South Dakota Economic Overview
South Dakota is mainly an agricultural state. Farms and ranches cover about 90 percent of the state—crops are grown mainly in the east, while ranching is the main agricultural activity in the west. South Dakota is conducive to business in that it has no income tax and has the lowest unemployment insurance rates in the nation. Per capita personal income is nearly $34,000 and gross state product (GSP) stands at $37 billion. Tourism, retailing, finance, and insurance make important contributions to the state economy. The state is a top producer of beef cattle, hogs, and sheep, and South Dakota is the second-largest producer of flaxseed and sunflower seed in the nation. Granite, clays, limestone, crushed stone, sand and gravel, and petroleum are South Dakota's most important mined products. South Dakota is the sixth leading ethanol-producing state in the nation.
French explorers searching for a route to the Pacific arrived in the area of South Dakota in 1743. The first permanent settlement, Fort Pierre, was established in 1817 as a fur trading post. The population increased quickly when the railroad arrived in 1873, and the discovery of gold in the Black Hills in 1874 brought even more settlers. From 1880 on, the gold mines yielded about $4 million annually, and the silver mines about $3 million.
The extremely severe winter of 1886–1887 destroyed huge herds of cattle, and recurrent droughts added to the difficulties of farmers. The extension of railroads encouraged further expansion of agriculture, but new droughts, including that of 1910–1911, forced many farmers to abandon their properties.
Prosperity and depression cycles again affected the state’s economy after the boom of World War I, and the economy suffered heavily during the severe Dust Bowl storms of the 1930s. Crops were destroyed and local banks faced foreclosures created by the additional financial hardships of the Great Depression.
The economy began to recover in late 1941 as the U.S. entered World War II, creating demand for agricultural and industrial products. Following the Flood Control Act of 1944, dams were built on the Missouri River, four of which were partially located in South Dakota. The dams and reservoirs produced hydroelectricity and attracted tourism. The economic boom brought about by the war continued through the postwar period, and was marked by the modernization of agriculture, more dams being built along the Missouri River, the extension of electricity to rural areas, and the reclamation of arid land.
In 1981 Citibank moved its credit card operations from New York to Sioux Falls and the financial service industry began to grow in the state. Casino gambling was legalized in 1989 and become an important source of state revenue. By the 1990s, income from agriculture had increased, including record corn and soybean harvests. The manufacturing sector grew nearly 10 percent a year in the first part of the decade. Along with tourism and the financial industry, the state economy today depends on wholesale and retail trade and agriculture.
Agriculture is South Dakota’s leading industry, contributing annual revenue of $19 billion to the state’s economy. Livestock and livestock products are the most important agricultural products, worth $11.5 billion. South Dakota is a leader in beef cattle, hogs, lambs, sheep and wool, bison, and pheasant. Chickens, eggs, geese, and turkeys are also raised in the state. South Dakota's top five agricultural products are cattle and calves, corn, soybeans, wheat, and hogs.
Corn generates annual revenue of $2.1 billion, soybeans follow with a value of $1.2 billion, and wheat is next at $1.1 billion. The sunflower seed crops are valued at $175 million and flax seed is $1 million. Revenue from cattle and calves is $2.3 billion, and hogs and pigs, $381 million. Milk and dairy products generate revenue of $280 million. The aquaculture sector generates $3.1 million in annual revenue. There are more than 31,000 farms in the state, and nearly $300 million is paid to hired laborers.
BANKING AND FINANCIAL SERVICES
Sioux Falls is the center of financial activity in South Dakota. The state is home to 87 banking institutions and provides jobs for some 31,000 workers. Financial services in the state contribute $6.5 billion to the gross domestic product. The more than 4,500 financial analysts doing business in South Dakota support an annual payroll of $395 million. There are roughly 2,500 personal financial advisers, earning an annual payroll of $217 million, and some 7,400 loan officers, who generate an annual payroll of $484 million.
South Dakota is ranked the ninth among the top financial service industry localities in the U.S. The largest employer in the financial industry is Wells Fargo Financial Bank, located in Sioux Falls, with more than 3,000 employees. The second largest is Citigroup Financial Services, also in Sioux Falls, employing some 3,200 workers.
