2020 trending upward. In the middle of March, this supersector adapted quickly to help lower the spread of COVID-19. Educational Services and establishments in Health Care and Social Assistance focused on an online format, lowering staffing needs at physical locations, with some temporarily closing. Schools switched from on campus to online classes. Medical appointments transitioned to online appointments.

Education and Health Services declined from March to April with the loss of 6,000 workers (8.0%). In May, Education and Health Services gained 900 workers (1.3%), rising to 69,700 workers. Health Care and Social Assistance contributed to the growth, some reopening after temporarily closing.

Worker levels in Education and Health Services remained at 69,700 from May to July. Educational Services worker levels declined as schools closed for summer break. Establishments in Health Care and Social Assistance had worker level gains as they continued to increase services and put protective measures in place to protect those entering each location. Some of the changes include encouraging use of masks, temperature checks, increased barriers and increased telehealth services.

From July to October, Education and Health Services trended upward, with 71,500 workers in October 2020. Educational Services accounted for this increase as schools hired workers for the school year. Health Care and Social Assistance worker levels fluctuated with gains in August, losses in September and worker levels remaining stable in October.

Worker levels in Education and Health Services continued an upward climb in November and December, reaching 72,400 workers in December 2020. Health Care and Social Assistance gained 400 workers in December 2020. Hospitals also had gains in December 2020, adding 200 workers over the month. Increases in Health Care and Social Assistance can be tied to small increases throughout multiple establishments over the month. Educational Services had minor fluctuations, with a gain of 200 workers in November and a loss of 200 workers in December.

Retail Trade

Retail Trade worker levels are notoriously seasonal in South Dakota; however, when COVID-19 entered the state, this sector dropped to its lowest level of the last 10 years. Retail Trade decreased 4,000 workers (8.0%), dropping to 45,900 in April 2020. A little over half of the losses in Retail Trade took place in the Sioux Falls Metropolitan Statistical Area. Retail Trade gained 1,300 workers (2.8%) in May 2020.

Retail Trade continued an upward trend from June to August 2020, reaching 50,000 workers in August 2020. This growth can be related to establishments increasing their workforce, with some establishments reopening after briefly closing due to COVID-19. As some retail establishments temporarily closed, others offered online shopping, delivery or curbside pickup options.

Retail Trade had minor fluctuations in September and October, dropping to 49,900 workers in October 2020. Historically, drops in the fall are common as seasonal establishments reduce their workforce as the demand shifts.

Retail Trade worker levels had strong gains in November and December, jumping to 52,000 workers in December 2020. Worker gains are common this time of year as stores ramp up their workforce to prepare for holiday sales. This year, many stores spread out holiday sales, featuring both online and in-store deals throughout the holiday season.

Manufacturing

Worker levels in Manufacturing have been especially erratic since the pandemic struck, with month-to-month losses from March to April, June to July, and July to August, but worker levels otherwise holding steady or showing slight growth. Since August, Manufacturing has gained 1,100 workers, reaching 43,000 workers in December. Non-Durable Goods Manufacturing accounted for the bulk of this growth with the addition of 1,000 workers. Durable Goods Manufacturing had small fluctuations from August to December, reaching 26,600 workers in December 2020.

Worker levels in this industry are especially dynamic right now, as South Dakota employers endeavor to find their “new normal” in the face of the pandemic. Many are operating in a state of flux due not only to challenges directly tied to the pandemic (such as having to ramp up safety measures), but ongoing challenges exacerbated by COVID-19 (such as supply chain issues and fluctuating demand). One of the greatest strengths of South Dakota’s Manufacturing industry has been establishing markets for their goods in other states and even internationally. But that means those areas’ varying states of closure, mandates and regulations to combat the pandemic are impacting demand for South Dakota-produced goods.

Government

Government worker levels were climbing upward over the first quarter of 2020, going from 79,100 workers in January 2020 to 80,900 workers in March 2020. In April, worker levels declined with a loss of 6,000 workers (7.4%). A little over half of the worker level drop was in Local Government Educational Services and State Government Educational Services. Declines in Educational Services were due to schools switching to online education in order to slow the spread of COVID-19, decreasing the demand for workers at physical locations. Worker levels fluctuated throughout May to July, dropping to 69,200 workers in July 2020. A majority of the decline during this time was due to losses in State Government Educational Services and Local Government Educational Services. Losses in Educational Services are common during the summer, while many schools are on summer break.

