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South Dakota Raises Minimum Wage, Sees Immediate Uptick in Job Creation and Job Seeking

By Cory Allen Heidelberger on 2015-06-24

Wait a minute: Monday I reported that South Dakota is led the region for job growth in May. Wasn’t raising the minimum wage supposed to kill jobs?

The South Dakota Department of Labor doesn’t have the May job numbers online yet. But consider what has happened to our workforce numbers since the voters raised South Dakota’s minimum wage from $7.25 to $8.50 and hour, effective January 1, 2015:

Year Month Labor Force Jobs Unemployed Unemp%
2014 Jan 447,080 431,355 15,723 3.5%
2014 Feb 447,345 431,780 15,565 3.5%
2014 Mar 447,595 432,150 15,445 3.5%
2014 Apr 447,830 432,490 15,340 3.4%
2014 May 448,080 432,880 15,200 3.4%
2014 Jun 448,340 433,315 15,025 3.4%
2014 Jul 448,550 433,685 14,865 3.3%
2014 Aug 448,705 433,930 14,775 3.3%
2014 Sep 448,790 434,020 14,770 3.3%
2014 Oct 448,815 433,985 14,830 3.3%
2014 Nov 448,795 433,880 14,915 3.3%
2014 Dec 448,755 433,730 15,025 3.3%
2015 Jan 449,230 434,090 15,140 3.4%
2015 Feb 450,285 434,930 15,355 3.4%
2015 Mar 451,610 435,615 15,995 3.5%
2015 Apr 453,020 436,605 16,415 3.6%

Now if you look at the far right column (and that is where the Far Right will look, right, Right?), you go, “Oh my gosh! Unemployment started rising in January 2015! It was higher now than at any time last year! And that Sioux Falls paper said it was 3.8% in May! The minimum wage raises unemployment!”

But look at the workforce and jobs columns. South Dakota’s unemployment rate is up in 2015 primarily because people have entered the workforce at a faster rate than job creation, but both figures are at all-time highs, and both have increased this year under the $8.50 minimum wage at relatively torrid paces:

  • Average monthly change in workforce in 2014: 165.
  • Average monthly change in workforce in 2015: 1,066.
  • Average monthly change in jobs in 2014: 240.
  • Average monthly change in jobs in 2015: 719.

South Dakota has created nearly as many jobs in the last four months (2,875) as it did in all of 2014 (2,880). Unemployment is up because the 4,265 people jumped into the labor pool in those four months, compared to 1,975 total new job seekers in all of 2014.

Lots of other economic factors could be motivating faster job creation and workforce expansion beyond the minimum wage. But South Dakota’s new voter-approved $8.50-per-hour minimum wage clearly has not deterred hiring or job-seeking during 2015 compared to rates in the preceding year. We could even speculate that the higher minimum wage may have motivated more people to join the labor force and seek work.

Published in South Dakota

6 Comments

  1. Jenny 2015-06-24 23:24

    As made my way to the usual tourist stops in the Black Hills, I kept noticing the various minorities working in them such as African Americans, people from other countries working for the summer in the Black Hills. Can anybody explain why regular SD young people needing jobs aren’t working in these places? Is this the token minority façade that Black Hills tourism wants to portray to its out of state tourists? That SD businesses catering to the tourists wants them to know that they hire all walks of life to make them look open to all people from all walks of life when in reality, the lurking of very real racial issues with the Native American are put on the back burner. I want to hear South Dakotans thoughts on this and yes, shame on Ted Hustead for hiring his summer employees for pennies above minimum wage plus charging for rent. Have the decency to either pay better or live rent free in the middle of nowhere. More on my report later…..

  2. Troy 2015-06-24 23:57

    CH,

    Good Information. However, I know you know the speculation in the last two sentences is neither supported or denied by the data. In addition to the point you make it could be driven by other factors like the absolute rabid construction boom in Sioux Falls, the time frame is short.

    To even make a case, you’d have to analyze the data outside Sioux Falls and Rapid City where the number of people making minimum wage is immaterial. What does that data show?

  3. caheidelberger Post author | 2015-06-25 06:36

    Jenny, I would be surprised if our Black Hills tourism industry’s widespread hiring of youth from elsewhere is a deliberate effort to put forward a face of diversity. I suspect it’s just a response to labor market realities. Wall Drug employs about 200 people. There are maybe 90 high school students in Wall, and they can’t all work at Wall Drug. Wall Drug’s manager Mike Huether said as much to SDPB’s Charles Michael Ray in a 2012 interview:

    Huether says to cover the super busy summer months Wall Drug first tries to hire local. He says Wall Drug hires workers from the reservations and surrounding communities. But Huether says there still isn’t enough population in the area to meet the need for seasonal workers. So each year they reach out – overseas. This summer Wall Drug brought in 47 extra workers from 19 different countries.

    “Ninety-percent of them have two jobs here in Wall. There’s motels, there’s the local restaurants also. And this one chance at making some money for their college and getting better English – they gotta get it while they can,” says Heuther [Charles Michael Ray, “Guest Workers Get Unequal Treatment in State,” SDPB Radio, 2012.08.27].

    Notice the mention of English skills—that could be code for the rationalization employers like Huether would use to pay these guest workers less.

    CMR’s article notes that Wall Drug was not among the five South Dakota businesses fined that summer for shortchanging workers on overtime and minimum wage. One of the violators was the swanky Adoba Eco Hotel in Rapid, which was housing 17 guest workers in a single house and charging them each $150 a month for that privilege. How much does Wall Drug charge its guest workers for their dorm rooms?

  4. caheidelberger Post author | 2015-06-25 06:38

    No, Troy: only my last sentence is speculation requiring much more rigorous and extensive analysis. The penultimate sentence is at least partially certain. The minimum wage went up, yet we have not seen a decline in jobs or participants in the job market. The minimum-wage hike has not caused what the exploiting class told us it would cause.

  5. Troy 2015-06-25 09:24

    CH,

    I know we are both splitting hairs. Just giving the other side of the hair. :)

    Example #1: The argument a cut in an increase of federal spending is described as a spending cut when in reality it is a decrease of from what other wise would have occurred.

    Example #2: The argument you make: Because jobs (not sure anyone said it would decrease those pursuing jobs) didn’t go down, minimum wage didn’t have any effect. That requires additional analysis as it is possible the number of people may be less than what otherwise would have occurred without the increase.

  6. bearcreekbat 2015-06-25 11:06

    I love the Black Hills in the summer, in part because of all our regular SD youth, such as African Americans, people from other countries, Natives, Hispanic, Anglos, etc, all show so much promise by working at tourist locations. I think that the efforts and ambitions this diverse group of our own SD young people bodes well for our future.

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