South Dakota provides its population with good access to broadband technologies and communications infrastructure. The state’s 527 information firms provide jobs for nearly 7,000 residents and support an annual payroll of some $280 million. The 186 telecommunications businesses employ 3,200 workers, with an annual payroll of roughly $163 million. The 165 companies in South Dakota’s broadcasting industry have annual sales of $608 million and employ about 23,000 people.
South Dakota Network Communications and its member companies provide telecommunications access to rural communities and anchor institutions throughout the state. Sioux Falls–based SDN Communications and its 18 owner/member companies serve 80 percent of the state. SDN generates annual revenues of $38 million and employs some 100 workers. The telecommunications sector pays more than $11 million in taxes to the state.
The construction industry generates annual revenue of some $80 million. The nearly 4,000 construction firms in the state employ some 22,000 workers and support an annual combined payroll of $835 million. About 6,000 workers are in the nonresidential sector, 3,500 employees are heavy and civil engineering workers, and nearly 13,000 construction employees are specialty trade contractors.
South Dakota educates about 140,000 pupils in its primary and secondary schools. With 750 public schools in 168 school districts, the state has the highest number of schools per capita in the nation. In addition, the ratio of pupil to computer (one to seven) ranks first in the U.S. The 9,400 public school teachers earn average annual salaries of $37,000. South Dakota’s teacher-to-student ratio is better than one to 14, and the state spends some $8,600 on each pupil. Primary and secondary schools generate annual revenue of $1.1 billion. Of the 24 post-secondary institutions, South Dakota State University, located in Brookings, is the largest with an enrollment more than 12,370. The only law and medical schools in the state are part of the state's oldest university, the University of South Dakota, located in Vermillion. South Dakota also has several private universities, the largest of which is Augustana College.
South Dakota has few fossil fuel reserves but is one of the country’s leading producers of ethanol. The small crude oil and natural gas reserves are located in the western corners of the state. South Dakota uses the Missouri River for hydroelectric power and corn produced in the east for ethanol production. Annual ethanol production is some $675 million, but total economic activity created by the production of ethanol is more than $1 billion. For every million dollars of ethanol and its coproducts delivered, the economy in the state increases by $374,400 and creates 4.4 full and part-time jobs.
Electricity in South Dakota is generated mainly by hydroelectric and coal-fired power plants. Hydroelectric power supplies about one-half of the electricity consumed in the state, and three of the state’s five largest electricity generation plants are hydroelectric. Annual revenues from electricity sales are $730 million. The majority of the state’s non-hydroelectric and noncoal electricity is generated from natural gas and wind. The largest utility employer, Black Hills Corporation Utility in Rapid City, employs more than 1,000 workers.
South Dakota’s diverse geography and varied cities make the state an attractive backdrop for filmmakers. The motion picture and sound recording industry employs about 500 workers and pays some $5.6 million in annual payroll. There are fewer than 50 performing arts companies in South Dakota, employing some 450 workers. Of those performing arts companies, 10 are theater groups and one is a dance group. There are about 10 musical groups in the performing arts industry that bring in revenue of $3 million. The annual payroll of the 40 employees of musical groups is $1.1 million.
The 210 domestic insurance companies in South Dakota contribute some $650 million to the gross state product, strengthening the state economy through employment, policy payments, and claims payouts. There are approximately 10,200 insurance carriers, with an annual payroll of some $370 million. Some 1,800 underwriters earn an annual payroll of $114 million. The state’s 470 insurance appraisers support an annual payroll of about $24.4 million, and 6,500 claims adjusters, examiners, and investigators earn $400 million a year.
The manufacturing industry generates revenue of more than $7.2 billion for South Dakota’s economy and is responsible for about 10 percent of the GSP. The 1,200 manufacturing firms located in South Dakota provide jobs for 43,000 residents and generate an annual payroll of some $1.6 billion. Leading manufactured products are computer and computer components, food processing (meat processing and packing, poultry processing, dairy processing, flour milling, livestock feed), machinery (agricultural and construction equipment), transportation equipment (truck trailers, motor vehicle parts), and fabricated metal products (architectural and structural metal). John Morrell & Co. of Sioux Falls, a food processing company producing hams, sausages, and cold cuts, is the state's largest manufacturing employer with more than 3,000 employees.
