In our continuing effort to burst Governor Dennis Daugaard’s hogwash bubble, USA Today notes that South Dakota has no income tax and still ranks us as the eighth worst state in which to make a living:
South Dakota has several positive factors, but still ranks as the No. 8 worst state to make a living. It has no state income tax, low unemployment, and relatively safe work environments. However, low unemployment does not appear to be translating into higher wages. The average income is only $37,300, the second lowest in the nation (Mississippi is the worst at $36,750). Furthermore, the cost of living index comes in at 101.3, the best on this list, but fairly average compared to the rest of the U.S. [Eric McWhinnie, “10 Worst States in America to Make a Living in 2015,” USA Today: The Cheat Sheet, 2015.07.05]
The original source of this analysis, MoneyRates.com, also wonders why low unemployment is not translating into higher wages. Low labor supply and high demand ought to translate into higher wages, right? Apparently something is broken in the feedback loop: in South Dakota, lower wages appear to be creating low labor supply, and we’re determined to try every other trick we can think of (e.g., free tuition for teachers and skilled workers, cute videos comparing our wages and oxygen levels to Mars) other than the obvious free-market solution of higher wages.
Statistics continue to defy the anecdotes and assumptions tossed off by South Dakota’s economic development cheerleaders about our purportedly lower cost of living. As reported here regularly, South Dakota’s cost of living remains a tick above the national average:
In the seven-state region, only Montana had a higher cost of living in the first quarter of 2015. Life is a touch cheaper in Minnesota and notably cheaper in Iowa, Nebraska, and Wyoming.