The Governor’s Office of Economic Development tweeted merrily Thursday that $100 is really worth $113.38 in South Dakota, the sixth-best relative value for the dollar in the country:
Your dollar goes just a little farther in South Dakota according to a recent report published by the Tax Foundation. The map show how far $100 in each state goes. That’s good news for both businesses and individuals in our state! https://t.co/oASucHIJv9 pic.twitter.com/Ln27CVhLGM
— South Dakota GOED (@SDGOED) September 5, 2019
GOED cites this August 14, 2019 Tax Foundation report that notes you have to go east and south, to Kentucky, West Virginia, Alabama, Arkansas, and Mississippi, to make your dollar stretch any further. Nebraska, Iowa, and North Dakota offer pretty good dollar stretch as well, all above $110 to the Benjamin. Montana and Wyoming are both above $105, while Minnesotans eke out a $2.56 advantage over the baseline. Colorado shaves over $3 off the power of each C-note. Californians and New Yorkers lose 13% to 14% off their dollars. Hawaiians have the least relative purchasing power, with $100 only getting $84.39 worth of groceries (though pineapple must be a bargain, right?).
Of course, purchasing power is only good where you can purchase the things you want. If we have to turn to online vendors to get what we need, any local purchasing power advantage disappears. Even if we don’t have to shop online, a lot of us drive to Sioux Falls or Rapid City to find what we need, and according to the May 2019 Bureau of Economic Analysis report from which the Tax Foundation gets its numbers, purchasing power in both of South Dakota’s metro areas is less than in the rest of the state. $100 in Rapid City stretches to $110.99, while in Sioux Falls, that C-note bags $109.17 worth of stuff.
Funny: the more there is to purchase, and the more purchasers there are, the lower the purchasing power.
Funnier: smart people appear not to care one whit about purchasing power. Remember what South Dakota News Watch reported a couple weeks ago about South Dakota’s persistent and unenviable brain drain? Return to the April 2019 Congressional Joint Economic Committee report, lay the numbers for each state’s net brain drain next to its purchasing power, then correlate the ranks, and you find a strong correlation (r=0.65, p<<0.01) between purchasing power and net brain drain.
In other words, GOED has it exactly backwards. They’d like us to think (and heck, I’d like to think) that smart shoppers would flock here to get the most from their dollars. But exactly the opposite appears to happen: higher percentages of highly educated people leave high-purchasing-power states, and lower percentages of highly educated people move to high-purchasing power states.
Hmmm… could it be that education makes people value something other than dollars, no matter how rubbery those dollars may be?
– The average Public School Teacher salary in Colorado is $57,085 as of August 27, 2019, but the range typically falls between $49,832 and $65,901.
– The average Public School Teacher salary in South Dakota is $49,012 as of August 27, 2019, but the range typically falls between $42,784 and $56,581.
It’s not so much what a dollar buys as it is how long it takes to make one. IMHO
PS … Like the new editing feature. :)
When I moved to Wisconsin, I checked out the costs to live here versus the costs to have stayed in South Dakota. The costs of housing was about 30 percent higher, but we had a nicer place. The equivalent housing in Rapid City was maybe 10 percent less. Food costs were considerably lower here (plus no tax on food). Utilities were slightly higher. Movies and other entertainment were about the same. Car expenses were a bit higher. I made nearly 60 percent more in Wisconsin in the same field I was in South Dakota. A big reason I moved was benefits in the job offered: great health coverage, a liberal pension, and a decent vacation policy. Those benefits make a lot of difference in your quality of life and future security.
What I gave up: all that you can do in the natural areas of the Hills. That was a huge, huge sacrifice for me. I made it in order to help my daughter pay for higher ed and to have enough money to retire. If South Dakota employers compensated employees better, people wouldn’t have to leave.
I used the editing function to correct a misspelling. Love it.
But, my Social Security pension dollar will go farther in SD. Farther towards paying much more for heat in the Winter. Not farther towards saving up for an out of state vacation. Farther towards paying the ridiculous tax on groceries. Not farther towards buying a new iPhone XS at $1200.
In short, old folks might get a bit of a break. Except to pay for that 200 mile ambulance ride to Sioux Falls or Rapid.
Something you don’t know. Funerals in SD are massively over priced. It’s a shady business to begin with (dealing mostly in guilt) but you are getting gouged. The mortician, whom I went to school with for darned sake, had the impression that because Mom had lived her whole live in Watertown that the sale belonged to him. “It’s the going rate, here.” He refused to itemize and negotiate until I found a package in a small MN town over the border for half his estimate. Luckily I didn’t have to buy land, since we have a family plot. Thank goodness for the internet. Saved over $4000. Mom would’ve been proud.
I know that a lot of small SD towns urge their residents to Shop Local, using that opportunity to promote locally owned businesses. But if your town lacks a place to buy new shoes, like Winner and Madison, you have to drive out of town, or buy shoes online. Winner, along with Madison and several other towns recently lost their Shopko stores, taking away a place where you could buy new shoes and clothing.
Winner and Madison also have Dollar General stores, My mom likes to shop there because of the money she can save by buying the basic necessities. Even I tend to shop at DG, despite knowing most of the money I spend there gets sent to DG’s corporate headquarters in Tennessee.
Chains like DG thrive because people with low wage jobs shop there for lower priced goods. DG is also expanding like crazy, opening up new stores in several rural SD towns in the last few years.
GOED frequently gets things backwards.
Only in French Math is r=0.65 a strong correlation.
If SD really did have such a great $ saving environment along with plenty of jobs, housing, etc, and really was such a great place to live . . . why is the brain drain so high?
Well, Grudz, we have a statistical question. There are 50 states, and, what, 48? degrees of freedom. With that much data going into the mix, you can get a result where 0.65 could be significantly different from 0.0, or not correlated.
I used to use Spearman’s rank correlation coefficient in these cases, because with rankings you never know if the relationship is linear. Does that make sense?
Conflating ‘smart’ with ‘highly educated’ isn’t very.. smart or educated…
Come now, let’s not keep perpetuating the Republican line of denigrating higher education.
The point is that people who’ve had more education, more opportunities to consider more points of view, economic theories, etc., appear not to be swayed by the promise of greater purchasing power. One would think that folks with higher education, folks who’ve had to spend more time in classrooms engaged in analyzing data, would be more inclined to do exactly the sort of analysis GOED invites… yet those highly educated folks appear to come to the opposite conclusion that GOED and I crave: more people bringing their talent and tax dollars here. Why is that?
Grudz, it’s stronger than any claim the state might make that smart people would move here to maximize their purchasing power. That message doesn’t work.
For real economic clarity, compare the average earnings in the states. Then we will see if earning $95 of the $100 leaves one with more to earning $140 of the hundred after spending it.
(Porter! Donald! I’m glad you like the new comment-editing feature! You can only see controls under your own comments, right? You can’t edit Grudz’s posts?)
You’ve gotta be quick to make any editorial corrections however. Don’t wait ’til there are only 30 seconds left (I have discovered).
I don’t know if a person can edit another person’s posts. I guess you’d have to try during the couple minute window and that would be difficult to time.
(Richard, it doesn’t let you start editing and go over the time limit? Interesting!)
Say, Donald mentioned paying more but also getting a nicer house in Wisconsin… I wonder if that brings up a possible flaw in the purchasing power calculations: does the BEA take into account varying quality of goods and services from state to state? Is it possible that one state might in general have better quality two-bedroom houses, or beef, or auto mechanics?