Government had gains in August, reaching 73,100 workers. Growth may be related to increases of workers for the 2020 Census and worker level gains in educational services as schools prepared for the start of school. Worker levels continued an upward climb in September and October, climbing to 79,900 workers in October 2020. State Government Educational Services and Local Government Educational Services accounted for the majority of the gains, as schools increased worker levels for the new school year.

Government worker levels declined in November and December, dropping to 78,300 workers in December 2020. State Government had a loss of 1,000 workers in December, with State Government Educational Services contributing to this decline with a loss of 1,100 workers. Losses are likely due to many programs at state colleges transitioning to remote format after the Thanksgiving holiday, lowering the demand for workers on campus in December. Federal Government and Local Government had modest gains in December, reaching 11,700 workers and 49,500 workers, respectively.

Construction

Construction worker levels climbed steadily from January to July 2020. In July 2020, Construction hit a 10 year high with 28,700 workers. Once COVID-19 hit the state, many people were encouraged to stay home to slow the spread. While spending more time at home, many South Dakotans focused on home improvements, increasing the demand for workers in Construction. Projects have included creating a home office for working remotely and updating outdoor spaces to relax at home.

Worker levels in Construction had a modest decline in August 2020 (100 workers) and continued a downward trend, dropping to 24,800 workers in December. Historically, Construction worker levels start trending downward in the fall as the weather begins to change.

For more in-depth analysis of the most current monthly nonfarm worker levels (offering month-ago and year-ago perspectives), please visit our Overview page.

Quarterly Census of Employment and Wages

One of the greatest strengths of the QCEW program is the “census” concept; it is considered the most accurate and complete source of wage and salaried employment data. It is based largely on worker data provided by employers to the South Dakota Division of Reemployment Assistance’s tax unit. Under South Dakota Unemployment Insurance law, all employers liable for unemployment tax must report, on a quarterly basis, each of their paid employees and the wages paid to that employee. Since the industry classification and physical location are also determined for each employer, in part through the QCEW program, the resulting data set is powerful.

One of the downsides of that powerful data set is the inherent time lag involved with data availability. As the saying goes, all good things take time. Employers’ quarterly reports to the RA tax unit are due one month after the end of a quarter. From there, the data in the reports must be processed for their primary purposes—covering South Dakota’s workers with unemployment insurance, verifying employment data of benefit claimants, adjusting employers’ unemployment tax rates, etc.

On the statistical or QCEW side, once the data from the quarterly reports is made available to LMIC staff, it is then carefully analyzed for consistency and accuracy. Data for those employers not reporting by the deadline must be added as it becomes available, with those same processes then completed to ensure data quality. Additional steps, such as follow-up efforts to collect missing data and greater, more detailed break-outs of employment by location for those employers with multiple work sites, are also completed.

Because of those various processes and procedures to ensure QCEW data is accurate and appropriately reflects the recent labor market, it takes a minimum of five months after the close of a quarterly report cycle until the new QCEW data can be published. For example, first quarter 2020 (January, February and March) data became available in late August 2020.

As expected, first quarter 2020 data did not reflect pandemic-related economic impacts on South Dakota industry employment. In fact, when comparing South Dakota QCEW employment data for the first quarter of 2020 to the first quarter of 2019, there was actually very slight growth in early 2020. The Coronavirus pandemic’s measurable impacts on South Dakota began in March 2020, when employment dropped slighly to 420,863 from the February 2020 level of 421,268. The lowest point for QCEW employment was April, when employment dipped to 387,238. Since then, QCEW data indicates South Dakota employment has been rebounding, steadily increasing to a preliminary August level of 422,946. Although the September level of 422, 298 was slightly lower, such a seasonal drop is not unexpected. The good news is, the September data indicates South Dakota employment has recovered from the blows the pandemic initially dealt to the state, with employment even slightly higher than pre-COVID 19 levels.