Governor Kristi Noem is treating South Dakota’s chronic labor shortage as a pretext for cutting off pandemic unemployment benefits to South Dakotans, effective June 26:
“Businesses across the state continue to say they would grow and expand, if it wasn’t for the lack of workers. Help wanted signs line our streets,” said state Labor and Regulation Secretary Marcia Hultman. “South Dakota is, and has been, ‘Open for Business.’ Ending these programs is a necessary step towards recovery, growth, and getting people back to work.”
South Dakota was the only state to not apply for the federal Lost Wages Assistance (LWA) supplement last fall. Additionally, South Dakota did not opt into the federal Mixed Earner Unemployment Compensation (MEUC) program in December 2020.
South Dakota elected to participate in three unemployment-related programs in connection with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Continued Assistance to Unemployed Workers Act of 2020.
- South Dakota will no longer participate in the federal Pandemic Emergency Unemployment Compensation (PEUC) program, which affected claimants who have exhausted their traditional 26 weeks of regular State unemployment compensation.
- South Dakota will no longer issue supplemental $300 weekly payments to claimants under the Federal Pandemic Unemployment Compensation (FPUC) program. This payment was made to all claimants who were receiving unemployment benefits regardless of the program under which they are being paid.
- South Dakota will no longer participate in the federal Pandemic Unemployment Assistance (PUA) program. PUA currently provides benefits to the self-employed, the underemployed, independent contractors, and individuals who have been unable to work due to health or COVID-19-related reasons.
The termination will be effective on the week ending June 26, 2021, for all three programs. South Dakota will continue to pay regular State claims. The agreement signed to initiate these programs allows South Dakota or the U.S. Department of Labor to terminate the programs upon 30 days’ written notice to the other party [South Dakota Department of Labor and Regulation, press release, 2021.05.12].
The Department of Labor could just enforce existing rules better to track down whatever handful of people may be illegally turning down offers of full-time work and continuing to collect unemployment checks. But such diligent governance would likely distract the Governor from her Presidential campaign, and making government do its job of helping people while preventing abuse of public assistance isn’t nearly as arousing for Republicans as cutting off benefits to everybody.
Congressman Dusty Johnson thinks public assistance is keeping people out of the workforce. But as John Tsitrian notes in his detailed and well-sourced analysis, people receiving higher unemployment benefits appear to search even more intensely for work. And here in South Dakota, the extra unemployment assistance does not appear to be keeping workers out of the workforce. According to the Department of Labor, we ended 2020 with over 3,000 more workers than we started with. The March 2021 number of unemployed workers was only 50 more than the number reported last March. And as of this March, says DOL, “South Dakota establishments have recouped about 98.8% of the worker levels they had in March 2020.”
Retailers’ lobbyist Nathan Sanderson admits that South Dakota’s unemployment rate is now 2.9%, below the 3.1% pre-pandemic level. Pandemic unemployment benefits thus appear to be a convenient scapegoat for the professed panic of South Dakota’s retail class over a problem that has existed for years. “Unprecedented Workforce Shortage,” KSFY said in 2018. “Plenty of Jobs, Not Enough Workers,” Pew’s Stateline reported in 2012 as it discussed Governor Dennis Daugaard’s five-million-dollar effort to use private recruiting firm Manpower Inc. to tackle South Dakota’s worker shortage:
The proposal is not intended to create a permanent relationship between the state and Manpower. Instead, it is a placeholder plan for use while the state ramps up longer-term job-training efforts to better match its own workforce with the needs of employers. South Dakota has an unemployment rate of just 4.2 percent, the third-lowest in the nation, leaving many employers struggling to find the technically trained workers they need.
…The question now, as both Manpower and state officials acknowledge, is whether out-of-work, skilled professionals from other states will see South Dakota that way.
…The state faces a dearth of affordable housing in some areas, and interested workers are likely to have many questions about South Dakota, both before they agree to move there and after.
…Robert Meyer, branch manager of the Manpower office in Sioux Falls, will help coordinate the company’s recruitment efforts around the country, and says there are “definitely some good things that can bring people to South Dakota,” including the low crime rate, the lack of a state income tax and even excellent hunting and fishing opportunities. But Meyer is careful not to gloss over one frequently discussed negative. “Winters are pretty harsh in South Dakota,” he says, “and it’s good for people to know that up front” [John Gramlich, “In South Dakota, Plenty of Jobs, Not Enough Workers,” Pew: Stateline, 2012.02.14].
Daugaard’s Manpower plan flopped, as apparently did whatever else our elected officials have been doing over the last decade to address the workforce shortage, because here we are still talking about a workforce shortage. As John Tsitrian wrote in 2014, “South Dakota’s labor shortage is symptomatic of a much larger problem“: low wages. Low pay doesn’t get highly educated workers to come brave the harsh weather that Manpower’s Meyer cited in 2012. Low pay doesn’t get people to stay and work here; the Drexel University report that Tsitrian cited in 2014 noted that South Dakota had the fourth-highest number of folks born in state who live in other states:
Currently, about 1.03 million residents of the U.S. reported that they were born in the state of South Dakota out of which about 540,000 have remained residents of the state. This is among the lowest fraction of state residents to birth residents in the nation. South Dakota is ranked 4th highest among all states in the nation in the share of births residents who resided in another state during 2011-2012, with 488,000 persons or 47 percent of all living persons who were originally born in South Dakota now residing in other states. Offsetting this outmigration, were about 262,000 persons who currently reside in South Dakota who were born in another state, along with about 27,500 foreign born residents. During 2011-2012 about 65 percent of South Dakota residents were born in the state and about 31 percent moved to South Dakota from another part of the U.S. Foreign-born residents accounted for about 3 percent of the state’s population at that time. South Dakota’s foreign-born population share is among the lowest in the nation. South Dakota had the 4th lowest foreign-born share of its total resident population among all states in the nation [Nesta P. Fogg and Paul E. Harrington, “Growth and Change in South Dakota Labor Markets: An Assessment of the State’s Labor Market Imbalances in a Weak National Recovery,” Drexel University Center for Labor Markets and Policy, February 2014, pp. 10–11].
More people leave South Dakota than move here: that’s the market saying South Dakota doesn’t offer as much opportunity as other places. Offering less unemployment assistance doesn’t overturn that market judgment; in one more small way, it reinforces that market judgment.
Cutting unemployment benefits is just the latest excuse South Dakota’s political and economic leaders need to distract voters and workers from South Dakota’s failure to address the real problems in our economy that deplete our labor pool and hinder South Dakota’s economic development.