Governor Dennis Daugaard showed signs this winter that he was abandoning the fantasy that South Dakota’s mythical low cost of living made up for South Dakota’s low wages. He explicitly repudiated that fantasy on teacher pay in his State of the State Address when he called for enactment of his teacher pay-raise plan. His worker recruitment campaign announced in February omitted talk of cost of living in favor of a quality-of-life pitch.
Now some people will say, “South Dakota may have a low tax burden and low cost of living, but I won’t get paid as much if I live there.” Actually when it comes to per capita personal income, we fare pretty well. Nationally, we rank in the top half. And, if you adjust the per capita personal income to add cost of living and taxes, we rank fifth in the nation [Governor Dennis Daugaard, “A Message to the Classes of 2016,” 2016.04.29].
Sharpen your spreadsheets—here we go!
Yes, South Dakota’s per capita personal income in 2014 was 23rd in the nation, 98.3% of the national average. In 2015, our per capita income dropped 0.6%, dropping our rank to 25th and our percentage of the national average to 94%.
As for cost of living, I’ll give you six arguments that I thought the Governor had conceded:
- In 2015, C2ER calculated that South Dakota’s cost of living was 2.5% higher than the national average and higher than every state in our adjoining septa-state region except Montana. C2ER uses data from Sioux Falls and Pierre, so Governor Daugaard should know if he’s buying his own groceries at Red Owl—er, Dakotamart.
- The Governor’s Office of Economic Development contends on the basis of Bureau of Economic Analysis data that our cost of living is 87.6% of the national average.
- The South Dakota Department of Labor’s holiday card showed that a sample of 38 professions in South Dakota pay 86% of the national average.
- Yes, our state and local taxes are low, but, strangely, perhaps because we are heavily dependent on other states for economic activity, we pay an inordinate amount of money in taxes to other states.
- Our average wages don’t provide workers with as big a cushion over the basic living wage as do average wages in most other states, including Minnesota.
- USA Today noted last July the strange failure of our low unemployment to translate into higher wages and reported that South Dakota is the eighth hardest state in which to make a living.
The Governor and I can go rounds all day trying to out-math each other on wages, taxes, cost of living, and other factors that make South Dakota a better or worse place to live than anywhere else (even no numbers would keep him or me from staying here, because we love South Dakota). But the hard fact for most South Dakota workers is that they have to put in more hours to get the same pay as their friends in other states.