MINING AND EXTRACTION
South Dakota is home to 644 firms that extract natural resources. These firms employ some 4,700 workers, who earn an annual payroll of $160 million. Gold is the most profitable mineral commodity in South Dakota, with a gross value of about $53 million. Annual silver production is valued at $3.3 million. The four oil and gas extraction firms employ fewer than 35 workers, who each earn an average of $76,000 a year. Sand and gravel is the major non-metallic mineral commodity mined and quartzite ranks second in this sector. Other minerals produced in smaller amounts include agricultural lime, bentonite, gypsum, iron ore, mica schist, pegmatite minerals (feldspar, mica, and rose quartz), placer gold ore, shale, and slate.
The more than 6,000 nonprofit organizations operating in the state provide important services to South Dakotans and generate annual revenues of $5.7 billion. Public charities account for 3,900 nonprofits and report $4.7 billion in annual revenue. The largest of those, health nonprofits, contribute $3.5 billion in revenue and education nonprofits add another $353 million in revenue. Nearly 200 of the nonprofits are private foundations generating $467 million in revenue. The remaining nonprofit organizations bring in revenue of $846 million. The largest of those are connected to benevolent life insurance associations, with revenue of $395 million, and civic leagues and social welfare organizations, with revenue of $307 million.
The retail trade industry is South Dakota’s largest small-business (fewer than 500 employees) sector. The state’s retail trade provides employment for about 78,000 workers. The largest portion of jobs is found in restaurants and bars, where 28,000 workers are employed. The second largest sector is department stores, warehouse clubs, and superstores, employing about 9,800 workers. There are about 5,700 retail businesses in South Dakota, and annual payroll is slightly more than $918,000. The retail industry generates annual sales of $15.4 billion. Walmart has 14 retail businesses in South Dakota that employ some 4,900 workers. Annual payroll for those workers averages $118 million, and Walmart pays more than $2.5 million in state and local taxes.
Technology—including biotechnology, medical, agricultural, and information technology, and medical device manufacturing—plays an important role in South Dakota’s economic economy. More than 97,000 workers are employed in the computer and mathematical science sector. The leading fields in the bioscience sector are medical and agricultural sciences. The bioscience sector employs nearly 2,000 workers, including agricultural feedstock and chemicals, drugs and pharmaceuticals, medical devices and equipment, and research, testing, and medical laboratories.
South Dakota has 83,609 miles of roads and 679 miles of interstate highways. The trucking industry earns about $10 million a year in revenue from transporting ethanol products alone. There are 10 freight railroads in South Dakota with 1,839 miles (2,960 km) of track, which carry nearly 175 million tons of freight each year. Freight carried includes 83,600 carloads of grain and field crops, 10,800 carloads of food products, and about 17,000 carloads of chemicals. There are 75 airports in South Dakota, but none that offers international service. South Dakota's largest commercial airports are the Sioux Falls Regional Airport and Rapid City Regional Airport. The transportation industry in South Dakota employs about 30,000 workers in various sectors and supports an annual payroll of about $820 million.
TRAVEL AND TOURISM
Visitors to the state spend about $965 million each year, making tourism the second largest industry in South Dakota. Visitor spending generates about 34,000 jobs for local workers. The tourism industry is responsible for a total economic impact of some $2.4 billion on South Dakota’s economy. One of the largest tourist events in the state is the annual Sturgis Motorcycle Rally. The five-day event draws more than 450,000 visitors (60 percent of the state’s population) and racks up $10.4 million in taxable sales. South Dakota’s top attraction, Mount Rushmore, attracts more than 2.7 million visitors each year.
Because of its vast rural areas and large Native American population, South Dakota has a bigger number of federal jobs than many states, ranking eighth in the nation in the number of government jobs per capita. One of the biggest is Ellsworth Air Force Base, established in 1941 near Rapid City. The home unit at Ellsworth is the 28th Bomb Wing, one of only two B-1B Lancer strategic bomber wings in the nation. Ellsworth is the second largest employer in the state. Each year the multimillion-dollar payroll for its some 4,000 workers, boosts the state economy by some $278 million.
-World Trade Press